10-Q 1 d178745d10q.htm FORM 10-Q Form 10-Q
falseQ30001321655--12-31P3YP3YDeferred revenue as of September 30, 2021 and December 31, 2020 includes $38.6 million and $68.2 million, respectively, from Palantir Technologies Japan, K.K. See Note 6. Equity Method Investments for more information.No other country represents 10% or more of total revenue for the three months ended September 30, 2021 or 2020.No other country represents 10% or more of total revenue for the nine months ended September 30, 2021 or 2020.On September 30, 2020, in connection with the Direct Listing, the Company incurred $769.5 million and $8.4 million of stock-based compensation using the accelerated attribution method related to the satisfaction of the performance-based vesting condition for RSUs and growth units, respectively, that had satisfied the service-based vesting condition as of such date.The Company’s investment closed after September 30, 2021. See further discussion in Note 14. Subsequent Events.Commercial contract contains termination for convenience clauses in the event the proposed business combination and/or the Company’s proposed investment is not completed. Investments are in publicly-traded marketable securities, unless otherwise noted.Investment in privately-held company. Reflected as commitments in Note 8. 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
    
    
    
    
to
    
    
    
    
Commission File Number:
001-39540
 
 
Palantir Technologies Inc.
(Exact Name of Registrant as Specified in its Charter)
 
 
 
Delaware
 
68-0551851
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
   
1555 Blake Street, Suite 250
Denver, Colorado
 
80202
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (720)
358-3679
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Class A Common Stock, par value $0.001 per share
 
PLTR
 
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
Large accelerated filer
 
  
Accelerated filer
 
       
Non-accelerated filer
 
  
Smaller reporting company
 
       
Emerging growth company  
        
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    Yes  ☐    No  
As of November 4, 2021, there
were 1,906,589,959 shares of the registrant’s Class A common stock outstanding,
 
97,225,971 shares of the registrant’s Class B common stock outstanding, and 1,005,000 shares of the registrant’s Class F common stock outstanding.
 
 
 

TABLE OF CONTENTS
 
 
 
 
  
Page  
 
 
PART I. FINANCIAL INFORMATION
  
 
     
Item 1.        
 
  
3
     
 
 
  
4
     
 
 
  
5
     
 
 
  
6
     
 
 
  
7
     
 
 
  
10
     
 
 
  
11
     
Item 2.
 
  
26
     
Item 3.
 
  
42
     
Item 4.
 
  
44
 
 
PART II. OTHER INFORMATION
  
 
     
Item 1.
 
  
45
     
Item 1A.
 
  
45
     
Item 2.
 
  
93
     
Item 3.
 
  
93
     
Item 4.
 
  
93
     
Item 5.
 
  
93
     
Item 6.
 
  
9
4
 
2

 
ITEM 1.
FINANCIAL STATEMENTS (UNAUDITED)
 
3

Palantir Technologies Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
(unaudited)
 
                               
                               
 
 
     As of September 30,       
 
 
 
      As of December 31,      
 
 
 
 
 
 
 
 
 
 
 
2021
 
2020
Assets
               
Current assets:
               
Cash and cash equivalents
  $ 2,335,068        $ 2,011,323     
Restricted cash
    41,316          37,285     
Accounts receivable
    174,405          156,932     
Marketable securities
    148,077         
 
 
 
 
Prepaid expenses and other current assets
    112,624          51,889     
   
 
 
 
 
 
 
 
Total current assets
    2,811,490          2,257,429     
Property and equipment, net
    28,778          29,541     
Restricted cash, noncurrent
    46,791          79,538     
Operating lease
right-of-use
assets
    220,846          217,075     
Other assets
    116,422          106,921     
   
 
 
 
 
 
 
 
Total assets
  $     3,224,327        $     2,690,504     
   
 
 
 
 
 
 
 
Liabilities and Stockholders’ Equity
               
Current liabilities:
               
Accounts payable
  $ 17,654        $ 16,358     
Accrued liabilities
    179,467          158,546     
Deferred revenue
(1)
    208,100          189,520     
Customer deposits
    232,707          210,320     
Operating lease liabilities
    43,581          29,079     
   
 
 
 
 
 
 
 
Total current liabilities
    681,509          603,823     
Deferred revenue, noncurrent
(1)
    26,723          50,525     
Customer deposits, noncurrent
    42,734          81,513     
Debt, noncurrent, net
    —          197,977     
Operating lease liabilities, noncurrent
    219,646          229,800     
Other noncurrent liabilities
    5,659          4,316     
   
 
 
 
 
 
 
 
Total liabilities
    976,271          1,167,954     
   
 
 
 
 
 
 
 
Commitments and Contingencies (Note 8)
           
Stockholders’ equity:
               
Preferred stock, par value $0.001: 2,000,000 shares authorized and 0 issued and outstanding as of September 30, 2021 and December 31, 2020
               
Common stock, $0.001 par value: 20,000,000 Class A shares authorized as of September 30, 2021 and December 31, 2020; 1,900,441 shares issued and outstanding as of September 30, 2021, and 1,542,058 shares issued and outstanding as of December 31, 2020; 2,700,000 Class B shares authorized as of September 30, 2021 and December 31, 2020; 89,672 shares issued and outstanding as of September 30, 2021, and 249,077 shares issued and outstanding as of December 31, 2020; and 1,005 Class F shares authorized, issued, and outstanding as of September 30, 2021 and December 31, 2020
    1,991          1,792     
Additional
paid-in
capital
    7,577,305          6,488,857     
Accumulated other comprehensive loss
    (1,695)         (2,745)    
Accumulated deficit
    (5,329,545)         (4,965,354)    
   
