Jefferies analyst Brent Thill reiterated an Underperform rating and $60.00 price target on Palantir Technologies Inc. (NASDAQ: PLTR)

The analyst comments "Key takes from the 10-K: 1) Total headcount increased by only 5% y/y (201 heads), calling into question whether PLTR is investing enough in the AI opportunity ahead. 2) US revenue growth overshadows flat international growth. 3) Update to Rule 10b5-1 Trading Plans for CEO and President. 4) Departure of Chief Accounting Officer. 5) Big customers get bigger. 6) SPAC exposure continues to decrease. 1) Total headcount increased by only 5% y/y (201 heads). Total headcount increased 5% y/y in CY24 (up 201 heads to 3.9K) after headcount decreased 3% y/y in CY23 (down 103 heads to 3.7K), for a total of just 98 heads added over the last 2 years. We believe this could mean one of three things: 1) PLTR's AI opportunity ahead is not as big as is priced in; 2) engineering/technical hires are being offset by reductions elsewhere — intl headcount decreased by 87 from CY23 to CY24 despite overall headcount increasing by 201; 3) the company over-hired 2 years ago (headcount grew 31% y/y in CY22, up 918 heads to 3.8K). 2) US revenue growth overshadows flat international growth. U.S. revenue accelerated to 38% y/y in CY24 vs 32% in CY23 and represents 66% of total revenue mix in CY24 vs 62% in CY23. Non-U.S. revenue grew 14% y/y in CY24 vs 14% y/y in CY23. 3) Update to Rule 10b5-1 Trading Plans for CEO and President. On December 11, 2024, Alex Karp (CEO) adopted a Rule 10b5-1 trading arrangement providing for the potential sale of shares of Class A common stock, with 9.975M shares being the maximum number. The duration of the trading arrangement is until September 12, 2025, or earlier, upon the completion or expiration of all transactions subject to the trading arrangement. Also on December 11, 2024, Stephen Cohen (President, Secretary, and a member of the Board of Directors) adopted a Rule 10b5-1 trading arrangement providing for the potential sale of shares of Class A common stock with 4.06M shares being the maximum number. The duration of the trading arrangement is until September 12, 2025, or earlier, upon the completion or expiration of all transactions subject to the trading arrangement. 4) Departure of Chief Accounting Officer. On February 12, 2025, Heather Planishek, Chief Accounting Officer, announced her decision to step down from her position effective as of the end of the day on February 24, 2025. Beginning on February 25, she is expected to continue as an advisor to the company for a period to assist with the transition. David Glazer, the company’s Chief Financial Officer and Treasurer, will assume the responsibilities of principal accounting officer on an interim basis, effective February 25. 5) Big customers get bigger. PLTR's average TTM revenue for its top 20 customers in CY24 was $64.6M vs $54.6M in CY23, representing growth of 18% y/y (vs 11% growth in CY23). Its top 3 customers accounted for 17% of revenue in CY24 vs 18% in CY23, a slight downtick and a step in the right direction in terms of reducing customer concentration risk. The company continues to add new logos at an increasing rate, adding 214 net new customers in CY24 (vs. 130 added in CY23) and bringing the total customer count to 711. 6) SPAC exposure continues to decrease. The total value of SPAC contracts (defined as sum of cumulative revenue recognized and remaining deal value) was $341M inclusive of $10M of contractual options as of the end of CY24. This compares with total deal value of $377M inclusive of $40M of contractual options as of the end of CY23, or a 10% y/y decrease. $52M of revenue related to SPACs was recognized in CY24 vs $87M in CY23."

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Shares of Palantir Technologies Inc. closed at $124.62 yesterday.