PALANTIR Q3 2026 EARNINGS | MARKET CLOSE

0:01 All right. Hello everybody. Welcome to the official Palunteer Q3 2026 earning stream. Every 90 days, these two guys bless us with their presence. Once again, we've got Air and we've got Aronaldo, the brothers and OGs that have been covering this company since it was $6 back in 2022. Guys, how you doing? Oh, great to see you again for this episode. It was a bit >> Yeah, doing good. Doing good. You know, I I went to bed. My portfolio was up a lot and I wake up and check now like where where are my gains?

0:41 What happened? >> Yeah, we did good. We're doing good. >> I I think we start there. Palunteer is at the lowest level it's been at in a month, losing 180 right here. it is it's not just pounder. I mean, pretty much every single stock today. SMH was up 2% at one point. Now it's down 3%. SPY was up 1% at one point. Now it's down half a percent. It's been a continuation of a lot of the pain that we saw in October. So I mean Arie, we'll start with you in general. Your thoughts about the market selloff and then if you think that affects pounder even if they put up some really good numbers today.

1:12 >> Well you're following the market very closely. So I'll ask you yourself is there a specific narrative that brings nar palanteer down? To my knowledge, no. There is a bit of fear here and there. There is a bit of skepticism now arising on the capex word. All the money that these AI companies are throwing to to develop the models. Therefore, also all the data mo data centers that are required to train them, they just require an infinite amount of money. And once you you spend trillions of dollars into capex for something that should theoretically work at the first signal something is not really working or just skepticism arises that is quite bad. Now is Palanteer affected really by that or maybe is on the opposite that Palanteer is a force that pushes these commodization of VA models and maybe all these topics are not really damaging Palanteer and actually they are benefiting it.

2:27 >> >> Yeah, I mean it it's kind of strange, right? Because first we had, you know, the the narrative of, you know, software as a whole is dead, you know, due to AI disruption. Then capex was too much like unsustainable. Now like capex is too little on some ends and like we're like oh my god, where's the funding going to come from? So the market can't seem to, you know, decide what it wants to think. And also I think Palunteer themselves are kind of killing the AI labs like it's like in reverse now because Palanteer you know is doing the fine tuning of open weight models that are now outperforming like frontier labs in an enterprise context. So now it's like we we've gone full circle like I don't even know what what to think anymore. in terms of Palunteer themselves, I'm kind of surprised that it's, you know, of course, it traded up from like 105 to like close to 200. I don't know if we hit 200s, like all the way back, like doubling.

3:26 Now it's traded down to 180. I still think that it should be at least 200 plus. Like I think it's so undervalued and I think we're going to have another record record earnings on our hands here. So will the narrative impact Palanteer earnings? I think Palanteer might be one of the trends setters here. Be like, "No, no, we are actually on pace here." We'll see. Arie, the streets expecting about 2.18 billion of revenue. about 40 cents of EPS. I mean, Palenter has beat pretty much every quarter. last quarter was 94% growth. I think a lot of people are expecting them to get triple digit growth. How do you think the earnings will end up today? Just before the call, I was checking a little bit the numbers and I noticed that the analyst more or less are aligned with the guidance but in reality the company keeps exceeding the guidance. I was looking literally every quarter in the last two years or so they smashed the guidance on the revenue side but also on the margin side. So if we need to if we try to apply the same premium theim exceed that the company was able to generate in the past quarters we actually get something closer to 225 billion. So essentially the street is expecting a growth of 83% but I think we will get closer to 90% or actually higher. Remember what Karp said. I don't see reasons why we can't grow this business like two 2x. Now it takes time. It's not like Nvidia where as soon as you have a spike in demand boom you have a spike in revenue. It takes time. It builds momentum. But once that momentum is there, it's very hard to smash it away and at the same time you keep unlocking a lot of network effects. So I think the life of Palanteer as of today is actually easier now that is at around two billion run rate per quarter compared with what we saw when it was smaller. In theory, they say, "Oh, a company that becomes bigger becomes harder to grow." But when it comes to tech businesses, actually, it is the other way around. And Palanteer is actually built on the premise of unlocking network effects. And we are just seeing that right now. Palunteer is not a creepy Palanteer that nobody knows what they do. I think at this point only people that are not smart enough to understand it don't know what it does but the reputation that it has except the protesters is actually so high that we are seeing massive new customers keep throwing in. I'm amazed. I was looking at the deals that were recorded in these last quarters and it's insane how many big names there are there and how many times companies like Nvidia pop up.

6:42 >> I would agree. Amir, do you also think that they decisively kind of beat these expectations even though the analysts have already raised them to some extent? >> Yeah, of course. And I'm also curious why that is like why won't Wall Street be a bit bolder on Palunteer. I mean I could kind of understand it like when every sellside was bearish on Palunteer like you know this company is so overvalued. There's no way like price targets in the like 2030s when Palanteer was trading at 150 like I can kind of get them like being skeptical then and being like on the safe side like yeah we're going to go with like guidance more or less. But now like most sellside analysts have like price targets in the like 250 range it feels like. So you would expect them to actually start to be a bit more bold and bullish like on the numbers and expect more from Palanteer to support those price targets, but we're we're not really really seeing that. So I don't I don't really get it. I don't know why because well I kind of get it because when I'm trying to plug my own expectations on Palunteer's numbers like when you start to see the growth rates you're kind of am I being too bullish here and then like where wherever I set it at earnings come out and like not not only Wall Street expectations are smashed my expectations get smashed as well. So, you know, it's just that that kind of company where you have to like be very optimistic when when you're doing these kind of forecasts. So, yeah. I also I I don't know if we're going to do triple digits. I would be like really really impressed. I have them doing 95%.

8:21 so that's 2.3 billion. against the streets 2.18. So, we'll see. I I I feel like I might also be too bearish. We'll see. At least I'm a bit more bolder than Wall Street is. >> Obviously, it's very ugly across the board. For those that are just joining, we will have Apple at 4:30. We should get Palanteer right after the bell. today is one of the uglier days in 2026, but Friday, last week, was also a pretty ugly day, and it looks like the continuation of that is happening. Now, the the the main reason today is really ugly is oil is down 8%. We're at 96 on crude, 104 on Brent and we are still falling as aggressively as we are on the indices. The Q's right here down 1% well below 700. So even the oil selloff which usually is inverse correlated with stocks going up because oil prices down are good is not helping which I think goes to show how bad sentiment is right now across the our ecosystem.

9:18 Arie, go ahead. I found a new tool that I really like that helps me just smash tweets here and there. And what I noticed, there were a lot of revisions from analyst in the past days. You could see it here how many changes in target prices there were quite recently in October. But what also surprised me was that finally we also got JP Morgan initiating the coverage on on Palunteer. And we also have a Barclays which they were quite late and that was so surprising to me. I mean we're talking about a company that right now is in the $400 billion market cap.

10:02 It touched even 500. It completely dominates the story in the sector it is and they were ignoring it. And I have to tell you this when you are in a bank and you initiate a coverage on a company is because you see an increasing interest from your clients. Maybe the funds are asking hey I want to know more about palentry. What do you think about palenteer and oh we don't have a coverage. So you start thinking of starting a coverage when you see there is actual demand from from customers.

10:42 And the way you approach that is you don't want to start an initial coverage saying oh ignore that. I mean at the end of the day the bank makes a lot of money from being the expert on on something that facilitates the trading on the stocks. So when fund managers want to execute some trades to buy palenteer they want to talk with the experts on on the stock. So when you start an initial coverage you want to be positive also because writing an initiation of coverage means writing some 40 60 pages it's a lot of work even with AI now. So you would typically want to be bullish but still not exploit all the bullishness that you can right because ideally you want to save the clients a story like we start the coverage on this company it's a good deal you can have some 30% upside that is typically reasonable and once the story evolves give it some quarters Then you have a good reason to say the client, oh you saw the company that I was telling you to start looking at that. Okay, the story is evolving and now the upside is even bigger.

12:11 Now initiating with 260 is more or less in line with also what Barlay initiated the coverage with. But Barclay actually went to the sovereign boot camp and they disclosed that we're very very happy of that. Also, Mizuko wrote a report essentially also their 250 zone. So I wondered JP Mar sorry Goldman Sachs as well 230. So I wondered, okay, but what are the estimates that these guys are actually implying for for these numbers? And if you open the the estimates, we see that Goldman Sachs expects Palunteer to reach 8 billion in 2026. That's almost done. So fine. But 2027, 13 billion. 2028 19 billion. And what I found quite surprising is that the delta between the years tends to be quite low. So from 2025 2026, okay, we have some almost 4 billion. But then from 2026 to 2027, so next year 6 billion. That's not a massive increase in revenue. And then again from 2027 to 2028 is still again 6 billion.

13:39 Essentially, Goldman Sachs with these numbers imply that while the growth rate is still there, the growth rate decelerates if Palanteer is able to generate the same amount of more revenue per per year. And I don't really buy that vision because this vision essentially implies that also the EPS, you could see from the numbers below, grows but doesn't grow that much. Yeah, I think that's fair. Obviously, a lot of the banks have started to give more coverage to pounder particularly because of the fact that when it comes to sovereign AI, you're seeing customers that have real use cases and you're seeing that reflected in the growth numbers. today's just going to be another one another one of those earnings where if they can put up the right numbers, the question is will the street respect it? First two quarters this year, they did not respect it. Last quarter, the day after was the highest single day gain on pounder in history after an earnings. And so really the question is just going to be how much the street's willing to price that in based on the numbers. Vance just now about 20 minutes ago said this about Iranations with Iranians. I actually just spoke with the president of the United States about about an hour ago about this. Look, the president and I both feel pretty good about the prospects for potentially coming to a negotiated settlement. We're going to keep on working at it. You never know.

14:54 Of course, the Iranians are always a little unpredictable and as the president always says, he retains kinetic options. He retains non-kinetic options. But we've certainly made some progress. We'll see if we can make some more. >> Have you offered them any sort of a a deadline to make a deal before the president resumes strikes? No, we haven't set deadlines. I mean, look, we've said here's what we want and what we want is having destroyed their nuclear program. We want to make sure they don't rebuild it or try to rebuild it. That's what matters most to the United States. I think, you know, the thing I picked up is they care a lot obviously about their sovereignty. They care a lot about economically rebuilding. We do think that there is a pathway there, but it really does require a firm commitment and a verifiable commitment that they don't rebuild that nuclear program with Iranians.

15:27 >> So, I think part of the reason a lot of stocks today have been taking a hit even after putting up incredible numbers. obviously Marllum that has created weird sentiment when it comes to the semis pounder losing 180 for the first time in basically a month. This idea of what's going to happen with the Iran war post midterms and what's going to happen tomorrow with the midterms. I mean those are two massive market catalysts. I don't think anyone expected the selloff to be this aggressive compared to the aggressive selloff we had on Friday. But you've got the administration at least the last day before the midterm trying to say this deal is going to come to fruition. And the question is how much the market believes in that. Obviously, right now with price action, it's looking like the market doesn't believe in it in it as much. Trump just tweeted as well, quote, "Oil prices are dropping like a rock, down almost $10 a barrel, a record, because people feel that there will not be a war with Iran. Iran wants a settlement as soon as possible. It could happen."

16:16 I think Trump took a look at the stock market and realized we might need to get a deal. Amir, your thoughts on all this as well. you're muted. There you go. You're good. Trump finally providing some value to all of those that bought his API. Like I think that he's he's been left them in the cold for quite a while now. I hear no but yeah like I don't have any macro thoughts. Sorry. Maybe Ernie has some.

16:48 >> I can't comment much on the specifics, but we need to be aware that potentially Trump not doing well at the midterms could affect the the narrative on Palunteer. I think right now there are two main narratives that could affect Palanteer. is right now it got quite closer to the Trump administration. So any sign of weakness on that side could potentially create some fear on the government side. I would say not much on the commercial side which is the real horse but you know narrative is narrative but to be to be honest I think that is the secondary narrative. The core narrative that I see is more what's happening in the AI world and how Palanteer is positioned to capture. I find quite fascinating that despite the size, Palanteer is not dominating the chit chat, but it is dominating in facts. I think right now real real quick, Arie, my computer is not I need to reset my computer so I can show share my screen. So, you keep talking. I'll be back in like less than two minutes.