 
 
 
 
 
 
 
Total stockholders’ equity
    2,248,056          1,522,550     
   
 
 
 
 
 
 
 
Total liabilities and stockholders’ equity
  $ 3,224,327        $ 2,690,504     
   
 
 
 
 
 
 
 
 
(1)
Deferred revenue as of September 30, 2021 and December 31, 2020 includes $38.6 million and $68.2 million, respectively, from Palantir Technologies Japan, K.K. See
Note 6.
Equity Method Investments
 for more information.
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
4

Palantir Technologies Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 
   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2021
   
2020
   
2021
   
2020
 
Revenue
   $ 392,146        $ 289,366     $ 1,109,022     $ 770,582  
Cost of revenue
     86,804          149,340       251,841       282,044  
 
 
 
   
 
 
   
 
 
   
 
 
 
Gross profit
     305,342          140,026       857,181       488,538  
Operating expenses:
                                
Sales and marketing
     153,443       334,911       451,919       536,082  
Research and development
     94,316       313,915       303,311       466,530  
General and administrative
     149,524       338,977       454,054       503,033  
 
 
 
   
 
 
   
 
 
   
 
 
 
Total operating expenses
     397,283       987,803       1,209,284       1,505,645  
 
 
 
   
 
 
   
 
 
   
 
 
 
Loss from operations
     (91,941     (847,777     (352,103     (1,017,107
Interest income
     379       494       1,127       4,312  
Interest expense
     (609     (2,085     (3,039     (12,325
Change in fair value of warrants
           (9,201           811  
Other income (expense), net
     (8,528     (3,293     (11,297     1,218  
 
 
 
   
 
 
   
 
 
   
 
 
 
Loss before provision (benefit) for income taxes
     (100,699 )     (861,862     (365,312     (1,023,091
Provision (benefit) for income taxes
     1,438       (8,543     (1,121     (5,043
 
 
 
   
 
 
   
 
 
   
 
 
 
Net loss
   $ (102,137   $ (853,319   $ (364,191   $ (1,018,048
 
 
 
   
 
 
   
 
 
   
 
 
 
Net loss per share attributable to common stockholders, basic
   $ (0.05   $ (0.94   $ (0.19   $ (1.43
 
 
 
   
 
 
   
 
 
   
 
 
 
Net loss per share attributable to common stockholders, diluted
   $ (0.05   $ (0.94   $ (0.19   $ (1.43
 
 
 
   
 
 
   
 
 
   
 
 
 
Weighted-average shares of common stock outstanding used in computing net loss per share attributable to common stockholders, basic
     1,964,395       905,462       1,893,911       713,879  
 
 
 
   
 
 
   
 
 
   
 
 
 
Weighted-average shares of common stock outstanding used in computing net loss per share attributable to common stockholders, diluted
     1,964,395       905,462       1,893,911       716,027  
 
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
5

Palantir Technologies Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
 
 
 
Three Months Ended September 30,
  
Nine Months Ended September 30,
 
 
2021
 
2020
  
2021
 
2020
Net loss
   $ (102,137   $ (853,319   $ (364,191   $ (1,018,048
Other comprehensive income (loss):
                                
Foreign currency translation adjustments
     (1,760     268       1,050       1,871  
    
 
 
   
 
 
   
 
 
   
 
 
 
Comprehensive loss
   $     (103,897   $     (853,051   $     (363,141   $     (1,016,177
    
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
6

Palantir Technologies Inc.
Condensed Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(in thousands)
(unaudited)
 
 
  
Common Stock
 
Additional
Paid-in

Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Accumulated
Deficit
 
Total
Stockholders’
Equity
  
Shares
 
Amount
Balance as of June 30, 2021
     1,936,578     $ 1,937
 
 
 
$ 7,294,369      $ 65   $ (5,227,408    $ 2,068,963  
Issuance of common stock from the exercise of stock options
     41,249       41
 
 
 
  97,954        —      —         97,995  
Issuance of common stock upon vesting of restricted stock units (“RSUs”)
     13,291       13
 
 
 
  (13      —      —         —   
Stock-based compensation
          
 
 
 
  184,995        —      —         184,995  
Other comprehensive loss
          
 
 
 
  —         (1,760   —         (1,760
Net loss
          
 
 
 
  —         —      (102,137      (102,137
    
 
 
    
 
 
 
 
 
 
 
    
 
 
 
 
 
    
 
 
 
Balance as of September 30, 2021
     1,991,118     $ 1,991
 
 
 
$ 7,577,305      $ (1,695 $ (5,329,545    $ 2,248,056  
    
 
 
    
 
 
 
 
 
 
 
    
 
 
 
 
 
    
 
 
 
 
 
 
Common Stock
 
Additional
Paid-in

Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Accumulated
Deficit
 
Total
Stockholders’
Equity
 
Shares
 
Amount
Balance as of December 31, 2020
     1,792,140        $ 1,792  
 
$ 6,488,857   $ (2,745)      $ (4,965,354    $ 1,522,550  
Issuance of common stock from the exercise of stock options
     155,720          155  
 
  474,528     —         —         474,683  
Issuance of common stock upon vesting of RSUs
     37,123          37  
 
  (37   —         —         —   
Issuance of common stock upon vesting of growth units
     1,471          1  
 
  (1   —         —         —   
Issuance of common stock upon net exercise of common stock warrants and other
     4,664          6  
 
  1,706     —         —         1,712  
Stock-based compensation
               
 
  612,252     —         —         612,252  
Other comprehensive income
               
 
  —      1,050        —         1,050  
Net loss
               
 
  —      —         (364,191      (364,191
    
 
 
