Analysts Have Never Seen This Before

Hey everyone and welcome back to another video for today. So in today's video, let's talk about Palanteer's incredible earnings report. Now, as you know, before the earnings, I did buy some extra shares of Palanteer. Now, it's a gamble, right? It's a pure gamble. We don't know what the stock's reaction will be after an earnings report. Why did I do it? Quite simple. I wanted to own more shares regardless. So, if the stock went up, which right now it's up 15% or so, then great and my position is going to be worth more. If the stock went down but the results were good, okay, I don't mind adding even more. But it is a gamble. There's nothing scientific behind it. So like I knew the stock was going to go up. No, my position was quite small, right? It's still quite small, but I said here I bought more shares. It's an earnings gamble. That's completely fine with me. I wanted to own more shares. And I said, look, 3 months ago, Palanteer crushed the earnings report. Yet the stock was down 7% or so. the day after. I just want to own a bit more shares in case the market does reward accelerated growth. Luckily for me, it did. Now, of course, year to date, Palanteer stock is still down 12.3%. Of course, at the start of the year, $181, a little bit more as well. It's it's very expensive. Even right now when you look at this trailing P2 125 times forward P 92.5 although the numbers here will change because analysts have to change their own estimates right Palanteer has been crushing analyst estimates time and time again and yet and yet analysts do not update their own estimates right time and time again they come out with numbers that absolutely crush it for example this quarter they beat by 6.9% revenue but even for the full year. For the full year, analysts are also not projecting anything close. They're at $7.7 billion. Palanteer is above $8 billion for this fiscal year. And we're done with Q2, right? This was Q2's earnings report. That means that in Q3 and Q4, their own fiscal year guidance can still increase more and more. If we go and look at free cash flow, right? remember during that Alex Karp interview on maybe CNBC maybe another I can't remember but he said in 2028 or by 2028 we could be at between 15 to$18 billion in free cash flow of course it's quite a big number to throw around they didn't reiterate that number during the earnings call but they did say it live on TV right now the end estimate sits at around $9 billion which if he reaches the top end of his own estimates that's half half of it. Now, of course, right now for this year, it's expected to reach $4.3 billion. So, that's quite a huge increase to go from $4.3 billion to between 15 to $18 billion. But when you look at the trajectory of the company right now, well, it it's not impossible. And that's the thing when looking at a Palanteer, it's the same thing that happened with an Nvidia. The numbers don't make any sense. The growth rates don't make any sense. Which is why people freak out when they see this. They're like, "Oh, how can you pay such a premium?" Well, I I pay such a premium because of the growth rates, because of the profitability, because of the momentum of this business, right? And Nvidia, although an Nvidia you would say, was never this expensive. I agree. And it's even crazier there because they're still growing 60 70 80% or so on a much larger revenue base. Incredible stuff. But for Palanteer, you're not paying a huge premium for a business that is growing 20%. 30%. No, you're paying a premium for a business that is growing triple digits. And according to Alex Karp, he said, "I'm driving the business to grow at a rate equal or above to what we have in US commercial for the next 18 months, which is a very high goal." Now, US commercial revenue increased by 149% year-over-year. Total US revenue increased by 115. Total revenue 93%, US government 90%. So, if for the next 18 months, this is what they're expecting. Yeah. I mean, how how can you say that this is now going to be an expensive super expensive name to own? Now, I'm not saying that they'll achieve it, but based on their track record, I guess it is possible. Now, before diving a little bit deeper, as of right now, as you can see, we're at $145, $146 per share. This is on the weekly, which means ideally we would like it to go above the 50, which is at $153 cuz previously, as you can see, it tried, got rejected, went back down. So, it's quite crucial for the momentum for the stock to go and crush that 50 on the weekly. As for the daily, right now we can see we're trying to go at that 200 day moving average. I know Voyager also reported their quarterly figures. I didn't have time to dive uh deeper into that just yet, but Voyager is up around 15 16% as well pre-market. Now, before continuing diving a little bit deeper, we'll also look at the DCF which is available to all of you for free. There's a link down in the description and in the pin comment again for free Google Drive. There are lots of other companies out there. Just copy and you can use it and do whatever you want with it. If you enjoy this type of videos, you know what to do. Hit all the buttons. Would really appreciate that. If you want to support me even further, do check out the link down in the description and in the pin comment with the top 10 best stocks to buy now or go to fool.com/couchinvestor. Thank you very much. Now if we look at Palanteer's quarter and you can see what has happened over the past couple of quarters, we see that this is not a company like we've seen before. But if you look at the growth rates, total revenue 92.8%. And it has been accelerating for many many quarters. 