18:02 >> Hey, take over. >> We finally to ourselves. Finally. >> Okay, guys. Everyone go to Arie's YouTube. He's been posting a lot lately. Show showing some support. Stream someone wrote stream just got 100 times better. >> I continue on. What were you saying? Yeah. Well, so we have a a potentially negative narrative on the geopolitic side, but I think their core narrative that is emerging is what Palanteer is pushing. I'm noticing more and more. It's not really a surprise that Palanteer tends to be ahead of the curve. So what Palanteer does doesn't go into the mainstream conversation because they are already advanced. they are further than what people really want to accept yet. So while people right now realize oh token maxing is actually stupid they are already solving how to deal with with the issues arising from AI that cost a lot and doesn't bring any value. Now I was waiting for Amit to share the screen because I think there is chart that he was able to capture at the sovereignty event as is essentially the most important picture that that is in the market right now.

19:34 >> What's the most important picture in the market right now? Arie can't wait to see this. Okay, we should be good. >> oh yes, >> this nice picture that our guy was able to shut I think is right now the most important picture in the entire financial market. So while everybody is desperate for building data centers, while everybody focuses on how much revenues and traffic is actually generated, I think this picture potentially destroys all the numbers that we are seeing from the frontiers. I call this picture essentially how Palanteer kills the AI frontier because what we are seeing in this picture is essentially a model that is open source. So is not as costly as Antropic OpenAI. You can download it essentially for free from something like Nvidia.

20:39 An entropic real quick let me just close out this market right here and then we'll get right back into that picture as that's going to lead us into Palunteer earnings. So again, thank you everybody for being here. Got a bunch of things to cover after the bell pounder. We should get the results in a few minutes right after the print. We have Apple later as well. I know it's been an ugly day, but it's time to see if we can get some relatively decent results from all these companies. Again, thank you all for being here. Monday, November 2nd, 4 p.m. The stock market is now closed.

21:20 All right. And now we wait. Arie, go ahead. >> But but did you watch the la the latest AIP con? Like it was essentially every presentation was about how they're using Palunteer's tuning of models to actually achieve exactly this. So this kind of like like already a wave. That's why why I said that like Palunteer is is killing like the frontier labs >> and and this this picture was important% cheaper and 93% more effective than the frontier models from optimum health and I think that's your point right or that more and more companies are recognizing how valuable that is.

22:02 >> Yeah. And so far people are not really paying attention to I mean if you look at the main tech channels they are focusing into how much these models are expanding in terms of revenues how much the token cost is decreasing but this stuff literally potentially kills the model the VA model business if you can do a a relatively the same output here we see even better output in 3 days. Literally 3 days is nothing. Why should you pay something that cost infinitely more?

22:44 >> And we're kind of at like an inflection point now where people don't really care about like synthetic benchmarks where they're like pushing like, "Yeah, look, we can score like one point higher than our rivals on this like synthetic general intelligence benchmark." Like people are at the point where they want to start actually using it across their enterprise and they at that point like having a much much smarter model than what we already have access to doesn't really matter. You just need to train it on your specific use cases within your specific company. And that's why corp has been saying you know all this token maxing stuff for the longest time. But before the latest AIP con we didn't really know like okay but what does that translate to? Like what is Palunteer doing against that? And then with the latest AIP con, they're like, "No, no, we're actually fine-tuning models and we're achieving results equivalent to or in sometimes in some cases better than what the Frontier Labs can do and we're doing it at a fraction of the cost. So that's why I think like OpenAI and Entropic are in like deep water."

23:48 Like if we I just posted a deep dive on Antropic and I I I think like their deceleration is starting now. I think they've already peaked in terms of like their exponential growth. Now it's only like downhill. So that's I think why they chose to actually go public now. >> Mhm. Well, like it or not, >> the business structure of these AI models is quite similar to the semiconductor side. Once there is a product that has high demand and you can increase the price a lot, the revenues skyrocket. And essentially that has been the case up to these these quarters. Now people start realizing okay if I just token max I don't really unlock value. So I need to find a way to connect my AI expenses to actual business value. And that's how Palanteer becomes infinitely valuable. I shared this this provocation.

24:53 Typically people hate me every time I associate Buffett with Palunteer somehow. But I drew I truly believe there is a value into this sentence. I really loved a sentence that Buffett once wrote. The best business is a royalty on the growth of others requiring little capital itself. Meaning that a business that is able to collect a steady flow of income while others spend a lot to grow. And the size of these royalty keeps getting bigger as the others spend is very very valuable.

25:30 And what Palanteer does is essentially that Palanteer takes a royalty on the value it creates for its partners and at the same time while everybody is spending infinite amount of money. Palanteer just collects that money and reinvest into the business. >> Okay, we do not have the Palenter numbers yet. We should get them in a second. Roku, they beat by 122% on EPS, 120 versus 54 cents. Revenue 1.5 versus 1.4. So they beat by 7% on revenue, beat by 122% on EPS. EPS is up 650% year-over-year. Revenue is up 24%. The stock did pump to 159, now back at 157.

26:07 pounder, there it is, up four. Okay, so we should have got numbers just now. Now it's up two. I do not have them yet. EPS looks like 44 cents versus 41. That's a beat on EPS. Stocks trying to go green right here. Up four and a half. Revenue, I don't have that yet. Revenue for the fourth quarter, they're guiding for 2.65. The street thought 2.4. Revenue came in at 2.31 billion versus 2.17.

26:40 That's a beat on revenue. Net income was 1.13 which means their net income margin was 49%. Fiscal year guide was 8.53 billion. Street wanted at 8.2. Revenue is up 96% year-over-year. EPS is up 110% year-over-year. Again, EPS by 7%. 44 cents versus 41 cents expected. Revenue came in at 2.31 billion versus 2.18. stock did have an immediate reaction to the upside and now it is going down.

27:13 once again this has been an earning cycle where no matter how good your numbers are, it is very difficult to please this market. And so if Palenter can even stay flat to relatively slightly down, I think that's a win in this market given some of the reactions we've seen across the board. But these are pretty incredible numbers. Third quarter, US Commercial Revenue Street won in 937 million. They came in at 984 million. That's a 50 million beat.

27:36 fiscal year adjusted operating profit. They raised it to 5.25 billion. Street thought it would be 4.79 billion and that's on adjusted operating profit. you know a few years ago Dr. Karp said he was going to try to get the company to do $4.5 billion of revenue in total by 2025 and now that was the expectation for the operating profit which just got raised to 5.25 billion. So, at its core, these numbers look pretty decent on the headline. Going to try to go deeper into that, but that is what we got. Arie Amir, any quick thoughts on those headline numbers?

28:11 >> No, I need to first visualize them. >> Okay, let me bring in some coverage right here as we go deeper into the numbers. >> Mike was muted. US government revenue with commercial growing 148% year-over-year to $984 million. That is higher than what the street was predicting. CEO Alex Karp telling CNBC, "I don't think anyone has had consistent results like this in the history of software AI ever and that Palunteer is able to deliver this type of growth with a limited sales team." Now, when I asked him about Anthropic's growth, it's decelerating due to the rise of openweight models that Palanteer's technology is working on. Karp said, "I would tell you in a world where we're doing this well, something is not working as well for everyone else.

28:58 Everyone being the Frontier Labs." Also, Karp doubling down on his earlier comments that the large language models should nationalize, saying the only realistic way for the Frontier Labs to deal with liabilities is to nationalize their companies, adding that Dario Amade, the CEO of Anthropic, is one of his favorite and more interesting corporate buddies. Guys, Palanteer's government business, worth noting, did see sales grow by 96% in the quarter. That's higher than the 90% growth rate it saw in the previous quarter. Karpc's business accelerating. Palanteer in fact raising its fullear guide and adjusted free co cash cash flow targets. Mike and Melissa.

29:35 >> okay, real quick before we get into before we go deeper into Palanteer air test systems that's up 8% after hours. Apple's at 430 for those that are asking. So we have 20 minutes until Apple. Air test systems 28 cents versus 13 cents expected on EPS. They beat by 115%. EPS is up 2700% year-over-year. Revenue 33 versus 27 million. They beat by 27%. Revenue is up 200% year-over-year. Another quote from Karp on the press release right here. The sovereign AI movement is imposing the most dramatic dichotomy between halves and have nots that I have witnessed in 30 years of business. Every institution, government, and commercials rapidly being forced voluntarily or not into one of these two categories. Witness our third quarter results. Overall revenue soared 96% year-over-year. US commercial revenue grew 148% year-over-year, 29% sequentially. And aggregate US revenue grew 119% year-over-year. Our US commercial revenue has surpassed our US government revenue for the first time in our company's history. The sovereign AI moment is purpose-built for pounder. Our products from foundry and ontology to AIP within its ontologized fine-tune openweight models ignite a self-improvement loop that joins and aligns the workflow with its optimal model and us with our partners. This dialectic drives transformational value for both poundry and our partners and only works in artistic combination. Each becomes stronger as the sum becomes more powerful. Amir, your initial thoughts to these numbers.

30:49 you are muted. >> There we go. Yeah, amazing numbers. Like my prediction was not far off at all. So that's great. one one thing like initially is that operating margins are slightly down. I mean it's still like a rounding error. 47.1% last quarter. 46.9. So both are essentially 47% which is of course really really strong. I don't know why the stock is not more excited. I mean I think these are fantastic numbers as we get into it and finally as corp mentioned US commercial surpassing US government for the first time. I think still commercial is larger than government but yeah plugging in these numbers and let's see what we dig up.

31:40 Rule of 40 score of 158. >> Wow. Is that a record >> or is that similar to us? >> one second. Rule of 40 record. Yeah, it is the highest on record. It was 154.5 last quarter. So, that's also up. Yeah, amazing. We We'll see. I'm going to plug these numbers. >> I mean, the fact that Pounder is actually up after hours, I think it can't be understated. We have had companies grow and beat expectations by 30 40% for the past three weeks and they've gone down. I mean, Google and Amazon wicked down 10% within seconds, you know. So, the fact that in this macro with everything that's going on, Palenteer is able to report and the street's able to say, "Okay, this is enough to, you know, not completely sell it off," I think just shows how it's a testament to how resilient these numbers were. If there was a different macro, I think the stock would be up a lot more.

32:36 But a rule of 40 hitting a new high, commercial being more than government for the first time in their history. I think that's probably a bit of an inflection point in terms of how much US adoption is happening on the commercial side. And ultimately, this is a company that's growing plus 90% two quarters in a row. Like there's just no other software company that's putting up those types of numbers. 212 deals that were closed worth at least 1 million.

33:00 64 exceeded 10 million. TCV total contract revenue 2.19 billion. Q4 guide again 2.65 billion that's above the 2.46 street expectation and then the fiscal year guide 8.53 versus 8.2 which is implying US commercial growth of 143% year-over-year and 91% annual growth for the business. They have 10.4 billion in cash. last quarter that was about 9.2. So you're seeing the cash pile continue to increase as well. pound right there that's up 1.82%. Roku's flat. Air test systems up 20. This is a very volatile stock. The stock was at 140 a couple months ago, came all the way back down, came all the way back up. Obviously, the numbers here, the street light in the testing equipment space, and that one is green. Lattis semiconductor, I also think had earnings today. that stock is flat, but Apple, we're going to get in about 10 minutes. Lattice. I don't see their numbers here, but they are flat after the bell pounder right there up at up at 2%.

34:10 I think the sharehold letter is out. So we're going to read through the shareholder letter. Arie, do you have anything to say real quick before we get into it? Oh, you're muted. >> Go ahead. Something that made me curious is about the total contract value that is only up 6% year on year. I would be curious to understand it better because it's seems quite detached from all the other numbers. So maybe the stock went down because it focused on that initially. So maybe I will explain it more better.

34:51 Okay, here is the Palunteer shareholder letter for Q3 2026 earnings. November 2nd, 2026. It would be an understatement to say that our results this past quarter were extraordinary. There has seldom been another enterprise in postwar America that has grown at the scale and speed of our own. Our company generated 2.3 billion in revenue in the third quarter of the year, representing an absolutely striking 96% growth rate over the same period the year before. We have been at this for more than two decades now and none of us has ever seen a business at this scale growing at this pace with the level of sustained ferocity. Indeed, our sequential growth in US commercial 29% would be an astonishing annual growth rate of any public software company in America. Dr. Cart basically saying, look, what we did Q over Q is what companies are struggling to do year-over-year. The underlying math of our financial results is simple, even jarring. We have now essentially doubled our entire business since the same quarter last year. We have stated our case consistently quarter after quarter.