      
 
 
 
 
 
 
 
 
 
    
 
 
    
 
 
 
Balance as of September 30, 2021
     1,991,118        $         1,991  
 
$     7,577,305   $ (1,695    $ (5,329,545    $ 2,248,056  
    
 
 
      
 
 
 
 
 
 
 
 
 
    
 
 
    
 
 
 
 
7

Palantir Technologies Inc.
Condensed Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(in thousands)
(unaudited)
 
   
Redeemable Convertible
Preferred Stock
   
Convertible Preferred
Stock
   
Common Stock
   
Additional
Paid-in

Capital
   
Accumulated
Other
Comprehensive
Income
   
Accumulated
Deficit
   
Total
Stockholders’
Equity
(Deficit)
 
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
 
Balance as of June 30, 2020
    4,017     $ 33,569       742,933     $ 2,094,509       736,635       $ 737       $ 2,563,354     $ 900     $ (3,963,692     $ (1,398,701)  
                     
Issuance of Series D preferred stock upon net exercise of Series D preferred stock warrants
   
 
 
     
 
 
      2,380       10,810      
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
 
                     
Issuance of common stock upon net exercise of common stock warrants
   
 
 
     
 
 
     
 
 
     
 
 
      7,631       8         (8      
 
 
     
 
 
     
 
 
 
                     
Issuance of common stock, net of issuance costs
   
 
 
     
 
 
     
 
 
     
 
 
      88,280       88         404,591      
 
 
     
 
 
      404,679  
                     
Conversion of redeemable convertible preferred stock to common stock
    (4,017       (33,569      
 
 
     
 
 
      4,017       4         33,565      
 
 
     
 
 
      33,569  
                     
Conversion of convertible preferred stock to common stock
   
 
 
     
 
 
      (745,313       (2,105,319       793,726       794         2,104,525      
 
 
     
 
 
      2,105,319  
                     
Conversion of preferred stock warrants to common stock warrants
   
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
      31,007      
 
 
     
 
 
      31,007  
                     
Issuance of common stock from the exercise of stock options
   
 
 
     
 
 
     
 
 
     
 
 
      31,748       32         87,175      
 
 
     
 
 
      87,207  
                     
Issuance of common stock upon vesting of restricted stock units
   
 
 
     
 
 
     
 
 
     
 
 
      68,149       68         (68      
 
 
     
 
 
     
 
 
 
                     
Stock-based compensation
   
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
      841,929      
 
 
     
 
 
      841,929  
                     
Settlement of employee loan accounted for as a modification to stock option
   
 
 
     
 
 
     
 
 
     
 
 
      (3,500       (4       (201      
 
 
     
 
 
      (205)  
                     
Other comprehensive income
   
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
      268      
 
 
      268  
Net loss
   
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
      (853,319)       (853,319)  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of September 30, 2020
   
 
 
    $
 
 
     
 
 
    $
 
 
      1,726,686     $ 1,727     $ 6,065,869     $ 1,168     $ (4,817,011)     $ 1,251,753  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
8

Palantir Technologies Inc.
Condensed Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(in thousands)
(unaudited)
 
   
Redeemable Convertible
Preferred Stock
   
  Convertible Preferred  
Stock
   
Common Stock
   
Additional
Paid-in

Capital
   
Treasury Stock
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Accumulated
Deficit
   
Total
Stockholders’
Equity (Deficit)
 
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
 
Balance as of December 31, 2019
    4,017       $ 33,569         742,840     $ 2,093,662         581,497       $ 588       $ 1,857,331         6,393       $ (38,895     $ (703     $ (3,798,963     $ (1,980,642  
                         
Conversion of Series
H-1
convertible preferred stock to common stock
    —         —         (28       (100       28         —         100         —         —         —         —         100    
                         
Issuance of Series K convertible preferred stock
    —         —         121         947         —         —         —         —         —         —         —         —    
                         
Issuance of Series D preferred stock upon net exercise of Series D preferred stock warrants
    —         —         2,380         10,810         —         —         —         —         —         —         —         —    
                         
Repurchase of common stock, held in treasury
    —         —         —         —         (808       —         —         808         (3,777       —         —         (3,777  
                         
Retirement of treasury stock
    —         —         —         —         —         (7       (42,665       (7,201       42,672         —         —         —    
                         
Issuance of common stock upon net exercise of common stock warrants
    —         —         —         —         7,631         8         (8       —         —         —         —         —    
                         
Issuance of common stock, net of issuance costs
    —         —         —         —         206,501         207         942,322         —         —         —         —         942,529    
                         
Conversion of redeemable convertible preferred stock to common stock
    (4,017)       (33,569)       —         —         4,017         4         33,565         —         —         —         —         33,569    
                         
Conversion of convertible preferred stock to common stock
    —         —         (745,313)       (2,105,319)       793,726         794         2,104,525         —         —         —         —         2,105,319    
                         
Conversion of preferred stock warrants to common stock warrants
    —         —         —         —         —         —         31,007         —         —         —         —         31,007    
                         
Issuance of common stock from the exercise of stock options
    —         —         —         —         69,444         69         115,961         —         —         —         —         116,030    
                         
Issuance of common stock upon vesting of RSUs
    —         —         —         —         68,150         68         (68       —         —         —         —         —    
                         
Stock-based compensation
    —         —         —         —         —         —         1,024,000         —         —         —         —         1,024,000    
                         
Settlement of employee loan accounted for as a modification to stock option
    —         —         —         —         (3,500       (4       (201       —         —         —         —         (205  
                         
Other comprehensive income
    —         —         —         —         —         —         —         —         —         1,871         —         1,871    
                         