3 years ago they were growing 16.8%. Couple of quarters ago 62 then 70 then 84. We're now at 93%. Free cash flow increased by 126% year-over-year. Government revenue increased by 79% year-over-year. US government revenue increased by 90% year-over-year. And here as well, you can see a acceleration in growth. That's the thing. This business is not only growing, but it is accelerating. Even when the dollar amount becomes bigger and bigger, which I admit is not the biggest number out there, but the number does get bigger and bigger. And yet the growth continues to accelerate from here. That's true momentum. Commercial revenue up 109% year-over-year. US commercial revenue up 149% year-over-year. Total customer count is the only thing here where I'd say I would love if this was increasing much faster, but I'll touch on that in a bit. Net dollar retention rate 157% that keeps on improving and then total remaining performance obligation was up 102% year-over-year. Now purely looking here at the customer count we're now at 149 that's up from 1 up from 954 two quarters ago. Now, this is the one where I'd say, you know what, I would love if this would increase much, much faster because at the end of the day, in a SAS business, SAS industry, a thousand customers is not a lot. And that's the thing, it's not a lot, which means there still is a lot of growth ahead. But on the other hand, you would like them to address this. You would like them to address the fact that they're not able to grow customer account much much faster because maybe they don't have the amount of people that could help them to grow this or maybe they're just prioritizing bigger customers, bigger contracts right now, which again would leave us of course a lot of growth for the future. But if it's possible to capture that growth already right now, why not do it, right? because yeah, okay, I am nitpicking here at this specific so-called issue, but it's not really an issue when you look at all the other numbers that we're dealing with here for this quarter. But if growth was decelerating, etc., etc., I would say, yeah, okay, fine, then this is a problem. But it isn't a problem right now also the way Palanteer does business, right? They go to companies, company works with them, they have the result, they get paid, everybody is happy. When you have here a thousand over a,000 customers that are getting a lot of value from Palanteer services, of course, other companies are also going to see this and say, "Oh, I'm actually paying another company an insane amount of money and I'm not seeing the amount of progress that this company, maybe my competitor, right, might be seeing. I'm not seeing hundreds of millions of dollars in savings. So, why shouldn't I go to Palunteer and try it out?" This is a nice base to start with. You get here over a thousand customers. They see the value. They are saving hundreds of millions, maybe billions of dollars thanks to Palunteer. They're growing. They're becoming more and more competitive. But it also mean that all the other thousands of potential customers out there are going to look at this and say, hm, maybe it is time to try out this solution. And of course, when the customers come to you, that's that's a even better scenario. Moving on here, let's look at cash from operations and adjusted free cash flow, 63% margin here across the board. And they now have $9.2 billion in cash cash equivalents and US treasury securities and no debt. And by the way, this increased by 1.2 billion quarter over quarter. The question is going to be when this continues to increase by a billion or so every single quarter, what are they going to do with all that cash? Moving on to guidance for Q3. They're expected to grow revenue to around $2.16 billion. That represents around 83% yearover-year uh growth. So yes, a small deceleration from the 90 plus% we got this quarter. But then again, maybe they'll beat that number. They'll definitely beat analyst expectations because analyst expectations are lower. Same thing here with fiscal 2026 revenue $8.15 billion. We just saw analyst expectations still sits at around $7.7 billion. So again, when you look at the forward multiples, you're looking at analyst expectations that are much lower than what Palanteer themselves project. And again, if you look at this number, $8.15 billion for this fiscal year. If they're expected to double the business again in fiscal 27 or close to it, you're getting to $16 billion or so. And then let's say in fiscal 28 they're growing another maybe 50%, maybe a bit more. Yeah, could be. Then looking at that 15 to 16 or 15 to 18 billion in free cash flow for 2028. Yeah, it it does become a bit more realistic. Of course, again, when we're talking about these growth rates, what they can double their business again? Yes, they can. And so when I look at my DCF here based on my own assumptions, of course, I'm still seeing 13.6% 6% upside to reach fair value again based on my own assumptions based on what I know right now. And what I know right now is of course that I'm still expecting them to grow significantly. So I'm putting here 80 for the base case which is 50% probability. Bull and bear I'm putting at 25%. Might be a bit too aggressive. Maybe