35:47 Such results as ours come as little surprise to those sensitive and curious enough to listen. But the most profound shifts in technology cannot be understood without reflection. Whoever has ears ought to hear. Every industry in the world from banks to insurers to hospitals and even one-story law firms will either be remade or set briskly aside. The outcomes will be increasingly binary with winners and losers and nothing in between. The lonely middle will be little more than a barren wasteland filled with those who are once legacy players who fail to heed the word and pay the ultimate price. The crowded bottom will be occupied by those who long lost their chance to build on what might once have been an insight or an edge. Now marching in inexraably towards irrelevance, their fate seal the the envelope unopen. Our business has been fundamentally transformed. For some time, our listeners have heard us point to US commercial as the primary driver of our growth. Now for the first time, revenue from US commercial has surpassed revenue from the US government business.

36:35 We generated 984 million this past quarter in US commercial market, a 148% increase from the same period the year before. This is not mere growth. It is a rate of expansion that represents a degree of intensity and sustained momentum that we believe is unmatched in recent economic history. The demand for our sovereign AI solutions that we began building long before the language models arrived has absolutely been ravenous and remains far from stated in the United States.

36:59 Indeed, its lifespan can only be measured in quarters, not years. Our advantage has only expanded with this demand. A sales cycle that once made had been more akin to a long, unproductive and unsatisfying flirtation has been condensed. What may have taken months and years, a slow koi theatrical dance towards a contract can now take days and weeks. Consummation happens quickly. Some leaders of business and government institutions believe they could delay the future. Many simply gamble that they would be able to that they would not be able to reckon with the consequences of their inaction. The revolution is happening so quickly. These leaders have been stunned to find that they cannot get out of town. And yet, a broad swath of leadership across American industry has awakened to the significance of this moment. The questions surrounding the adoption of large language models force the world and its leaders to confront both a promise and apparel that is totally unlike anything that has come before. In the best case, these models on their own generate limited value in the far more likely outcome. They become agents of chaos, lacking a grounding in the meaning of interfacing with the labyrinth of data sets, people, business units, use cases, and critical safeguards scattered across the modern enterprise. The LLM agent is virtually an unlimited liability, possessing a nearly unbounded destructive potential and a blast radius that tends towards infinity. There is simply no means of effectively and reliably connecting the language models to large enterprises without the operating model and capabilities we have pioneered. There was a time not too long ago when many would ask us with an inquiring and searching tone whether our business as compelling and consequential as it seemed would ever turn a profit. The subtext was that our decision to invest for years in building a foundational architecture while noble perhaps represented an idiosyncratic diversion at best and foolish misadventure at worst. And the verdict has now come in.

38:33 We generated another record quarterly profit of 1.13 billion, an amount that dwarfs what we delivered in revenue not long ago. This moment, remarkable as it is for us, remains the first scene of the first act. It is our firm and unwavering intent to take the entire market, the whole thing. We think it is more likely than not that our raw concentration of creative and technical talent will continue to define the genre and craft the definitive story of software itself over the coming decades.

38:58 And it is not merely because we have hired the best and brightest, although we have. Our art performance is at a more structural level the result of our wild and unruly organizational culture as well as a radical distaste for the conventional means of marshalling and cultivating human talent. We are it seems the number one founder factory in the world ahead of Stanford, MIT, Mckenzie, Google, Harvard, Bane and BCG among many others according to one recent tally making the rounds. There is indeed an alignment problem and a grave one. It is not just the one that society has been sold. The real problem is not the challenge of aligning with the aims and capabilities of our technological creations with our interests. It is rather seeking alignment between the corporations that are constructing those technologies and the interests of the customers who utilize them as well as the greater public interest itself. We have no interest in building software that leeches the value and alpha from our partners migrating what they own and have built and have earned to our systems and our accounts. And yet what once disappointed the bankers now seems to enthral them. Venture learned and now the markets are learning that the only thing that are valuable are the things that they do not understand. Our success comes from aligning with our customers fundamental interest in doing right by them. We were founded more than two decades ago and have served our partners across the US military and its allies with pride through five administrations.

40:06 Our unwavering commitment is to the American public and to the institutions that the elected and the elected leaders that serve it. It is simply our firm belief that if one is inclined to ask someone to risk their life in a defense for our nation, we must always make sure they have what they need to do their jobs and come home alive. In this way, we are see we see ourselves as the pioneers of a genuine and viable anti-war movement. We are all in no uncertain terms living through what John Lewis Gatis the professor of naval and military history at Yale precise presently described decades ago as the long piece and we will no longer and we will join anyone who seeks in earns to advance an even longer one sincerely Alex Karp co-founder and chief executive officer of Palunteer technologies I mean real quick before we get into all the numbers the part that hit me the artist right here is effectively when he was saying that we once again tend to take the whole market. I mean he said this three years ago it is our firm and unwavering intent to take the entire market the whole thing and it looks like they have not given up on that overall belief. Arie, any thoughts on that letter as the stock is up about 2% after hours >> of time since people were making fun of Karp saying we'll take the old market and it is actually happening again maybe not the AI market as everybody thinks of it but if we think of where the value is actually created with AI in a consistent way that fully aligns the interest of palanteer that serves the clients and the clients themselves.

41:58 We really don't see any other solution. I mean the closest thing that we saw is service now that keeps saying we are the AI control tower here and there we grow so much but at the end of the day if they're only grow able to grow 22% it means that their narrative doesn't really resonate with the client they are just selling other software while what we're seeing with Panty right now is clients are really thinking oh this stuff works therefore I need more and the numbers speak for for the self. I also liked that sentence. But to me what was more striking was that sentence. We have no interest in building software that leeches the value and alpha from our partners migrating what they own and have built and have earned to our systems and our accounts.

42:59 And then the the smash in the face. And yet what what once disappointed the bankers now seems etheral them in thrill them. Venture learned and now the markets are learning that the only thing that are valuable are the things they don't understand. P guys sorry we have we have some crazy numbers. First of all net dollar retention 165%. I I I would be happy if they did what they did last quarter of 157. I would be like damn good job. You you managed to keep 157. No, no, they went to 165%.

43:41 And I think we're finding out why the street might not have initially been happy, and that is because US commercial did not grow faster than it did last quarter. it's still 148% year-over-year, but actually US government came in a lot stronger than than expected at 97% year-over-year. So that's like the duality, right? you have some people are super super bullish commercial often disregarding how strong government can be. I mean government still 50% of the business grew almost 100% as well. Like just remove US commercial if they only had the the government business you would still be like oh my god 100% growth.

44:24 but yeah people tend to ignore the government business there. And for why the TCV might be lower they have of course less deals. By the way the presentation is automate. I don't know if you saw that. real quick before you continue, let me just do Fabernet. So, Fabernet revenues up 51% year-over-year. Beat expectations 1.47 versus 1.4. EPS 434 versus 419. The guide was also a nice beat 165 to 1.4. I don't know much about this company, but it is very similar to every semiconductor name that's in the picks and shovels. I mean, Fabernet peaked in June at 720 $745 a share. stock's at 314 right now and it's up 9% after hours. Like it it just reminds me of so many of these names that have put up incredible numbers because objectively these numbers in terms of the beats and raises on revenue and EPS are incredible, but I it's just nowhere near the peak in June and the move after hours is nice if you just bought in. If you've been dcingle all year, you know, it's not really doing enough. So once again, the semis and who knows, you know, if even if this 10% can hold because the day after most of these companies have better earnings, it just ends up fading away. So a lot of the semis really good numbers. Same thing with Air Test Systems. It's just the pump is either not staying or the the stock is just so far away from those all-time highs. And the question is, can they start beginning to make that recovery going into the future?

45:54 >> Amir, go ahead. Let me pull up the presentation as well. >> Yeah. All right. So TCV which is total contract value meaning the size of the contracts they sign a quarter is is a bit lower and so is remaining performance obligations meaning like their future guaranteed revenue from the commercial side also down quarter over quarter even though we got this amazing growth to this quarter meaning that customers are more eager to get that like Palunteer business now. So recognizing a lot of that early and you know deals were also less than last quarter and a lot less big deals of 10 million or more. So they signed a record 72% year-over-year growth on the mid-range size like 5 to 10 million instead. but the fullear expectation this is kind of funny. So, so people are like, "Yeah, you are too bullish, Palanteer, when you say that your price target is like 350, 360 per share."

46:57 Well, their fullear expectations are higher than what I had in my model. Like they have 8.53 billion. My model has 8.34 like going into this quarter. So, you know, when when you start to extrapolate some of the commentary we've gotten from Corp lately, like the valuation does seem very very undervalued here. another thing which might be why some people are a bit bearish is that total customers still didn't reach 1 1K.

47:30 So 1090 which is 20% year-over-year growth. So imagine this, you have 20% year-over-year growth in in customer count yet you're growing like US commercial at what was it? >> 148. You know, honestly, bro, the more the customer count, like the more we have quarters where customer count Q over Q is like four to 5% and 20% year-over-year and the business keeps growing the way it does topline, that gets me more excited for the future because eventually customer count is going to be, you know, 30 40% year-over-year. And when that happens with this level of NDR, I think that's what gives you the sustainability of revenue for a long time being at much elevated levels.

48:09 >> Exactly. like the way they they are scaling the customers they have which is also why net dollar retention is so high because their existing clients like Palunteer gets the foot into those businesses they provide value and people like oh my god we need to deploy Palanteer across our whole enterprise and that's how you get like the current clients scaling so much Q3 is typically the weakest quarter in terms of like acquiring new customers so I wouldn't like dig too much into that but yeah I I think the only thing that the street might have been bearish on initially is US commercial and not accelerating and the total customers like not really growing. Like I I I don't I don't see what else because the rest is amazing.

48:53 Oh yeah, RPO is down and TCV is down. But I mean the the the top line is amazing. Like you can't really I can't really find anything wrong here. Emir, since you're officially an analyst now, you have to write a report on Palanteer tonight or tomorrow. How these numbers actually change your perspective? >> I think one thing that I'm personally like I'm very >> we got we got we got we got two minutes and then we'll get into Apple. So two minutes and then we'll we'll do Apple here.

49:29 >> Yeah. just just quickly the the only thing that I wanted to see more which ma matters more to me is like an increase in operating margins right because that's the whole driver of like future value like how high can palanteer actually get their margins now 47% is definitely very very strong I have them like by 2035 I have them doing like 55% so like they are getting there but like top top line I mean we all kind of expect topline to Amazing. Amazing. But the thing is can margins follow and you know having the same margins as last quarter like I I wouldn't say it's bearish still amazing like margins but if it's one thing that I wanted to see per personally like I would sacrifice some growth for margins personally like if I had to choose I don't know what what you're seeing Arie but I mean overall amazing quarter like I don't like >> the stock is in 200 >> let's do these Apple numbers. We should be getting it in about 20 seconds. We'll see how it reacts and then we'll keep diving into Palter. Pounder's call is at five. So, we'll get through Apple for the next couple minutes and then we'll go back to Palanteer. Air Test System still up after hours. Fabernet up 11% after hours. Paler basically flat again. Massive move from the 120s on the last earnings. but the topline numbers obviously look incredible and it's the strongest numbers the company's put up in their history of being a public company. Apple. It should be out 338. It closed on the day. Stock immediately reacts down 2%. I don't have the print yet. Let's see if that reverses.

51:18 little reversal up a half. Apple net sales 114.4 versus 113.3. That's a beat. EPS 210 versus 199. That's actually a pretty decent beat for Apple. I iPhone net sales 57.5 versus 56.5. That's a beat by a billion. the EPS included a 5cent tariff refund. So if it were not for the tariff refund, it would be two uh05, which would still be a beat.

51:52 I don't know if this is the most impressive. It's definitely not bad. But I'm not sure how much the street is going to love these numbers. Here's what we got on Apple. >> Go straight to Mackenzie Sagalas with the numbers. Matt, >> hey Mel, we're seeing Apple shares about a percent lower. It's a beat on revenue coming in at 114.48 billion versus 113.39 billion expected. That's up 12% year-over-year despite those supply constraints. Now EPS, it's coming in at $210, which is up 14% from a year ago.

52:27 That includes a 5 cent benefit from tariff refunds. At this point, we're not comparing that to estimates. looking at iPhone revenue, of course, this is Apple's biggest business, accounts roughly half of revenue, and that's a beat coming in at 57.58 billion. which is against an estimate of 56.54 billion. That includes only eight days of sales of that iPhone 18 Pro and Pro Max. Now, services, this is of course the high margin growth engine for Apple, coming in just slightly light, 31.57 billion versus the 31.58 billion estimate. It's up though 10% year-over-year. In terms of greater China sales, of course, that's been a bright spot over the last year. It is up 21% to 17.54 billion in the quarter.