Net loss
    —         —         —         —         —         —         —         —         —         —         (1,018,048       (1,018,048  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of September 30, 2020
    —       $ —         —       $ —         1,726,686       $ 1,727       $ 6,065,869         —       $ —       $ 1,168       $ (4,817,011     $ 1,251,753    
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
9

Palantir Technologies Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
    
  Nine Months Ended September 30,  
  
2021
 
2020
     
Operating activities
                
     
Net loss
   $ (364,191   $ (1,018,048
     
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
                
     
Depreciation and amortization
     11,057       10,308  
     
Stock-based compensation
     611,308       1,028,914  
     
Non-cash
operating lease expense
     23,417       28,815  
     
Unrealized loss from marketable securities
     7,238        
     
Other operating activities
     3,076       3,621  
     
Changes in operating assets and liabilities:
                
     
Accounts receivable
     (15,412     (112,723
     
Prepaid expenses and other current assets
     (7,872     (11,598
     
Other assets
     (8,155     (20,944
     
Accounts payable
     1,158       (29,372
     
Accrued liabilities
     20,360       42,138  
     
Deferred revenue, current and noncurrent
     (3,781     (30,937
     
Customer deposits, current and noncurrent
     (16,227     (140,162
     
Operating lease liabilities, current and noncurrent
     (22,786     (34,725
     
Other noncurrent liabilities
     1,234       6,393  
    
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
     240,424       (278,320
     
Investing activities
                
     
Purchases of property and equipment
     (6,783     (7,475
     
Purchases of marketable securities
     (155,315      
     
Purchases of alternative investments
     (50,941      
     
Other investing activities
     (3,000     (2,500
    
 
 
 
 
 
 
 
Net cash used in investing activities
     (216,039     (9,975
     
Financing activities
                
     
Proceeds from the issuance of common stock, net of issuance costs
           942,529  
     
Proceeds from issuance of debt, net of issuance costs
           199,369  
     
Principal payments on borrowings
     (200,000     (400,000
     
Proceeds from the exercise of common stock options
     474,683       79,473  
     
Repurchase of common stock
           (3,777
     
Other financing activities
     (401     (250
    
 
 
 
 
 
 
 
     
Net cash provided by financing activities
     274,282       817,344  
     
Effect of foreign exchange on cash, cash equivalents, and restricted cash
     (3,638     (678
    
 
 
 
 
 
 
 
     
Net increase in cash, cash equivalents, and restricted cash
     295,029       528,371  
     
Cash, cash equivalents, and restricted cash - beginning of period
     2,128,146       1,401,962  
    
 
 
 
 
 
 
 
Cash, cash equivalents, and restricted cash - end of period
   $ 2,423,175     $ 1,930,333  
    
 
 
 
 
 
 
 
     
Supplemental disclosures of cash flow information:
                
     
Cash paid for income taxes
   $ 3,588     $ 9,143  
     
Cash paid for interest
     2,774       9,737  
     
Supplemental disclosures of
non-cash
investing and financing information:
                
     
Conversion of redeemable convertible and convertible preferred stock to common stock
   $     $ 2,138,988  
     
Receivable from the exercise of common stock options included in prepaid expenses and other current assets
     396       36,557  
     
Conversion of convertible preferred stock warrants to common stock warrants
           31,007  
     
Cashless net exercise of warrants for convertible preferred stock
           10,810  
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
10

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Organization
Palantir Technologies Inc. (including its subsidiaries, “Palantir,” or “the Company”) was incorporated in Delaware on May 6, 2003. The Company builds and deploys software platforms, Palantir Gotham and Palantir Foundry, that serve as the central operating systems for its customers.
2. Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The accompanying condensed consolidated financial statements include the accounts of Palantir Technologies Inc. and its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Investments in entities where the Company holds at least a 20% ownership interest and has the ability to exercise significant influence over the investee, but does not control, are accounted for using the equity method of accounting. The Company’s fiscal year ends on December 31.
The unaudited condensed consolidated balance sheet as of December 31, 2020, included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including certain notes required by GAAP on an annual reporting basis. In management’s opinion, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the balance sheets and statements of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year or any future period.
The Company ceased to be an emerging growth company as of December 31, 2020, which accelerated its adoption of Accounting Standards Update (“ASU”)
2016-02,
Leases (Topic 842)
. As a result, certain components of cash flows used in operating activities within the Company’s condensed consolidated statements of cash flows for the nine months ended September 30, 2020, have been presented to conform to the new standard. The impact to the presentation of the other statements was not material.
These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included in its Annual Report on Form
10-K
for the year ended December 31, 2020, which was filed with the SEC on February 26, 2021.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.
Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to, identification of performance obligations in customer contracts
;
the valuation of deferred tax assets and uncertain tax positions
;
collectability of contract consideration, including accounts receivable
;
useful lives of tangible assets
;
and the incremental borrowing rate for operating leases. Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates and such differences could affect the Company’s financial position and results of operations.
 
