onlycfo.io · 2024-08-05 · 668d

Palantir Valuation Analysis: From Cult Stock to Justified Premium Multiple

The article analyzes Palantir's 19.4x EV/Revenue multiple—the highest in cloud software—challenging bear arguments about consulting-driven business models, lack of scalability, and stock-based compensation impact. The authors argue that Palantir's Forward Deployment Engineers function as R&D rather than consultants, revenue-per-employee metrics demonstrate SaaS scalability, and improving SBC dynamics paired with 20% revenue growth and 35% FCF margins justify premium valuation relative to peers.

14 metrics· Cited 0× in the knowledge base ·Open source ↗

Metrics in this report

Cloud Software Sector Median EV/Revenue

5.1xmultiple

median

Overall software market median (not tech premium peers)

EPS Growth Forecast

25%percent

analyst consensus

Palantir forward estimates

EV/FCF Multiple

56xmultiple

NTM

Palantir; valuation metric used for assessment

EV/FCF Multiple

60xmultiple

Palantir; analyst consensus estimate (alternative figure cited)

EV/Revenue Multiple

19.4xmultiple

Palantir (NTM); highest in cloud software sector as of Aug 2024

EV/Revenue Multiple

15.3xmultiple

Samsara (2nd highest); NTM basis

Free Cash Flow Margin

27%percent

Palantir; implied from table and ~35% analyst estimates

Gross Margin

81%percent

Palantir

IPO Return (Palantir)

180%percent

Stock return from IPO in 2020 to Aug 2024; from $9.50 day-1 close to $26.89

Operating Margin

8%percent

NTM

Palantir (only profitable on GAAP basis among top peers)

Revenue CAGR Forecast

23-26%percent

analyst consensus

Palantir forward period

Revenue Growth Rate

20%percent

NTM

Palantir next-12-months growth

Stock-Based Compensation

20%percent of revenue

Palantir; comparable to ServiceNow despite 4x size difference

Top 10 Cloud Software Median EV/Revenue

12.7xmultiple

median

Top 10 richly-valued cloud companies including Palantir, Samsara, ServiceNow, Cloudflare, Datadog, CrowdStrike