53:13 Looking at gross margin, so a sense of profitability here, we're not going to be comparing it. It's at 47.9% but again that includes favorable impact from those tariff refunds. That cash on hand pile 136.94 billion. Capex at 2.24 billion. Historically a light spender there. Now in terms of product categories, Mac again outperforming. We're seeing a beat here of 10.79 billion. That is up 24% year-over-year. Really crediting MacBook Neo and Pro sales. They've never sold more Macs in a fiscal year than they did in 2026.

53:46 That's a big.61 billion estimate. But iPad and then that wearables home and accessories category both coming in light. Of course, they just made that push in the home category with the home view. I was just back there at Apple Park talking to John Turnis, his first quarter as CEO, asking him about Duo demand. Of course, we've seen that that supply is not available until the end of January. He said Duo remains constrained today, but he said that the ramp is going well, that they're working hard to get more of them into customers hands, but at this point not able to predict when supply and demand will be in balance. And then on the Siri AI strategy, we asked whether or not they're looking to diversify their partners beyond Google, especially as Gemini falls behind on some of these leaderboards. Turner said they're not. the teams are working very well together, very proud of the work that they've done building the models that buil that power Siri AI and Apple intelligence that he feels really good about this roadmap ahead. So many of the new products that have come out under him, of course, are powered by Siri AI. And then finally, in terms of how they're thinking through Siri AI and monetizing that, I asked whether or not that was something that they're looking at to do with the services segment. He said, "We're thinking through many different avenues where Siri AI can make us money." And then one example of that is on the hardware side that it offers this compelling reason for upgrading or switching. Now of course the earnings call starts at 5:00. That's when we're going to get the allimportant December guide which is when they come up against very tough iPhone 17 super cycle comps.

55:14 And guys those shares down around 1% now. >> All right. So Apple not with anything too surprising right here. I don't think there's that much to look at. I mean it's down 2%. Granted, it's been the most resilient in the midst of this massive sell-off over the past couple weeks. Q4 comps are going to be definitely harder for them to match. Services was up 10% year-over-year. They generated 28 billion in operating cash flow and they returned 28 billion to shareholders with dividends and buybacks. Fiscal year 26, operating cash flow is now 145 billion. The stock trades at 40 times earnings. I think the, you know, there's a lot of reasons why Apple trades at a high premium, but I think the number one reason this year has been they're not spending on capex and so the street sees it as something safe and durable and sustainable.

56:02 but nonetheless, they have the highest multiple out of the MAX 7 outside of Tesla. And, you know, these are decent numbers. They're not incredible. They're not horrible. They're relatively decent. And you know, stocks basically holding on to this 330 level right here after the print. Amir, Arie, anything else you guys are seeing as you're going through these numbers? >> Yeah, you you know how people are so scared about the delilution for Palanteer? Can you guess the delusion rate year-over-year on the stock?

56:35 >> 0.11% 0.1% delusion year over year. And people are like, "Yeah, oh my god, Palanteer so much is stockbased compensation. They're diluting us to oblivion." Like, yeah, 0.1% year-over-year delilution. Actually, one number that no one really talks about, which is billings. And you know it's a really good indicator for you know future growth for for Palunteer specifically because GAP rules prevent Palanteer from recognizing upfront payments for future services as you know revenue. So when billings are above revenues it indicates that a lot of further revenue acceleration can be expected and billings this quarter were 2.45 four five billion which is up 100% year-over-year and that's of course higher than the revenue that they recorded. So you can actually expect Palanteer to increase their acceleration going forwards. So so that's a number that a lot of people like don't really talk about. so another you know further evidence of like yeah Palunteer is not plateauing here and like it's downhill from here like no no they're actually going to keep accelerating.

57:50 So that's a really really what do you call underrated metric for Palanteer. >> Do you think this is the moment where they will start pushing also outside the US? Because if you look at the numbers the US side is growing so much that is obliterating all the other sides. I don't know. I I I don't know if like the rest of the world is as adventurous as American enterprise is to be ready to embrace. I mean, Noun is definitely doing things internationally, but you know, the question is how aggressive the environment will be for people to want to adopt their software. Like we know they had a couple things recently in Germany. just I don't know if we get this type of growth but if we do I mean obviously Japan South Korea that's going well but if we start to see this level or even a third of this a tenth of this level across the rest of the world I think that's another tailwind that can keep this going for the coming years >> do you think when Karp was talking about we actually prevented a lot of terrorism acts in Germany and and France do you think that term als also included major very violent manifestations like the ones that we are seeing right now in in Europe because at the end of the day like it or not there are some terroristic intrusions into those manifestations. Maybe they started peacefully but in reality they are not.

59:32 And the more I dig into the more we see there is some convergence into very left side supporters that are very connected to the to the Islamic side and we know how this stuff work. So do you think maybe there's this alarm feeling that government in Europe have could trigger some responses into okay it all the solutions that we were trying to build we need something that works or Europe as usual >> I think it's possible but it's Europe right I have no idea you guys know better than me in Europe if your leaders will actually be willing to adopt pounder.

60:24 >> I don't know. >> Actually, technically I'm the only European now here. >> Oh, that's right. Yeah. M years now. >> Tax residency in Japan. No, no, but actually international commercial had its u you know record quarter in terms of overall topline. It grew 23% year-over-year. which is not amazing but it is that tent that Amit was referencing at least a tent. No, but the thing is that international commercial for those that haven't been following Palanteer it's been stuck in a range like it has been flat ever since Palanteer went public.

61:01 It's only actually in the past three quarters that they have actually started to accelerate revenue growth internationally. So in Q1 of 2026 it was 26%, last quarter it was 26%, this quarter it's 23%. And that is after like being down like some quarters then up like 2% some quarters like it's actually starting to happen now. And the thing with Europe is that yeah they might be late to the whole AI buildout, AI revolution. There's too many regulations in place all of that like we we know all of that. they will have to come around sooner or later because like there's an energy crisis in in in Europe. So on the commercial side like they will have to pick up and on the government side I mean they're growing 34%. So like the the government side like hasn't been as big of of an issue as the commercial side and commercial adoption but I mean GDP growth in Europe is like the forecast is not looking good and it hasn't been good these past few years.

62:05 So sooner or later they will they will have to come around and yeah Palanteer will definitely be one of those companies that will start to benefit from that because they have the blueprint in in US right they say okay we have to start adopting AI what actually works where do we get our bang for our buck and then they look towards like the US and they see oh Palunteer is actually delivering value now they look at some of the slides that we shared at the beginning of the show they're like okay like this is the direction we should go. So yeah, I think Palanteer sooner or later will start to expand massively internationally as well and not only like in Asia because we know that they're strong in South Korea and Japan, but like Europe as a whole. I think there would be a big beneficiary there.

62:53 The reason Bloom is up after hours is because it looks like the California Resources Corporation has announced that it's established a strategic partnership with Bloom to promote reduced carbon power generation across California. And that is why you've got Bloom right there up four after hours. It fell three during the day. but yeah, you're getting some love right there. Fabernet's up 12%. Air test systems up 17 and then poundry right there up about 2% after hours. Let's get some of the coverage on Wall Street on this print for counter >> checks all the boxes. These guys are accelerating at incredible scale from 93% to 96% top line. I think it's gerine that you're talking to them about returning cash when most major enterprise technology companies are burning cash as they fund the AI revolution. So you know we saw US commercial accelerate by let's 1100 basis points sequentially to 148 % year-over-year. These are these are just really strong numbers.

64:09 it's pretty much been strong numbers has been the pattern for for most of Palunteer's time le certainly the last couple of years as a public company. yet the stock just kind of swings wildly all over the place and it's always been chocked up to look very expensive. I mean even right now it's like 50 times you know current year sales or something like that. So how do you orient investors toward what a proper way you know to value the business as you see the business growing from here?

64:39 Yeah, it's a great question. I think if you look at the EV to sales number, it is mathematically high, but you have a company returning 50% of every sales dollar in the form of free cash flow. and EPS is around that range as well. EBIT, I should say. So, you know, if you look at the growth rate here, even excluding the leverage they're getting through the operating model, it's trading at well less than one times its growth rate at my target of of $260, which is is 60 times EPS out one year. So, I think, you know, this is an old-fashioned earnings story, not not a sales multiple story. And and they are delivering earnings and free cash flow in spades.

65:25 I haven't seen the the most recent cash on the balance sheet numbers here for for this third quarter. but as I understand it, they had nine billion on their balance sheet in total, John, roughly. And I'm wondering what you think they should if they're not going to return it and they don't really make many acquisitions. What should be what should they be doing with that? >> Well, like any technology company to incent their very talented employee pool, they give them options. I think step one would just be to to to bring the share count to flat possibly with some kind of a buyback. and then from there I think you know relative to managing taxes institutional investors typically prefer a buyback over a dividend. you know relative to their >> So again they can't buy back because the Trump administration basically made it illegal for defense contractors to buy back. Do >> you know that Rishi pushed an article on the Financial Times showing that again the top the most requested question on say technologies from retail investors was one dividend highlighting that essentially retail investors are stupid.

66:41 That was the worst note like being bearish on Palunteer because yeah, investors are asking for stock splits. They're asking for dividends. I'm like, dude, they've been asking that ever since they went public and started using sale. Like that's I don't know why, but that's automatically like the top voted like every single quarter. Like how can you base your like sellside research bearishness on that? Like that's not something new. Like where are you smoking? That was so crazy.

67:11 Dude, retail investors want dividends and stock splits and buybacks. If if a stock was up a gazillion percent, people would still be asking for that. So to frame the like net dollar retention was 165%. To ignore that and to focus on what some retail investors want, which they want out of every company they've I mean retail investors have been asking for dividends since 2021. The founder went public in 2020. Like you know, it's just this weird thing that people care about.

67:37 But that does not that does not deny the results that we're seeing here today. And again, I know the stock's not really reflecting it after hours. Once again, the stock fell 50% this year and came all the way back. So, to me, I'm not going crazy that it's not blasting above 200. I'm perfectly fine with the fact that it's at least getting back to where it was in January. But these numbers more than highlight how much momentum is there for pounder. Frankly, I find quite it funny that on something as high ranked as the Financial Times, you could have an article that starts Palanteer among the other thing is a meme stock.

68:16 More than half of the shares are held by retail investors, which goes some towards explaining why a database installation company is on a new paradigm valuation. to keep its retail partners engaged. Palanteer runs a public message board with say technology. Palanteer is obviously the only quil company doing that. But look at what a beautiful chart Rishi did. Tracks my palunteers >> actually like it's not even majority retail investors like institutions have held over 50% since last year. So I don't know.

68:54 >> Yeah. Like what a what what a loweffort article. >> What did mine mean? RBC analyst Rishi feels a sense of growing frustration among faithful. >> You know you know the >> the lore for people that are new to to Palunteer is that you know Karp always says that yeah analysts sitting at Motel 6 you know doing their Palanteer analysis. Rishi is the original guy that like called in from a motel. Like that that's where that comes from. Like the the Motel 6 reference is actually Rishi calling into I I think it was CNBC from what seems to be like a cheap motel. So that's where all of Yeah.

69:40 where this image originated from. Of course like they have changed out the the background, but he called in from like what seemed to be a motel. So it's so funny. Yeah, it's it's it's it's not a meme stock. It's just it's it's it's just not a meme stock. I mean, you don't look at these types of numbers and say, "Oh, it's meish because retail bought it." I mean, retail is up thousands of percent on this company.

70:05 And when JP Morgan and DA Davidson and all these firms, Barkclays initiate coverage, I mean, just look at the numbers. The numbers, I think, kind of tells the story. But if you're someone like Rishi who has felt the valuation has always been too aggressive without factoring in the growth from the valuation also I mean if you know if Dr. Karp is right and they do 15 to 18 billion of free cash flow in two years this really isn't the most expensive company in the world.

70:29 So when you go out a couple years and see that level of growth they would have to sustain to get there know that makes it very exciting and I don't think she is really taking that into account. Amit since you are very following the market every day how much is the narrative toward the cyber security stocks because when I look at the comparison I typically like to see in terms of multiples from comparing Palanteer with service now snowflake crowd strike something that keeps getting my attention is how crowd strike is essentially at twice the multiple in terms of EVA bida compared with with palenteer but in reality crowd strike grows 30% the margin is less than 30% or slightly there and if we compare the numbers we just realized from palenteer we are talking of a revenue that is three times as much margins that is twice as much so yeah it's look ever since ever since Mythos came out, that's where I mean already every single day I look at the valuations of the cyber security names and I don't get it. crowd's not even profitable. You know, it's one of those things where it's very confusing how they get this multiple. But mythos made everyone think cyber security was the one thing in the IT budget that can't be cut, which is probably true. And then you had all the different cyber security names get a bid regardless of their growth, similar to PaloAlto. And they should have got a bid. you should get a premium for that but obviously the premium is a bit aggressive and now the question is how important is cyber security when it comes to what could happen with AI speaking of AI anthropic this headline just came out I mean Karp in the letter was speaking about how some of these technologies will be commoditized and nationalized and you know ultimately they don't actually offer value to their clients. Wall Street Journal says anthropic IPO investors now pushing for a lower valuation 1.5 to 1.6.