11

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
Summary of Significant Accounting Policies
The Company’s significant accounting policies are discussed in
Note 2. Significant Accounting Policies
in the notes to consolidated financial statements in its Annual Report on Form
10-K
for the year ended December 31, 2020, which was filed with the SEC on February 26, 2021. There have been no significant changes to these policies during the nine months ended September 30, 2021.
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents primarily consist of amounts invested in money market funds.
Restricted cash primarily consists of cash and certificates of deposit that are held as collateral against letters of credit and guarantees that the Company is required to maintain for operating lease agreements, certain customer contracts, and other guarantees and financing arrangements.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the amounts shown in the condensed consolidated statements of cash flows (in thousands):
 
 
  
As of September 30,
 
  
2021
  
2020
Cash and cash equivalents
   $ 2,335,068        $ 1,800,190    
Restricted cash
     41,316          43,800    
Restricted cash, noncurrent
     46,791          86,343    
    
 
 
 
  
 
 
 
Total cash, cash equivalents, and restricted cash
   $             2,423,175        $             1,930,333    
    
 
 
 
  
 
 
 
Accounts Receivable and Allowance for Credit Losses
Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses, if any. The Company generally grants
non-collateralized
credit terms to its customers. Allowance for credit losses is based on the Company’s best estimate of probable losses inherent in its accounts receivable portfolio and is determined based on expectations of the customer’s ability to pay by considering factors such as customer type (commercial or government), historical experience, financial position of the customer, age of the accounts receivable, current economic conditions, including the ongoing
COVID-19
pandemic, and reasonable and supportable forward-looking factors about its portfolio and future economic conditions. Accounts receivable are
written-off
and charged against an allowance for credit losses when the Company has exhausted collection efforts without success. Based upon the assessment as of September 30, 2021, the Company recorded an immaterial allowance for credit losses. As of December 31, 2020, the Company did not record an allowance for credit losses.
Concentrations of Credit Risk and Other Concentrations
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, and accounts receivable. Cash equivalents primarily consist of money market funds with original maturities of three months or less, which are invested primarily with U.S. financial institutions. Cash deposits with financial institutions, including restricted cash, generally exceed federally insured limits. Management believes minimal credit risk exists with respect to these financial institutions and the Company has not experienced any losses on such amounts.
The Company is exposed to concentrations of credit risk with respect to accounts receivable presented on the condensed consolidated balance sheets. The Company’s accounts receivable balances as of September 30, 2021 and December 31, 2020 were $174.4 million and $156.9 million, respectively. Customer H represented 11% of total accounts receivable as of September 30, 2021. Customer G represented 13% of total accounts receivable as of December 31, 2020. No other customer represented more than 10% of total accounts receivable as of September 30, 2021 and December 31, 2020. The Company seeks to mitigate its credit risk with respect to accounts receivable by contracting with large commercial customers and government agencies and regularly monitoring the aging of accounts receivable balances. As of September 30, 2021 and December 31, 2020, the Company had not experienced any significant losses on its accounts receivable.
For the three and nine months ended September 30, 2021, no customer represented more than 10% of total revenue. For the three months ended September 30, 2020, no customer represented more than 10% of total revenue. For the nine months ended September 30, 2020, Customer F, which is in the government operating segment, represented 11% of total revenue. No other customer represented more than 10% of total revenue for the three and nine months ended September 30, 2020.
 
12

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
The Company relies on the technology, infrastructure, and software applications, including
software-as-a-service
offerings, of third parties in order to host or operate certain key products and functions of its business.
Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU
2019-12,
Simplifying the Accounting for Income Taxes (Topic 740),
as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes. ASU
2019-12
removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU
2019-12
also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. The Company adopted ASU
2019-12
as of January 1, 2021 using transition methods allowed under each aspect of the guidance. The adoption of the standard did not have a material impact on the Company’s condensed consolidated financial statements.
3. Contract Liabilities and Remaining Performance Obligations
Contract Liabilities
The Company’s contract liabilities consist of deferred revenue and customer deposits. As of September 30, 2021 and December 31, 2020, the Company’s contract liability balances were $510.3 million and $531.9 million, respectively. Revenue of $347.7 million and $406.4 million was recognized during the nine months ended September 30, 2021 and 2020, respectively, that was included in the contract liability balances as of December 31, 2020 and 2019, respectively.
Remaining Performance Obligations
The Company’s arrangements with its customers often have terms that span over multiple years. However, the Company generally allows its customers to terminate contracts for convenience prior to the end of the stated term with less than twelve months’ notice. Revenue allocated to remaining performance obligations represents noncancelable contracted revenue that has not yet been recognized, which includes deferred revenue and, in certain instances, amounts that will be invoiced. The Company has elected the practical expedient allowing the Company to not disclose remaining performance obligations for contracts with original terms of twelve months or less. Cancelable contracted revenue, which includes customer deposits, is not considered a remaining performance obligation.
The Company’s remaining performance obligations were $873.9 million as of September 30, 2021, of which the Company expects to recognize approximately 45% as revenue over the next twelve months.
Disaggregation of Revenue
See
Note 13. Segment and Geographic Information
for disaggregated revenue by customer segment and geographic region.
 
13

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
4. Investments and Fair Value Measurements
Financial instruments consist of money market funds and certificates of deposit included in cash equivalents and restricted cash, accounts receivable, equity securities, other assets accounted for at fair value, accounts payable, and accrued liabilities. Money market funds, certificates of deposit, and marketable securities are stated at fair value on a recurring basis. Accounts receivable, accounts payable, and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date.
The following tables present the Company’s assets that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation (in thousands):
 
    
As of September 30, 2021
 
    
Total
   
Level 1
   
Level 2
   
Level 3
 
Assets:
                                
Money market funds
   $ 767,372     $ 767,372     $     $  
Certificates of deposit
     60,061             60,061        
Marketable securities
     148,077       148,077              
    
 
 
   
 
 
   
 
 
   
 
 
 
         
Total
   $ 975,510     $ 915,449     $ 60,061     $                 —  
    
 
 
   
 
 
   
 
 
   
 
 
 
   
    
As of December 31, 2020
 
    
Total
   
Level 1
   
Level 2
   
Level 3
 
Assets:
                              