the bear should be more, maybe the bear should be less. It is what it is. This is for me the right way right now. revenue growth 85% this fiscal year 85% next fiscal year and then it goes down to 70 50 35 27 23 2018 18 15% of course by 2035 nobody can predict what will happen until then but you have to create here a story that for you makes sense and by then I'm expecting here 50% a bit margin could of course be achieved much sooner as well but these are my assumptions right Now for the base case which again is 50%. For the bull case it's just them growing more aggressively faster achieving a bit margin of 50% already by fiscal 32. With the bare case it's of course growing slower. So they're still expected to grow quite fast but not fast enough of course to justify the price that you're paying today. As for EIT margin here as well, it does go a little bit higher, but not high enough to justify the price that you're paying for the company today. Does it seem realistic to me? Yes. Based on what I know today, I believe this can be achieved. Of course, if by fiscal 29 we can see that the growth rates are much lower, etc., etc., then okay, you you will have to adjust along the way. But right now, yes, I do think I do think this is definitely uh possible. And so, yeah, $165 per share, which is 13.6% higher from where we're at right now. Of course, when this was at $110 a couple of weeks ago, well, you had 50% upside, but you know what they say, if if if my uh what was it? Aunt had balls, she would be my uncle or something like that. So, yeah. to this was a very good one. I think Max Vustapen said it. Anyways, if we're looking at Palanteer today, if you listen to what management is telling us, if you look at the partners that they're working with, because they did mention partners in the earnings call, I assume they were talking about Nvidia, maybe they're talking about Zeta Global as well. By the way, with regards to Nvidia, I'll show you a quick clip in a bit because in this world of model companies LLMs tokens etc. Of course, Palanteer is positioning itself where openweight models, open source models is well is what they want. And the rest the frontier models which are closed, which are here to monetize the hell out of your tokens and your credits, well, they're not really the biggest fan of that, which makes sense when you lose clot, when you use OpenAI chat GPT, right? the amount of credits and tokens that you burn because the model makes mistakes because the models doesn't give you what you want and you're still paying for it. To me, it doesn't make any sense. And look, when you think about this in any other industry, right, when when you have a problem, you call someone, comes, fixes the problem, you pay. You won't pay if the problem isn't fixed or if it's half fixed. But here with the models, you'll pay regardless. You say hello, you pay. You say, "Oh, deliver me this, this numbers, that number." And then the model does whatever it wants. Doesn't deliver what you want. Then you're like, "No, this was a mistake. You didn't do what I asked. Oh, I apologize." Okay, thank you. You apologize, but you just burn through my credits for the day. Doesn't make any sense. And that's, by the way, part of the bare thesis of this whole token economy, etc., is the fact that people are spending way too much money yet the outcome is not what they needed. you need to reach a price to outcome which Palanteer's model is is a bit like that. Now, they did talk a little bit about Nvidia Neotron. >> I literally almost felt gas lit when within 24 hours of getting Neotron up with no post training. This is vanilla Neotron Ultra, it did better than Frontier. You know, if you just looked at the numbers, you would say, "Well, it's nowhere near the Frontier. That shouldn't even be possible." But, of course, the benchmarks are wrong. I mean, the benchmarks are right for what the benchmark's measuring, but that's not my business. Those are not the tasks my customers had that they were trying to solve. >> And it's true, the benchmarks are, of course, the best metrics for the models, not for the specific company that needs to use an AI model for their specific needs, right? Those are completely different benchmarks. And so, we are entering, in my opinion, a new reality here. how companies use AI, how companies use LLMs, they will still be using claw, they will still be using open AI, etc., etc. But I do think that the door has opened here for more companies to start using AI through Palanteer, through some other companies in a more efficient way, in a way where okay, I control the rails, I control everything. I use this model because I want my business to become better and my IP to stay with me, not to go to an entropic, not to go to an open AI so that they in the future can destroy my business because essentially, yeah, essentially you are subsidizing unprofitable businesses which are entropic and open AI, giving them money and they might and probably will compete with your business in the future. Doesn't make much sense. Anyways, that's all I've got for you in today's video. Happy Palanteer shareholder absolutely crushed this quarter and guidance as well. It's been a pretty good earning season. All in all, businesses are doing exactly what you want them to do. Stocks reaction of course can be mixed. Later today, we do have AMD will go live, so stick around for that. See you all in the next one. Bye-bye. [music] >> [music] [music]