72:32 Some investors reportedly favor a lower starting valuation to leave room for a strong first day trading gain with expectations that Enthropic could potentially reach two trillion valuation after its market debut. Obviously, I think the VCs that got into this thing years ago want it to go public in some capacity even if it's not at two trillion so that it's a successful IPO. The question is, you know, poundry went public at 20 billion. Anthropic is going public at two trillion. Which one's going to actually have the gains in alpha and sustainability business models that can scale? And that's what I think this market is trying to figure out.

73:02 >> I think Anthropic's time is running out. They have to do something soon or like because I think now they've posted, you know, operating profitability, you know, operating cash from operations like this is the time to actually go public like when you're at your like growth peak because I think it's just like downhill from now. I like they they should like do it sooner rather than later and just take the hit is my opinion. >> We need to recognize Bankers are doing a very good job with Antropic exposing the numbers exactly now that the numbers are peing and if they are rushing on doing the IPO now it means that they what we're going to deliver in a few quarters from now probably will not be as exciting but it will be already too late for for those who jump in now.

73:58 We have some new carp quotes. Morgan Brennan from CNBC spoke with them. Quote, "Carp, we didn't even have a commercial business when you and I started talking. Now, Department of War is only 30% of our business. Most of our market cap now is covered, if not our whole just by our commercial business. Luckily, we have the Fshares, special founder voting shares, or the private equity people would be trying to fire me and break out the commercial business."

74:19 Karp says, "In the American industry, it's just going to ha it's just going to be a have and have not world, and that's a problem. That's something we should we have to solve because you can't have the halves being four or five companies like us anthropic and open AI or something. You have to figure out how to expand that. And we're really trying to train our partners to be independent of us. Quote, "What's actually happening is that we're taking our product and putting it in the enterprise and teaching them aka our partners how to both use it internally and then strongly suggesting to them and it's beginning to work that they then use it externally." externally meaning they build their products inside our ontology and they distribute them within their people. So basically we're empowering a MIDI palunteer at our partners. We have to scale because it's our kind of obvious goal that we're going to get to 15 billion run rate in US commercial in 2028. And how do you do that with a mly crew of 4,000 people? We have to scale.

75:08 It's a fork in the road and we cannot meet the demand. We need partners. I think this is something that Carp has talked about for a while. this idea of building a network effect inside of Palanteer's customers so that those customers then deploy the software across their sub vendors, distributors, etc. and build even more customers on top of that. And it looks like, you know, the product selling itself through a variety of different customers really is one of the big sales strategies that this company has been able to deploy without needing to worry about hiring thousands of sales people, which obviously keeps those margins incredibly high. He also said, "We're in a shakeout politically. We're in a shakeout culturally. we're in a shakeout intellectually and an economy where it's just like there's like a fork in the road on the midterms. He said, "As I've been trying to get everybody to recognize for the last two years, if you do not address the fact that a small number of people are going to be 10 or 20x richer than they are now, you're going to see things blow up and every political thing is downstream reaction to that in my humble opinion. And again, I'm going to avoid criticizing specific people, but people who did not pay attention to this are going to have a very hard time politically.

76:07 What what number did did he give 15 billion US commercial for what year? >> 2028. >> Yeah, that's where I have the Okay. So, I I did what he said. I deleted the whole government business from my valuation model and I got 220 per share. So, it's pretty accurate what what he said that like their whole business market cap today is essentially just a commercial business like not even counting a government. And yeah, I'm pretty aligned with him on US commercial for 2028. I've been doing 15.4 that year in US commercial. So yeah, some really really strong quotes there. And also some numbers that we didn't cover yet before we go into the call. Just quickly record number in free cash flow margins on trailing 12 months. It reached 57%.

76:57 >> Wow. And also a after reinvestment it's also at a record high at 53%. That's after accounting for the working capital and stuff like that that you need to keep the business going. So 53% free cash flow to the firm margins and 57% adjusted free cash flow margins. which is just before people go crazy like oh I adjust the numbers it's 23 million for employer payroll taxes related to SPC 23 million so before you go crazy like oh adjusted like yeah it's just 23 million like even without that it's still 57%.

77:39 So yeah record margins on free cash flow across the board that's really really impressive as well >> I was number I was I was going to say to Chad's point, these numbers I think definitely make me happy. I mean, these are the fact that the fact that Amir could take out the government part of the business from his model and get 220 a share literally proves what Kark just said, which is the market cap is justified because the growth, the insane growth, the crazy growth in the commercial part of the business, it's 200 a share or 220 a share of that.

78:13 And and just so so people understand how we get to 15 billion in 2028 on US commercial that is at least 126% growth next year and then about another 100% after that. So two years of above 100% year-over-year in US commercial to reach that. And you know Karp is probably going to overshoot that as well. Like he he wouldn't give us a number only to meet it. So, I mean, I don't know what you're doing not getting excited about this company. Like, I don't know why this stock isn't above 200 yet. Like, this is crazy, crazy undervalued.

78:51 I was just observing that the analyst estimates for 2028 are around 17 18 billion and Karp just said okay US commercial alone >> is going to be 15 which means what we were discussing at the beginning of the live stream even if we take the analyst estimates that are already favorable and these analysts that have a 250 target area. These guys are incorporating estimates that are closer to this number of 17 $18 billion. For instance, the Goldman Sachs estimates that we were discussing at the beginning said $19 billion. But that is already no sense because if US commercial alone is 15 then you have a government that right now is around4 billion dollar run rate which means that you could get the government not growing anymore but the government is actually growing more than 90%.

80:01 So this tells me analyst today, tonight, tomorrow will be forced to rise the estimates. And my simple reasoning is if they already come out with a target that is from 240, 260 with these estimates that are good, but we realize that are not that strong. I wouldn't be surprised tomorrow to see some 300 price targets.

80:33 >> I would agree. Call should be starting in about 30 seconds. we'll be back after the call to analyze it. But obviously these are just absolutely incredible numbers and I would imagine Dr. Karp and the team feel pretty proud of the growth that they have been able to put up. stock right now after hours up about 1% 180.38 Apple's flat air test systems up 15 Fabet up 13 pounder right they're up 1.2 two after hours. It's going to be about 20 minutes of financials and numbers and then we will see Karp and the team and that's usually how how these calls go.

81:23 Okay, should be starting in about 30 seconds here. Palanteer 1. >> Good afternoon. I'm Anna Sar from Palanteer's finance team and I'd like to welcome you to our third quarter 2026. We'll be discussing the results announced in our press release issued after the market closed and posted on our investor relations website. During the call, we will make statements regarding our business that may be considered forward-looking within applicable securities laws, including statements regarding our fourth quarter and fiscal 2026 results, management's expectations for our future financial and operational performance, which does not constitute formal guidance unless indicated as such in the accompanying written materials, and other statements regarding our plans, prospects, expectations, goals, and aspirations.

82:04 These statements are not promises or guarantees and are subject to risks and uncertainties which could cause them to differ materially from actual results. Information concerning those risks is available in our earnings press release distributed after the market closed today and in our SEC filings. We undertake no obligation to update forward-looking statements except as required by law. Further, during the course of today's call, we will refer to certain adjusted financial measures. These non-GAAP financial measures should be considered in addition to not as a substitute for or isolation from GAP measures. Additional information about these non-GAAP measures, including reconciliation of non-GAAP to comparable gap measures is included in our press release and investor presentation provided today. Our press release, investor presentation and other earnings materials are available on our investor relations website at investors.palanteer.com.

82:52 Over the course of the call, we will refer to various growth rates when discussing our business. These rates reflect year-over-year comparisons unless otherwise stated. Joining me on today's call are Alex Karp, chief executive officer, Sham Sankar, chief technology officer, Dave Glazer, chief financial officer, and Ryan Taylor, chief revenue officer and chief legal officer. I'll now turn it over to Ryan to start the call. >> Humanity is facing world historic crossroads in how it chooses to deal with AI. And through it all, our genre defining technology has led the way, redefining the industry.

83:27 We've been shaping the AI revolution from its start and despite being only at the very beginning of the sovereign AI revolution, we already see how it is transforming the size of the market. We achieved revenue growth of 96% year-over-year and 20% sequentially, the highest growth rates we've ever delivered as a public company. These results are the continued financial expression of the transformational impact we're delivering for our customers, which is also evident in the depth of our customer relationships.

84:00 The third quarter average trailing 12-month revenue from our top 20 customers increased 76% year-over-year to $146 million per customer. Our US business is in overdrive. We brought in $1.9 billion in US revenue, which grew 119% year-over-year and 23% sequentially, representing 84% of our total revenue. This is led by our US commercial business, which grew 148% year-over-year and 29% sequentially and surpassed our US government business revenue in quarter for the first time. In US commercial, the average trailing 12-month revenue per customer grew 88% year-over-year and 20% sequentially.

84:47 The US continues to be the epicenter of the AI revolution. I won't repeat what I said last quarter because it has become self-evident in our unparalleled results. Two years ago, we led the way with our commoditized cognition thesis. And today, the market is only beginning to recognize the full force of sovereign AI. It's pervasive in the conversations I'm having with customers and undeniable in the results they've shared. The COO of Optim highlighted, quote, sovereignty doesn't mean that we have to build everything ourselves. What it does mean though is protecting what differentiates us while retaining the ability to evolve, to adapt, and to scale our solutions as our customers needs change, and they change often. It means knowing where the right partner can help us move faster.

85:42 L3 Harris noted that by fine-tuning open- source models on its own data, a sovereign model outperformed the Frontier model it had been using in less than 48 hours and cut cost by 95% in preliminary results. Nvidia reported that by evaluating and post-training its open models, it was able to get its smallest, most efficient model to outperform its largest model by a large gap and can now retrain that model on just a single GPU in a couple of hours, enabling them to retrain any time they have data to improve the decision intelligence.

86:19 They stated, quote, "We captured our alpha and we trained it into a model. We couldn't have started this process until we built the workflows in Palunteer. And our customers are choosing Palunteer and our sovereign AI to transform their organizations at a furious pace. An industrial materials company piloted a nearly $3 million engagement in Q2 2026 before converting to a $29 million ACV deal last quarter. A global athletic company converted a 1.6 $6 million pilot that began in Q12026 into an approximately $21 million ACV deal last quarter. A global home appliance company converted a $1 million pilot that began in Q2 2026 into a $3 million ACV deal within the same quarter, then expanded nearly five-fold to a $15 million ACV deal in Q3 across commercial, finance, and supply chain workflows. After an agent camp in Q2 2026, an apparel company signed a $2.5 million pilot.

87:26 Then last quarter, they converted to an 11.5 million ACV deal. These commitments are downstream of the measurable impact we're delivering with our customers. With Palunteer Sovereign AI, McCarthy building companies will save 30,000 hours annually by using post-train Neatron to help turn complex project requirements into contract language that allocates risk and clearly defined subcontractor obligations. Tampa General is deploying sovereign AI to keep sensitive data and model processing local while enforcing its own risk and privacy standards for LLM traffic and supporting the granular controls Tampa General wants to define for itself using fine-tuned and post-trained neatron to achieve this outcome. Together we also improve model performance by 7% and reduce latency by 22x.

88:23 Turning to our US government business, revenue grew 96% year-over-year and 18% sequentially, demonstrating continued extraordinary impact across civil and defense with Maven as our foundational work. In Q3, the Army awarded Palanteer a prime agreement to produce eight Titan systems. And last quarter, FAA highlighted the impact of our work together, stating, quote, "That shift from scattered data to an embedded ontology is what changes the game. This is a modernization in operational form changing how safety work gets done and noted that the work they can do now would require hundreds of analysts without Palunteer."

89:05 As I reflect on our results, I see the furious pace continuing unabated. I'm invigorated unlike ever before by the ambition I'm hearing from our customers and their demand for sovereign AI. A revolution we should remember is barely one quarter old. As extraordinary as these results are, they are only the opening chapter of sovereign AI. I'll now turn it over to Sham. Thanks, Ryan. Palanter is obsessed with turning tokens into economic value. It's clear that the vast majority of economically valuable problems that LLM can solve can be solved with intelligence at or below the frontier.