Money market funds
   $ 1,075,783     $ 1,075,783     $     $  
Certificates of deposit
     74,097             74,097        
    
 
 
   
 
 
   
 
 
   
 
 
 
         
Total
   $     1,149,880     $ 1,075,783     $     74,097     $                 —  
    
 
 
   
 
 
   
 
 
   
 
 
 
Certificates of Deposit
The Company’s Level 2 instruments consist of cash equivalents and restricted cash invested in certificates of deposit. The fair value of such instruments is estimated based on valuations obtained from third-party pricing services that utilize industry standard valuation models, including both income-based and market-based approaches, for which all significant inputs are observable either directly or indirectly. These inputs include interest rate curves, foreign exchange rates, and credit ratings. Gross unrealized gains or losses on certificate of deposits as of September 30, 2021 and December 31, 2020 were not material.
Marketable Securities
Marketable securities consist of equity securities in publicly-traded companies and are recorded at fair market value each reporting period. Realized and unrealized gains and losses are recorded in other income (expense), net on the condensed consolidated statements of operations. During the three and nine months ended September 30, 2021, the Company recorded net unrealized losses of 
$7.2 million within other income (expense), net on the condensed consolidated statements of operations.
Investments
The Company approved and entered into certain agreements (“Investment Agreements”) to purchase, or commit to purchase, as further discussed in
Note 8. Commitments and Contingencies—Investment Commitments,
shares of various entities, including special purpose acquisition companies and/or other privately-held or publicly-traded entities (each, an “Investee,” and such purchases, and commitments to purchase, the “Investments”). In connection with signing the Investment Agreements, each Investee or an associated entity and the Company entered into a commercial contract for access to the Company’s products and services. The maximum potential revenue from all of these commercial contracts is $640.2 million, which is inclusive of $82.9 
million of contractual options. The terms of
such contracts, including such contractual options, range
 
from three to ten years. The majority of these commercial contracts are subject to various termination provisions, including for convenience in the event a proposed business combination is not completed.
 
14

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
During 2021, the Company assessed the concurrent agreements under the
non-monetary
guidance within Accounting Standards Codification (“ASC”) 606 -
Revenue from Contracts with Customers
and the total revenue recognized from the commercial contracts during the three and nine months ended September 30, 2021 was $19.0 million and $22.0 million, respectively.
The following table presents the details of the investments purchased under such Investment Agreements during the nine months ended September 30, 2021 (in thousands):
 
Entity
(1)
     
Share Amount
   
Investment Amount
 
Celularity
                               2,000     $ 20,000  
Faraday Future
        2,500       25,000  
Astrocast
        1,520       5,000  
BlackSky
        800       8,000  
Lilium
        4,100       41,000  
Roivant Sciences
        3,000       30,000  
Sarcos Robotics
        2,100       21,000  
Autonomous aerial vehicle company
(2)
        3,000       3,000  
       
 
 
   
 
 
 
Total
        19,020     $ 153,000  
       
 
 
   
 
 
 
 
 
 
(1)
 
Investments are in publicly-traded marketable securities, unless otherwise noted.
 
(2)
 
Investment in privately-held company.
Privately-Held Securities
Equity investments in private-held companies without readily determinable fair values are recorded using the measurement alternative of cost less impairment, if any, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer. As of September 30, 2021, the carrying value of investments without readily determinable fair values were recorded in other assets in the Company’s condensed consolidated balance sheets and were not material.
Alternative Investments
The Company purchased $50.9 million in
100-ounce
gold bars, which are included within prepaid expenses and other current assets on the condensed consolidated balance sheet. The investment is initially recorded as cost and is subsequently remeasured at lower of cost or market each reporting period. The gold bars will initially be kept in a secure third-party facility located in the northeastern United States. The Company is able to take physical possession of the gold bars stored at the facility at any time with reasonable notice.
5. Balance Sheet Components
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
 
    
 
As of September 30,
2021
 
 
  
 
As of December 31,
2020
Leasehold improvements
       $ 80,215           $ 85,196   
Computer equipment, software, and other
     25,451           22,275   
Furniture and fixtures
     10,021           9,976   
Construction in progress
     5,305           493   
    
 
 
    
 
 
Total property and equipment, gross
                 120,992                   117,940   
Less: accumulated depreciation and amortization
     (92,214)          (88,399)  
    
 
 
    
 
 
Total property and equipment, net
     $ 28,778           $ 29,541   
    
 
 
    
 
 
Depreciation and amortization expense related to property and equipment, net was $3.1 million and $2.5 million for the three months ended September 30, 2021 and 2020, respectively, and $9.3 million and $9.3 million for the nine months ended September 30, 2021 and 2020,
respectively.
 
15

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
 
    
As of September 30,
2021
    
As of December 31,
2020
Accrued payroll and related expenses
     $ 100,157        $ 85,466
Accrued other liabilities
     79,310        73,080
    
 
 
    
 
 
Total accrued liabilities
     $             179,467        $         158,546
    
 
 
    
 
