A month has gone by since the last earnings report for Palantir Technologies Inc. (PLTR Quick QuotePLTR - Free Report) . Shares have lost about 10.5% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Palantir Technologies due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.

PLTR Beats Q3 Earnings Estimates

Palantir Technologies reported third-quarter revenues of $1.18 billion, marking a 63% year-over-year and 18% sequential increase, beating the Zacks Consensus Estimate by 8%. It registered an earnings per share of 21 cents, surpassing the consensus mark by 23.5%. The figure increased by 110% year over year.

This performance reflects surging demand for the company’s Artificial Intelligence Platform (AIP) and analytics solutions across both commercial and government markets.

PLTR's Profitability and Cash Generation

Beyond revenue growth, Palantir’s profitability metrics improved significantly. The company achieved its highest-ever adjusted operating margin of 51%, reflecting the scalability of its software business model and disciplined cost control. GAAP operating income reached $393 million, while GAAP net income came in at $476 million, translating to GAAP earnings per share (EPS) of 18 cents and adjusted EPS of 21 cents that beat the Zacks Consensus Estimate of 17 cents.

Gross margins remained robust at 82%, underscoring the company’s high-value, software-as-a-service (SaaS)-based operations. The strong profitability is complemented by healthy cash flows. Palantir generated $508 million in cash from operations and $540 million in adjusted free cash flow during the quarter. The company ended the quarter with a solid $6.4 billion in cash, cash equivalents and U.S. Treasury securities, providing ample liquidity for future investments, research, and acquisitions.

The company’s Rule of 40 score reached a record 114%, one of the highest ever achieved in the software industry, underscoring the rare combination of growth and profitability that Palantir has managed to sustain.

PLTR's Q4 & FY25 Guidance

Looking ahead, Palantir provided upbeat guidance for both the fourth quarter and full-year 2025. The company expects fourth quarter revenue of $1.329 billion, indicating 13% sequential and 61% year-over-year growth.

For the full year, revenue guidance was raised to a midpoint of $4.398 billion, representing a 53% increase from 2024 and exceeding the previous guidance by $252 million. Palantir also raised expectations for adjusted income from operations to a range of $2.151-$2.155 billion and projected adjusted free cash flow between $1.9 billion and $2.1 billion. The company continues to anticipate GAAP operating income and net income in every quarter of 2025, reflecting consistent profitability and strong financial health.

Importantly, U.S. commercial revenue guidance was revised upward to exceed $1.433 billion, implying at least 104% year-over-year growth. This projection reflects Palantir’s success in converting pilot projects into large-scale contracts as enterprises increasingly rely on AI-driven decision intelligence systems.

The expanding mix of commercial revenue, coupled with long-term government partnerships, positions Palantir to maintain steady growth while diversifying its revenue base. Its ability to balance innovation and financial discipline gives the company a unique competitive advantage in the enterprise AI landscape.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

The consensus estimate has shifted 27.53% due to these changes.

VGM Scores

At this time, Palantir Technologies has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Palantir Technologies has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Palantir Technologies belongs to the Zacks Internet - Software industry. Another stock from the same industry, Reddit Inc. (RDDT Quick QuoteRDDT - Free Report) , has gained 18.6% over the past month. More than a month has passed since the company reported results for the quarter ended September 2025.

Reddit Inc. reported revenues of $584.91 million in the last reported quarter, representing a year-over-year change of +67.9%. EPS of $0.80 for the same period compares with $0.16 a year ago.

Reddit Inc. is expected to post earnings of $0.97 per share for the current quarter, representing a year-over-year change of +169.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.4%.

Reddit Inc. has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.