89:45 So what's preventing this from happening? On one end, you have the model makers who can't conceive of solving any problem except through model improvement. So they aren't even trying. And on the other end, you have the hard work of diffusion, which sounds passive, but is anything but. All the value comes from the elegant integration of AI, software and humans. And this requires not a harness for the model, but something closer to a harness for the enterprise, which is exactly what AIP is. Most profoundly, the conceit that the labs have wrong is the belief that the atomic unit of the enterprise is the individual knowledge worker. It is not.

90:26 The fundamental unit of the enterprise is the workflow. You can make any set of workers more productive and generate no actual ROI. For some things like coding, the knowledge worker is the workflow. So there's perfect product market fit. But for the vast majority of the enterprise, it is not. Given this, it is incredibly valuable that AIP implements enterprise workflows and is able to bring AI to it in a way that generates objective quantifiable value. For example, page 209 of Anthropics S1 talks about AIG's automation of insurance underwriting processes for complex commercial lines of business. That entire workflow and the elegant application of AI software and humans runs in AIP and was implemented by Palunteer and AIG.

91:12 We are the diffusion layer not just of choice but of necessity. There's a clear pattern emerging amongst our customers who are most successful at getting value from AI. They have enormous ambition. Their goal is not something lame like opex reduction. It's market domination. And the opposite is true. Customers that struggle the most are narrowly focused on reducing cost. AI is a new type of intelligence. Simply trying to shoehorn it to replacing the human misses the moment completely. The error of conflating human and machine intelligence locks you into a poorly chosen goal, one that limits your ambition and still remains out of reach.

91:54 Instead, we're attacking all the work the enterprise knows it should be doing, but historically lack the economic resources or capabilities to take on. An agent swarm watching each patient in the ICU ward to help clinicians avoid potential signs of sepsis earlier and improve patient outcomes. an agent swarm per wellhead in the Peran basin to maximize production. An agent swarm for every customer of our customer to drive growth. This is not about doing the same thing cheaper. It's about defining the productive work that goes beyond yesterday's frontier and capturing and compounding the new economic value it creates. And doing so with sovereign AI, the examples are everywhere now. It's clear that post- training on your specific operational data in ontology enables better than frontier performance on weights you control, protecting your alpha. Yes, it's cheaper, but the dominant variable is that more use cases can actually get to the threshold of viability for machine intelligence to generate economic value when elegantly integrated into your enterprise. And our product investments in AIP to create a closed loop model factory are making this easy and fast. The specific post-trained model is a commodity item.

93:07 The compounding value is in the post-training pipeline that is constantly fed from your operational exhaust captured in the ontology that drives automated post- training runs, model checkpoints, evaluations, and deployment across yesterday's, today's, and tomorrow's openweight ecosystem. Our new feature of auto research and continued investment in AIP evolve push us closer and closer to an automated loop to build, deploy, and evaluate intelligence continuously against ROI.

93:37 In AIP and sovereign AI, the paro optimal frontier is no longer an unachievable academic aspiration. It is a simple function call and one we can invoke automatically on your behalf. At a recent PayCom exercise, we deployed a 30 billion parameter post-train model into space weight power cooling constraint compute ready for the disconnected fight with superior task specific performance than GPT56 soul a three trillion parameter model. L3 Harris realized 95% cost reduction with sovereign AI. McCarthy will save 30,000 hours a year on subcontractor drafting achieving better than frontier performance or RFI classification and subcontractor drafting on a post-train Neotron 4 billion parameter model where again the real value is the substantially greater number of demand events they can process now Maven continues to deliver for the joint force exceeding 100,000 users Maven is now available to all the services beyond just the combatant commands and many combat at support agencies. We just concluded a Maven hackathon. 46 teams across the joint force participated.

94:50 Many amazing projects were built by our 25,000 strong builder community. The winning two teams were both Army teams. One building an edge planning and simulation capability for force protection and a second place an incredible platform to analyze drone incursions to drive force protection insights. And we continue to feel demand for Maven down to the tactical edge in disconnected environments ashore and afloat. We have seen incredible success with Dora disconnected ontology resilient architecture including in the army's jailbreak effort. Dora is an embedded compute device that brings Maven's capabilities to disconnected operations. Using AFD service members can build readrite integrations with legacy sensors andectors and bring them online in hours entirely unassisted.

95:37 With that, I'll turn it over to Dave. >> Thanks, Sean. We had an outstanding third quarter. We delivered our highest ever reported year-over-year revenue growth rate of 96% and our highest ever reported sequential revenue growth rate of 20%. Quarterly revenue crossed the $2 billion mark for the first time. And we surpassed additional billion dollar milestones in commercial revenue, government revenue, and gap operating income. Revenue in our US business accelerated yet again, growing 119% year-over-year and 23% sequentially. Our US commercial business grew 148% year-over-year and accelerated to 29% growth sequentially. And our US government business grew 96% year-over-year and 18% sequentially.

96:19 Demand for our sovereign AI offering is accelerating our US commercial momentum, helping to make this our first ever quarter that US commercial revenue eclipse US government revenue, a critical milestone in the history of our company. On top of this, we are raising our fullear US commercial revenue guidance to in excess of 3.559 billion, representing a growth rate of at least 143%. We're also raising our fullear 2026 revenue guidance midpoint to 8.532 billion representing 91% growth year-over-year, a 9point increase over our full year 2026 revenue guidance from last quarter. Turning to our global topline results, third quarter revenue grew 96% year-over-year and 20% sequentially to 2.313 billion. Third quarter US revenue grew 119% year-over-year and 23% sequentially to 1.937 billion. Revenue from our largest customers continues to expand. Third quarter trailing 12-month revenue from our top 20 customers increased 76% year-over-year to 146 million per customer. Now moving to our commercial segment. Third quarter commercial revenue grew 113% year-over-year and 24% sequentially to 1.168 billion, crossing the billion dollar mark for the first time. We closed 1.652 billion in commercial TCV bookings in the third quarter, representing 17% growth year-over-year. Our AI platform continues to dominate the US markets as the only real choice for operationalizing LLMs while still giving customers full control over the data, logic, actions, and security of their enterprise. Third quarter US commercial revenue grew 148% year-over-year and accelerated sequentially to 29% quarter-over-arter, totaling 984 million. US commercial revenue was 397 million in the third quarter of 2025, meaning it increased by 587 million in just one year. We closed 1.463 billion of US commercial TCV bookings, representing growth of 11% year-over-year. Over the past 12 months, we closed 6.114 billion of US commercial TCV bookings, a 62% increase from the prior 12 months, highlighting the accelerating demand for AI that creates real operational value, while also moving power away from the labs and back into your enterprise. Total remaining deal value in our US commercial business grew 79% year-over-year and 4% sequentially.

98:45 We believe sovereign AI is the latest and largest tech revolution of our generation. We signed multiple 8 figureure deals in the quarter that were shorter in duration than usual as customers rapidly adopted initial sovereign AI capabilities in their enterprise. It is important to remember that the sovereign AI revolution is only one quarter old. As we continue to deliver value with sovereign AI over time, we expect both the duration and size of these contracts to increase. Our US commercial customer account grew to 686 customers, reflecting growth of 29% year-over-year and 5% sequentially.

99:19 Third quarter international commercial revenue grew 21% year-over-year and 1% sequentially to 184 million. Revenue from strategic commercial contracts was approximately 400,000 for the quarter, representing less than 0.02% of overall revenue. We continue to expect revenue from these contracts to be less than $500,000 in the fourth quarter and we anticipate no further revenue from these contracts beyond the fourth quarter of this year. Shifting to our government segment, third quarter government revenue grew 81% year-over-year and 16% sequentially to 1.146 billion, crossing the billion dollar mark for the first time. Third quarter US government revenue grew 96% year-over-year and 18% sequentially to 953 million. This growth was driven by continued execution in existing programs and new awards reflecting the growing demand for our AI platform and government.

100:12 Third quarter international government revenue grew 31% year-over-year and 6% sequentially to 192 million. We closed 2.918 billion of TCV bookings up 6% year-over-year. Net dollar retention was 165% an increase of 800 basis points from last quarter. We ended the third quarter with 13.4 4 billion in total remaining deal value, an increase of 55% year-over-year and 2% sequentially, and 4.9 billion in remaining performance obligations, an increase of 88% year-over-year and flat sequentially. As a reminder, RPO is primarily comprised of our commercial business as it does not take into account contracts with an initial term of less than 12 months and contractual obligations that fall beyond termination for convenience clauses, both of which are common in most of our government business.

101:00 Turning to margin and expense, adjusted gross margin, which excludes stockbased compensation expense, was 85% for the quarter. Adjusted income from operations, which excludes stockbased compensation expense and related employer payroll taxes, was 1.427 billion in the third quarter, representing adjusted operating margin of 62%. Q3 adjusted expense was 887 million, up 20% sequentially, and 53% year-over-year, primarily driven by the continued investment in our AI platform and technical hiring. As we welcomed our latest class of new grad hires, we remain committed to investing in the most elite technical talent as well as R&D for our product pipeline and sovereign AI efforts. All while delivering on our goals of sustained gap profitability.

101:42 Third quarter gap operating income was 1.085 billion representing a 47% margin and surpassing the billion dollar mark for the first time. Third quarter gap net income was 1.128 billion representing a 49% margin. Net income has increased nearly eight-fold over the last 24 months from 144 million in the third quarter of 2024. Third quarter stockbased compensation expense was 319 million and equity related employer payroll tax expense was 23 million. Third quarter gap earnings per share was 44. Third quarter adjusted earnings per share was 44.

102:19 Additionally, our combined revenue growth and adjusted operating margin accelerated to 158% in the third quarter, a three-point increase to our rule of 40 score from the prior quarter, and our 13th consecutive quarter of an expanding rule of 40 score. Turning to our cash flow, in the third quarter, we generated 1.205 billion in cash from operations and 1.216 billion in adjusted free cash flow, representing margins of 52 and 53% respectively. We ended the quarter with 10.4 4 billion in cash, cash equivalents, and US Treasury securities.

102:52 Now, turning to our outlook for Q4 2026, we expect revenue of between 2.649 and 2.653 billion and adjusted income from operations of between 1.640 and 1.644 billion. For full year 2026, we are raising our revenue guidance to between 8.530 and 8.534 billion. We're raising our US commercial revenue guidance to in excess of 3.559 billion representing growth rate of at least 143%. We are raising our adjusted income from operations guidance to between 5.245 and 5.249 billion. We are raising our adjusted free cash flow guidance to between 4.8 and 5 billion. And we continue to expect gap property income and income in each quarter of this year.

103:42 With that, I'll turn it over to Alex for a few remarks and then Anna will kick off the Q&A. welcome to our earnings call and you know I think for many many years our earnings calls were really about our earnings. now it is the focal point of tech society and general trends and I think many if not most people who are watching this and it is by far the most watched earnings call in the world. It's the one where people come to figure out what's going on on the ground floor.

104:16 And given that AI and sovereign AI is changing the universe in our case for tremendous good and is showing up in our numbers, people really want to have a sense of well what is actually happening in the world politically, sociologically, anthropologically and of course financially. so you know given that demand in in in in interest in in Palunteer and the reality that this this this moment has become a a real focal point of understanding and quite frankly many investors watching this are are watching it to figure out what's going on with their investments and not even primarily Palanteer and so there's this larger question of what does it mean to have a business that was built around the what we believed and believe now is the most important mission in the world.

105:06 Supporting our war fighters, bringing them home where even as much even a year ago, two years ago that people even involved inside Palenteer viewed the core value of our business economically as Glazer would look at it and quite frankly, you know, in a very helpful way, he's the force of greed. you know, Glazer's view of our business was Could you talk a little more about commercial over the past year, past couple years, and in this quarter, our commercial business eclipsed our government business. And in fact, the market value of that is probably justifies our current value given we're growing at 90 we aggregate business growing at 96%. the the juggernaut of US commercial. I mean, these numbers are so far outside the bounds of what you could I mean, outside the bounds of what even the most optimistic people could think a business like ours could do while maintaining a way of going to market that is completely suenous. We have products that are unique. We have ways of going to the market that are unique.

106:14 We were the leader of a revolution that was in front of us, but none of us really were able to put our name on the sovereign revolution. Meaning people need to understand how AI can create value, how you can create value out of tokens, how you can keep the value of your own alpha, how is it not transferred to anyone else, and how can you expand it? That revolution of course is happening in America. And then these out-of-bounds results of which were a metaphor really show you you the future is becoming the present, the present is now. You see it in Europe, which you know I'm spend half my life and at this point we should kind of avoid talking about it because of of what's going on.