 
6. Equity Method Investments
Palantir Technologies Japan, K.K.
During November 2019, the Company and SOMPO Holdings, Inc. (“SOMPO”) created a Japanese Kabushiki Kaisha (“K.K.”), Palantir Technologies Japan, K.K. (“Palantir Japan”), to distribute Palantir platforms to the Japanese market. Upon closing of the transaction with SOMPO, the Company purchased a total of 100,000 shares of Palantir Japan common stock for $25.0 million. The shares the Company received in exchange represent a 50% voting interest in Palantir Japan. The remaining 50% of the voting interest is held by SOMPO. The Company’s investment in Palantir Japan is accounted for as an equity method investment as the Company is able to exercise significant influence over, but does not control, the investee.
7. Debt
2014 Credit Facility
In October 2014, the Company entered into an unsecured revolving credit facility which has been subsequently amended (the “2014 Credit Facility”). The 2014 Credit Facility incurred interest at the London Interbank Offered Rate (“LIBOR”) plus a margin of 2.75% per annum, subject to certain adjustments, and incurs a commitment fee of 0.375% assessed on the daily average undrawn portion of revolving commitments. Interest and commitment fees are payable at the end of an interest period or at each three-month interval if the interest period is longer than three months. The 2014 Credit Facility, as amended, matures on June 4, 2023.
During April 2021, the Company entered into an amendment to the 2014 Credit Facility, which provided for an increase of $200.0 million to the revolving commitments of the existing lenders under the 2014 Credit Facility, for total revolving commitments of $400.0 million, and which also provided for an incremental loan facility for additional loans in an aggregate principal amount of up to $100.0 million with one or more existing or new lenders upon mutual agreement between the Company and such lenders. Upon entering into the amendment, the Company repaid its outstanding term loans of $200.0 million. As of September 30, 2021, the Company had no amounts outstanding under the 2014 Credit Facility and a $400.0 million undrawn revolving credit facility.
The 2014 Credit Facility contains customary r
epresentat
ions and warranties, and certain financial and nonfinancial covenants, including but not limited to maintaining minimum liquidity of $50.0 million, and certain limitations on liens and indebtedness. The Company was in compliance with all covenants associated with the 2014 Credit Facility as of September 30, 2021.
8. Commitments and Contingencies
Purchase Commitments
In December 2019, the Company entered into, and subsequently amended during December 2020, a minimum annual commitment to purchase cloud hosting services of at least $1.49 billion over six contract years, with an optional carryover period through June 30, 2029, in exchange for various discounts on such services. I
f the spend does not meet the minimum annual commitment each year or at the end of the term, the Company is obligated to make a return payment. If the difference is greater than $30.0 million for each of the first three contract years or $50.0 million for each of the contract years thereafter (“relief amounts”), the Company has the option to pay the respective relief amount for that year for services to be utilized in the future and the excess amount of the difference above the relief amount would be added to the minimum annual commitment of the following year through the end of the contract.
As of September 30, 2021, the Company had satisfied $34.0 million of its $167.0 million
commitment for the contract year ending June 30, 2022. 
 
16

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
In June 2020, the Company entered into an additional commitment to purchase at least $45.0 million of cloud hosting services over a period of five years commencing on June 1, 2020 and ending on May 31, 2025. If the spend commitment is not met at the end of the term, the Company is obligated to pay the full amount of the outstanding balance (“shortfall payment”). The shortfall payment may be applied as a prepayment against consumption during an additional twelve-month coverage period expiring on May 31, 2026, at which time any unused amount would be forfeited. As of September 30, 2021, the Company had satisfied $8.0 million of its commitment.
Investment Commitments
The Company approved and entered into certain Investment Agreements with Investees, as further discussed in
Note 4. Investments and Fair Value Measurements - Investments
.
As of September 30, 2021, the Company had outstanding investment commitments, subject to the applicable terms and conditions, to purchase a total of 22.7 million shares for an aggregate purchase price of $226.5 million. The closings of certain of such Investments are contingent upon the completion of a proposed business combination between the applicable Investee and other applicable parties.
The following table presents details related to the Company’s investment commitments outstanding as of September 30, 2021 (in thousands):
 
Entity
  
Investment
Agreement Date
 
 
Committed
Share Amount
 
 
Committed
Investment Amount
Mobility company
(1)
     May 11, 2021        2,000   
 
$ 20,000
       
Wejo
     May 28, 2021        3,500   
 
  35,000
       
Babylon Health
(1) (2)
     June 3, 2021        3,500   
 
  35,000
       
Boxed
(
2
)
     June 13, 2021        2,000   
 
  20,000
       
Pear Therapeutics
     June 21, 2021        1,000   
 
  10,000
       
Autonomous vehicle company
(
2
)
     June 22, 2021        1,800   
 
  18,000
       
Fast Radius
(
2
)
     July 18, 2021        2,000   
 
  20,000
       
Tritium
(
2
)
     July 27, 2021        1,500   
 
  15,000
       
AdTheorent
(
2
)
     July 27, 2021        1,500   
 
  15,000
       
FinAccel
     August 2, 2021        1,000   
 
  10,000
       
Energy Vault
(
2
)
     September 8, 2021       
850
  
 
  8,500
       
Electric vehicle charging company
(
2
)
     September 10, 2021        2,000   
 
  20,000
             
 
 
  
 
 
 
Total
              22,650   
 
$ 226,500
             
 
 
  
 
 
 
 
 
(1)
The Company’s investment closed after September 30, 2021. See further discussion in
Note 14. Subsequent Events
.
(2)
 
Commercial contract contains termination for convenience clauses in the event the proposed business combination and/or the Company’s proposed investment is not completed.
Litigation and Legal Proceedings
From time to time, third parties may assert patent infringement claims against the Company. In addition, from time to time, the Company may be subject to other legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of trademarks, copyrights, and other intellectual property rights; employment claims; securities claims; investor claims; corporate claims; class action claims; and general contract, tort, or other claims. The Company may from time to time also be subject to various legal or government claims, disputes, or investigations. Such matters may include, but not be limited to, claims, disputes, allegations, or investigations related to warranty; refund; breach of contract; breach, leak, or misuse of personal data or confidential information; employment; government procurement; intellectual property; government regulation or compliance (including but not limited to anti-corruption requirements, export or other trade controls, data privacy or data protection, cybersecurity requirements, or antitrust/competition law requirements); securities; investor; corporate; or other matters. The Company is unable to predict whether or when any such matters may arise, the outcome of these matters, or the ultimate legal and financial liability, and cannot reasonably estimate the possible loss or range of loss at this time and accordingly has not accrued a related liability.
 
17

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
On December 14, 2017, members of KT4 Partners LLC (Managing Member Marc Abramowitz) and Sandra Martin Clark, as trustee for the Marc Abramowitz Irrevocable Trust Number 7 (together, “KT4 Plaintiffs”), filed an action in the Delaware Superior Court against the Company and Disruptive Technology Advisers LLC. The complaint alleges tortious interference with prospective economic advantage and civil conspiracy in connection with a potential sale of stock by the KT4 Plaintiffs to a third party. The KT4 Plaintiffs seek compensatory and punitive damages, interest, fees, and costs.
The Company believes this lawsuit is without merit and is vigorously defending itself against it. Given the uncertainty of litigation, it may be reasonably possible that the Company will incur a loss with regards to the matter; however, it cannot currently estimate a range of possible losses. Accordingly, the Company is unable, at this time, to estimate the overall effects that may result from the lawsuit on its financial condition, results of operations, or cash flows.
As of September 30, 2021, the Company was not aware of any currently pending legal matters or claims, individually or in the aggregate, that were expected to have a material adverse impact on its condensed consolidated financial statements.
Letters of Credit and Guarantees
The Company had irrevocable standby letters of credit and guarantees, including bank guarantees, outstanding in the amounts of $88.1 million and $116.8 million as of September 30, 2021 and December 31, 2020, respectively, all of which were fully collateralized. The Company is required to maintain these letters of credit and guarantees primarily for operating lease agreements, certain customer contracts, and other guarantees and financing arrangements. As of September 30, 2021, these letters of credit and guarantees had expiration dates through August 2028.
Warranties and Indemnification
The Company generally provides a warranty for its software products and services and a service level agreement (“SLA”) for the Company’s performance of software operations via its operations and maintenance (“O&M”) services to its customers. The Company’s products are generally warranted to perform substantially as described in the associated product documentation during the subscription term or for a period of up to 90 days where the software is hosted by the customer; and the Company includes O&M services as part of its subscription and license agreements to support this warranty and maintain the operability of the software. The Company’s services are generally warranted to be performed in a professional manner and by an adequate staff with knowledge about the products. In the event there is a failure of such warranties, the Company generally is obligated to correct the product or service to conform to the warranty provision, as set forth in the applicable SLA, or, if the Company is unable to do so, the customer is entitled to seek a refund of the purchase price of the product and service (generally prorated over the contract term). Due to the absence of historical warranty claims, the Company’s expectations of future claims related to products under warranty continue to be insignificant. The Company has not recorded warranty expense or related accruals as of September 30, 2021 and December 31, 2020.
The Company generally agrees to indemnify its customers against legal claims that the Company’s software products infringe certain third-party intellectual property rights and accounts for its indemnification obligations. In the event of such a claim, the Company is generally obligated to defend its customer against the claim and to either settle the claim at the Company’s expense or pay damages that the customer is legally required to pay to the third-party claimant. In addition, in the event of an infringement, the Company generally agrees to secure the right for the customer to continue using the infringing product; to modify or replace the infringing product; or, if those options are not commercially practicable, to refund the cost of the software, as prorated over the period. To date, the Company has not been required to make any payment resulting from infringement claims asserted against its customers and does not believe that the Company will be liable for such claims in the foreseeable future. As such, the Company has not recorded a liability for infringement costs as of September 30, 2021 and December 31, 2020.
The Company has obligations under certain circumstances to indemnify each of the defendant directors and certain officers against judgments, fines, settlements, and expenses related to claims against such directors and certain officers and otherwise to the fullest extent permitted under the law and the Company’s bylaws and Amended and Restated Certificate of Incorporation.
9. Stockholders’ Equity
The Company’s Class A, Class B, and Class F common stock (collectively, the “common stock”) all have the same rights, except with respect to voting and conversion rights. Class A and Class B common stock have voting rights of 1 and 10 votes per share, respectively. The Class F common stock has the voting rights generally described below and each share of Class F common stock is convertible at any time, at the option of the holder thereof, into one share of Class B common stock. All shares of Class F common stock are held in a voting trust established by Stephen Cohen, Alexander Karp, and Peter Thiel (the “Founders”). The Class F common stock generally gives the Founders the ability to control up to 49.999999% of the total voting power of the Company’s capital stock, so long as the Founders and certain of their affiliates collectively meet a minimum ownership threshold, which was 100 million of the Company’s equity securities as of September 30, 2021.
 
18

Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
Holders of common stock are entitled to dividends when, as and if declared by the Company’s Board of Directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. No dividends have been declared as of September 30, 2021.
In connection with the Company’s direct listing of its Class A common stock on the New York Stock Exchange (“Direct Listing”) in September 2020, all outstanding shares of redeemable convertible preferred stock and convertible preferred stock were converted into 4,017,378 and 793,725,807 shares of Class B common stock, respectively, and 1,005,000 shares of Class B common stock held by the Founders were exchanged for an equal number of shares of Class F common stock.
The following represented the total authorized, issued, and outstanding shares for each class of common stock (in thousands):
 
 
 
As of September 30, 2021
 
 
As of December 31, 2020
 
 
 
Authorized
 
 
Issued and
Outstanding
 
 </