106:50 It doesn't help to just you know stamp on them but but you see it across America. You see it the reaction to AI. You see the polarization politically. It's because all the value in the market is actually moving to the vehicles in this case Palunteer and really very few others anthropic open AAI us others that where you can actually make a claim that there is some value creation again it's so extreme that a business that was viewed as a nice to have part of our business as as ear as as late as three years ago is now the dominant part of our business that business grew 29% quarteron quarter. It's it's it's almost at 150% growth. A and it's dragging our US growth number over 100%. It these are just bomb and we did this while attacking the market the way we attack it. Very few salespeople very in impossible way to understand how we're capturing this juggernaut unless you view it as a completely new and different moment. And so when people are watching this like what what is happening in the market, what is happening in our society, it really is the case that that the playbook, the products, the way of going to market do not work in most cases, but the things that do just spring alive. And you know, our our somewhat crazy aspiration to take the whole market doesn't look that crazy right now. You know, and and you know, we believe at this company and many of the people watching it, we do not only have a financial reason for taking the whole market, which Glazer is salivating at. We on the mission side, we believe we have a mission reason for taking the market. And that mission reason is we support your alpha. We support your sovereignty. We've done this for for over 20 years. We support the war fighter. We are delighted that we can support support the war fighter even more because we're making so much money. But we we believe we have a moral imperative to be the dominant player in our industry broadly defined including all AI imp applications and the use of model open and closed especially training openweight models and that moral imperative drives every part of our business.

109:10 The interesting thing about the internal dynamic of our business, it's not only that the sum of the parts in our business is stronger. That's obvious. 96% growth. Look at our rule of 40. It's 158. It's almost like jaw-dropping. But we the parts of our business, the individual parts, the parts that the people at this company are are running, those parts are stronger than they were before. Every part. And that that's what you're seeing in these numbers. and and and arguably for most people watching that that's what you're seeing in broader society and this move to the from the future to the present is the reason why many of the classical approaches to business there was an idea they were going to fail in five years that doesn't work.

109:54 You have to execute now and in the present and this company Palenteer and everyone involved and all the people watching this who are on our side of which there are many many people are part of that movement and that and that's why we're so really happy and honestly quite optimistic about the the future especially in the US. >> Thanks Alex. Our first question is from Dan with Yorkville Ives. Dan, please turn on your camera and then you'll receive a prompt to unmute your line.

110:24 Yeah, thanks. and obviously just another phenomenal quarter. So, my question is with with the Sovereignty AI boot camps. I mean, I've been to a few, it seems like they're really becoming huge for converting customers. Can you just walk through like like Alex like you talk to so many of these customers like do they come into a boot camp just they're not they're they're trying to understand their AI path and then they leave and they're actually a customer like can you just walk through like just from your perspective? Well, you know, I mean, what's really shifted on the front line is like it there used to be this long walk up to people like talking to us and then you do a pilot and then you try to get a long pilot and then you kind of lock that in because it the same way you lock in like hire all these salespeople so that the market believes you're going to have sales kind of thing. Now it's it's much more you know people are it's super heterogeneous. So some people, everybody basically comes in on the spectrum of what I have doesn't work now and I've heard what you have does work. That's usually where it starts. They also strongly believe and are quite tired of of what they believe.

111:35 The reality is my IP is in danger and I'm getting no value. It's like and this is when we started talking about sovereignty, this was kind of an un this was a something that was being expressed they felt but they didn't know how to articulate. Now it's something they articulated and they're and they're they they've gone from anger to action. Like it's like, you know, it's like they've gone from thinking, "Hey, I'm not in a great marriage to I'm I'm at the divorce and like and like they come and then then what's very special now is they're surrounded by people who've had the same journey and that the timeline from jour from interaction to them buying pilots or going into production is completely shifted." And so what like Ryan and I are seeing on the front line and commercial is, you know, this much quicker interaction, much quicker to deployment, shorter duration of the contract, but then an ability to expand that contract dramatically because as soon as you go in there and you show them that you can, for example, train open weight models in our ontology, those models are valuable and you have beyond frontier capacity without losing the alpha, you just are hooked. what we have to do internally is figure out how to re-resource our company to focus exclusively on those people because we don't have even the the bandwidth to do that. So, but that's because like every single time we go into the conference like in the past you would be we go into conference and people are like warm leads turn into hot leads. This is like first date into bed kind of thing you know you know maybe that's not the right metaphor for this but it's like it's it's a very different jam. It's like we've gone this way, we've gone from being the most attractive person in the physics department to being the captain of the football team kind of thing. I mean, not that I did that, but this is like a completely different jam of like what's going on. And and then it's also different on our end because we know we can deliver on use cases no one else can deliver on. So like even today we're going over use case after use case with like a super m like one of the most important companies and I'm going to go see them and basically it's like I'm gonna instead of saying hey get which is like let's just get started you have this crucial problem for your business we know we can deliver on this in in weeks this will change the trajectory of your business and and it's in a weird way it's much much closer to what we were doing in the beginning in the US government where we were like hey we're just going to get started we knew we could prove it with PG and then we but but it's like at a much more massive scale. So instead of being like 250k, it's like $25 million to start and and honestly the general vibe is if this actually works, it's worth of infinite value and it will work. And quite frankly, I do not see how other offerings are going to work because this is both product and artistry. It's not just that's why these numbers are so bombastic. It's not like some static like when Sham's on the front line doing implementations or Ryan is is is structuring these I mean Ryan was so busy the last couple days of last quarter he couldn't get out of his car.

114:41 We were like we like we about I was about to send over a bottle so he could like you know take care of nature. It was like it was like it's like that on the front line like and I'm not even exa I'm not exaggerating. It's like I'm like Ryan was on his way to work and like he had to pull over. He drives a fancy car. I mean, look at that. But, you know, it's you know, but he literally had to pull over. And that's that's just what's going on. And it, but again, I I know like it it the primary focus of your interest here is financial, but there's the flip side. The other stuff is not working. That's part of it's not it's not just that our thing is unique.

115:18 It's there's a very strong sense in the market that these other approaches fake deploy codes token raw usage lightweight companies reselling tokens software companies that are reselling tokens and it counts as revenue. People are just tired of it. And I'll tell you last not least the taste of the market is shifting. Like people really do grow to like what works. I mean look at the success in you in in in the department of war you know it's like that was a we shifted the taste that's what's happening in US comm that's what's explaining the numbers and that's what if you like people watching this you should come you should come to one of our you know AIP sovereign you know it's it's it's a little bit like a rock concert >> thank you next question is from Gil with DA Davidson Gil turn on your camera and then you'll receive a prompt to unmute your Thank you. Good afternoon. I I want to build on that conversation you had with Dan. You talked to him about one type of CEO, the one that comes to you with an urgency around sovereignty. But but I was reading the anthropic S1 will tell us about half of their customers work directly with anthropic. So when you have a C, which means there's a lot of CEOs that haven't gotten the message to your point, you're in the first inning of this conversation. When you get a CEO that's still unconvinced, what kind of analogies and metaphors can you use to help them understand the importance of this diffusion layer orchestration harnesses coming from you and not directly from the lab? What kind of examples do you have to provide them to understand the risk?

117:03 >> There's two parts to your question which is like you know the person who's not convinced or not yet convinced and then what do we do? The the the weird thing here though is we really cannot satiate demand. So this is a market that is growing so rapidly. We don't need the people who aren't convinced. We really don't. And by the way, and again I I say this every time, Daario is someone I get along very well with. I think he's I think he's one of the most important business people of my generation, if not multiple generations. They are also selling our product because people interact with them. And again, some people want that approach, but a lot of people are super concerned about their alpha being transferred to them. And the results, even the results they talk about are often already in our application lately. We work very effectively with anthropic in the department of war and at AIG and all over the place. but but again, the the primary that the what what they are doing is increasing the size of the market. What we're doing is servicing the market that's gotten real and we are actually in a symbi symbiotic relationship with them commercially because they're growing a market that's probably much much bigger than it will be to it is today and we're taking advantage of the market where it really where you really need delivery where delivery also includes now if there is somebody we don't we really do convincing in the government space like we've been on the front line like certain agencies didn't want to adopt And we knew that war fighters would die if they didn't adopt. So we went to convince them. In commercial, our real approach is, you know, hey, enjoy the one you're with till you just you find out it's not the one you want. You know, there are very very very few times where we're trying to go and compete and take their customer away. It it really is not happening. And conversely, you know, you know, once you go poundier, you don't go back. And that's just that's how it is.

119:09 and and and you can see it in our numbers which is so it's this is a very different thing. I I don't know at what point we become competitive with each other but at this point in the US the market for us is insatiable. It's and it's insatiable and growing and growing and growing. You know there's what two ways to look at our numbers. one is to say we are just sublime at what we do. Another way is to say we're very unique and the market is exploding around us. I'm much more in the latter camp.

119:38 Like I don't we are a creative colony. We're not perfect but the market is exploding around us and they are helping it explode. And the only area where we do anything that looks competitive is we are we are spending a lot of time educating clients partners that may never that are nonpartners around the risks of using closed models without an application layer. That's that's the one thing we do do actively. So, but we're not really saying, hey, you're going to, you know, the value creation people know we own this. It's certainly an industry.

120:12 I think less on Wall Street. Actually, honestly, I think on Wall Street, I don't mean you, but I think really what happened on Wall Street is everybody invested in these firms early. Bless you guys. It's hard to see the reality when you're getting rich on something that's not actually working the way you think it is. And the reality is though in industry people realize when when it gets real you need us and and that market is much larger than we can service.

120:40 >> Thank you. Our last question is from Brad with Deutsche Bank. Brad, please turn on your camera and then you'll receive a prompt to unmute your line. >> Great. Thanks so much for including me. Congrats on another rocket ship quarter. Alex, in your shareholder letter, you said that you see Palunteer as the pioneers of a genuine and viable anti-war movement. Can you expand on what that means and what it might mean for your government business? >> Well, you know, one of and I'll let Sham talk about this. you know, it I'll go back to the beginning of our pound here, PG. You know, we and we built products that would protect civil liberties and stop terrorism for the very simple reason that you don't want to do one or the other. If you don't stop terrorism, you're going to get a radical fringe on the right. If you stop terrorism without rights, none of us want that. Okay? You could say it's an anti-terror product or you could say it's a product for social cohesion. It's a product for our products are built to avoid war. Meaning the adversary knows that they will have such pain inflicted upon them that in fact it's not worth going to war. And also to create social cohesion because we're going to bring back our troops healthier, safer, non-damaged, and that makes our society much more effective. And I would say as a as a person, not as a not as like Palanteer. I I grew up as a lefty. I don't actually like war. I want to avoid war. I don't support wars. Sometimes they are necessary. And when they are necessary, America and its allies need the very, very, very best tools. And we have competitors, adversaries, and enemies out there. They need to know our stuff works. The way to stop a war is for them to know these things work. And also, you know, the part of the problem with that we've had in an AI discussion in this country is we do have a rival, an adversary on the battlefield. I happen to respect their culture quite a bit, China. But it is us or them and they have a dynamic, interesting, super high IQ, scaled culture that is doing exceedingly well at AI. And we've got to make sure we're the leaders and somehow we have to drag our European and other allies with us, which is going to be hard because they're they're going to have to also learn how these things work. And that probably means a real interaction with the leader of the sovereign movement, not some fake bureaucratic thing made up by people have no idea what they're talking about and think you can regulate these things like a telecom industry. When in fact, this is galvanizing a new transform of technology that is transforming every part of society and transforming our numbers and everything it touches.

123:30 >> Thank you, Alex. As always, we have a lot of individual investments. >> Somebody else has got to talk. Is there anything anyone would like to say before you end the call? >> You guys can say a couple words. Tom, would you like to say? >> Well, I mean, you spoke about deterrence really well. I guess I would just add that, of course, the the objective is to is to deter conflict. Deterrence is not something you accomplish by hope. You actually have to build it brick by brick. And so on one end in the foxhole, that's about having a capability that's 10 times 100 times better than your adversary. should they choose to fight, they're going to lose and therefore they should not choose to fight. And on the other end, it comes down to the factory floor. You know, deterring conflict, as we've seen with with Russia and Ukraine, is is really about your ability to produce the material. And I I we are in a period where we need to reinvent how we do production. We've gone through 30 40 years of of essentially de-industrialization in the nation beyond just our defense industrial base.

124:26 and the work that we're doing with War Machine and and and working with commercial and private and and public sector companies in order to to enable production using a modern American manufacturing stack. These are two parts of the the same coin here and I think it comes down to yes freedom driven through the foxhole but also prosperity the growth of the American economy on the back of that. >> Do you want to say something? would you like to talk about your greed after?

124:54 I'll just add, you know, the sovereign AI revolution, we launched this last quarter, and the felt version on the ground is is and what we're seeing at sovereign AI boot camps when we actually show and don't tell is the the momentum and the urgency of customers. They get it and see it adopting quickly, moving quickly, moving with urgency because they realize how much it matters. And we're feeling that on the ground and we're at the very beginning of this and we only see that continuing and and expanding from here. because I can't help myself, I'll say one more thing going back to Gil's question. you know, I I I mentioned this earlier in my comments, but it it really is the case that I think one of the conceits that the labs don't have right and that perhaps that the customers who who don't quite yet realize that the return is not there is that the atomic unit of the enterprise is not the knowledge worker.

125:40 You know, you can make people more productive and generate no actual return on investment. If you're measuring the inputs, it can feel really good to see that productivity of the person. you actually the atomic unit is the workflow and having a platform like AIP where you're already managing your supply chain or your SNOP or your key enterprise processes the exhaust of those processes then enable enable you to go through the post training loop to have a model that's better than frontier at that we give you the tools to elegantly integrate your people your AI and the software to actually drive objective quantifiable value against the workflow this is the compounding loop that the customers who are coming to us in the sovereign boot camps understand just at our our most recent DevCon down in in Miami, we had a customer who on their stack in production as a hack week project built a productionready model that's better than Frontier for their use case in the 48 hours single person in the 48 hours that was Devcon.

126:36 so that the proof is everywhere on this >> and I guess to add two financial metrics to leave you with. I'd say two years ago on net income and to today we've 8xed our net income over the last two years which I am incredibly proud of as well as everything else that was said and also as we look at sort of this this year to to basically guide to almost $5 billion in cash flow for the full year is is I think something we all can be excited about. And to close, I just, you know, the people who invested in us early, many of them were investing their own money and and would otherwise be called retail and many now in recently have reinvested in us. You know, the sovereign revolution is a metaphor for your interaction with Palunteer and the fact that we've been able to help you and you've been able to help us in your own wealth creation and in our journey and that you've defended us against what obviously now look like ridiculously stupid and malicious, incredibly hard to understand attacks is something that we will never forget. And part of the delivery here, part of what motivates me is helping to make sure we are fighting for you. And quite frankly, making sure that the people that made fun of you and made fun of us are suffering. And I I'm very proud of that. And I'm very proud to have all of you along with us. And thank you for that support.

127:54 >> Thank you. That concludes today's call. Okay, that was the call for pounder Q3 2026. The stock is down after hours with everything else. Pounder down 4% 17128. Apple down 3 and a half%. They said some stuff about memory that the street does not like, but that stock now back into 320s. Grab usually doesn't put out earnings until 7. They ended up putting it out early. We'll talk more about it tomorrow mornings, but the numbers look quite incredible from my perspective. Up about 3% after hours. It was up 5% during the day. but everything else pretty much is taking a bit of a hit after hours. Let's start with you, Amir. What were your thoughts based on that call?

128:43 >> Poor one out for our fallen sister. I don't know where Mariana was. but she actually she she left Bank of America. She's not a Bank of America anymore. So that's why Really? Yeah. change industries. Oh, whatever. We'll cover that some other time. But yeah, one new analyst per quarter, it seems. Damn, dude. That Brad guy from from Deutsche was so happy to be there. He's like, "Guys, thank you so much. >> Your dream came true."

129:12 >> Yeah. And Dan Ies, I mean, I think it it's very very impressive how Dan Ies can have the same exact question for like eight quarters in a He's like, "Okay, so are are boot camps converting?" He's like, "Dude, you asked the same thing for like eight quarters." And I I think Karp just got fed up with it. So, he just went on a 10-minute monologue as like just talking about everything except what Dan I asked for. but it seems like u based on what Karp was saying that conversions are a lot faster now. you know during previous AIP cons they they would have someone on stage that was like yeah I attended a boot camps 6 months later we became a customer and we're now here and presenting it seems like it's a lot faster the more time that passes and also I think it was I I I kind of want to discuss this to get your guys thoughts so Gil Gillura asked you know people who come with you know urgency and stuff like that how how do convince them and corpse said bas basically like dude we we can't even meet demand like we don't need to convince those who aren't already convinced and my question then like if I'm being devil's advocate here like why can't you meet demand like there aren't big reinvestment needs to this business theoretically like just sell software bro like is it would be like the the argument right do you guys believe that it is because it's so difficult to find enough elite hit FDEES that are also aligned with the mission that would help with the implementations here and like would AI FDS on a broader scale solve that issue because we we've been hearing this now for many quarters without really hearing like how they're going to solve it like they've been saying like yeah we can't meet the man and we're seeing it in the numbers the numbers are insane but like for how long does this go on and how does it get resolved like what is the main issue here Why can't you meet demand?

131:22 >> What do you guys think? >> I was searching for piece of information. Give me a second, please. >> Okay, I'll I'll take that question. Yeah, I I think I think to your point, Amir, for them to adequately meet demand, you need to have a you need to have a relationship with the partner, right? So, it's not one of those things where you tell them to download the software, they send you a contract, and it's over. There's four deployed engineers that are working very deeply.

131:47 you know with Andos and Zeta, two of the recent customers they recently signed on. they both have their four deployed engineers working with each other, you know, going to each other's companies offices, working together. Same thing with Nvidia. So I I think when he says there's insatiable demand, he's talking more broadly about the fact that there is just so much out there. But to actually capture that demand and and translate it into value, that requires the pound engineers, you know, being able to work with a company's engineers and and there's probably a bunch of companies that are interested, but they don't have the buy in or the lock in effect of saying, yeah, sure, your FTEEs can come and work with our stuff and but there's a bunch of companies that do have that, you know, level of ability to say, okay, like let's really commit to this. And I think that's the argument he's making there.

132:29 But but but but the counterargument is here that Palanteer years ago like secured partnerships with all of these consultancies just to be able to solve like just this implementation issue. And >> maybe he was talking like broader with the like in insatiable how do you pronounce that demand like for the market but he has said that they have more inbound than they can deal with like this is like recurring thing. So is it simply because you know FDs are that difficult to come by that are actual FDs not not like the you know what the Microsoft entropic and stuff are like doing like but actually like well but there's two things I don't think Accenture is going to help them do the types of transformation changes they need to do for some of these customers right so those system inst in integrators and consulting firms may help but I don't think that's like solving the bottleneck number two is I'm kind of happy every quarter we keep hearing that demand is insatiable. Like I'd rather >> it's a good problem to have, right? It's a good problem to have.

133:29 >> If the growth was declining and he says demand is insatiable and they can't hire enough people, then we have an issue. It's like Nvidia, right? Like the only reason Nvidia can't grow faster is because of supply chain. But that's not a bad thing given that growth is accelerating. So I I don't read too much into the comment in a negative aspect. I >> I think there are many layers to the topic. Something that I think could be mentioned is this a sentence from the Barclay's report saying Aifd shows encouraging early signals in enabling customers to take greater control of their own growth. A few customers have built entire new use cases without the assistance of Palunteers FD whose cost has historically limited the number of workflow it software has been able to touch.

134:21 And some comments from from Karp were in the line of saying we want to be the first point of of contact. people see the software, see they talk with other customers that have a similar issues and then okay, we want this stuff and Karpy hinted something like we want our customers to be more independent into growing the the usage of of Palanteer. So I think there is a maybe something not fully working on the partner side. I think is quite difficult even when you have a strong demand to actually have very qualified people that can take care of the implementations. But at the same time, it seems that Palanteer itself is not pushing too much on the partners apart from those that Palanteer really likes Fujisu.

135:23 And it seems it wants more to pursue a way of neither gathering too many clients but going very deep into the clients, show them how they can keep expanding. And that sentence that Karp mentioned again in the last part saying oh now we are talking about what was a 25k contract now it's 25 million to start that connected very well with what the management was saying of now we are taking many multiple 8 figure deals that are short and when I heard that shortened duration. I was like, "What the hell are you doing?

136:08 Like, you should try to get big long contracts. Why? Why? Why short?" And the answer that seems to emerge is if you have already a deal that is big and short, but it still gives you value, you are more prone to say, "Okay, 25 million. Actually, I'm unlocking 70 million in value. Okay, let's go for a hundred million dollar value so that we can unlock maybe $300 million and so on.

136:44 So >> I already real >> I I 1,000 every software company is focused on expanding customers. I feel like counter is the only software company and we're talking about a thousand customers. They're I think they're one of the only companies on the planet that is concerned with delivering so much value for the small group of customers that they have that it unlocks such a bigger TAM and eventually it scales to all the other customers. I think when Karp was on the call and he was answering that question from Gil about these other customers that are spending more with Enthropic, why haven't they recognized the value yet? I I think Corp was right basically saying look the ones that have used Claude and OpenAI and seriously committed money to it and realize it doesn't translate to anything meaningful. That's a journey that all these customers will inevitably realize. And if he's right about that thesis, I think we're going to see a massive acceleration on customer account and then they're really going to have a problem in terms of the demand being insatable. But to be able to lean in on your biggest partners, get revenue at 96%, which again, there's no software company growing at 96%. it's just not out there for them to be able to do that on a base of customers that want to spend more. I think that's the right strategy. I I I think longterm that will be the way this plays out in a more meaningful way versus just trying to go and cast a big net and get as many customers as possible.

138:02 >> But as as he said, it doesn't matter if they realize that they're overspending or not. It doesn't matter if they re realize that they need to go to Palunteer for value because Palanteer can't deal with them anyway. So that's what what I'm asking. How do they reach a point where they can actually because Carp has said like he reiterated it. We want to take the whole market. Well, how do you take the whole market if you don't have the capacity to deal with people like does K like as you guys said does cart need to shake hands with everyone personally? Like no like there has to be some way to reach that scale without compromising the culture that is Palanteer. What makes them so so special? So my my question is brother like okay so how do you reach a point where they can actually meet this demand because you want to take the whole market you you you obviously have demand you are hinting at future demand as well when people realize what they have isn't working so how do you capture that like that's my question and so far for several quarters now we've been hearing that retra like okay I'm not being bearish I I just want to point that out like people was you being bearish like no I just want to understand but I think the dynamics of the business you're reading way too much into that comment the growth if the growth was declining then that comment has value until then it's just a comment on the amount of demand that's out there like I don't think there's that much more to read into it if the growth was declining then it's a different if the growth was going down and there was a supply bottleneck of talent >> I would get your point growth's going up at every layer >> I mean it is fair to ask >> if you have such a strong growth, you have such a big opportunity while you're keeping the headcount almost flat.

139:49 >> Well, and I think they would say that it's important to retain their cultural advantage and you know that's why they have a flat hierarchy. Mo people have multiple jobs there. Like look, if growth was declining, I would get your point like oh you say demand's so amazing but then your growth is slowing down. Hire more people sacrifice. What what what I'm saying I'm saying how can it be even more amazing like how do they capture that market which they reiterating are saying like yeah we're going to take the whole market everyone is doing it wrong and I believe that most are getting it wrong and Palanteer is the only one getting it right I just want the company to capture more of that into the future like how do they stop limiting themselves like obviously it's it's amazing I'm not saying that growth was bad I'm I I think the quarter was amazing and it has been amazing for the past couple of quarters, but they keep mentioning the same comments regarding demand and not being able to meet it.

140:41 So, I'm just asking a broad question. How do they reach a point where they can capture more of that? >> That's what I'm saying. >> Maybe operating under these constraints is exactly what makes Palanteer Palunteer. Remember that snippet where Karp asked, okay, I need to to do twice as much faster how you do you just cut the timeline in half. So operating under very strict constraints is what make you shine especially when you have a colony of of artist given that I still wonder what could be the playbook even if they don't like the word the playbook but they are clearly playing a game I mean imagine you have 10 billion in cash and you are we we don't hire more people to sell more Yeah, that's obviously like Snowflake is doing that. It's obviously not not working just to just hire saleseople, bro. Obviously, that's not the solution.

141:48 That's not what I'm saying. I'm just asking like will AIFD be something as you shared with the comment like that really starts unlocking like being able to meet more of that demand even even though it's not going to be overnight. Anyway, I during the call we we got another figure that is amazing. So on over the trailing 12 months, the top 20 customers on average recorded 146 million of revenue on average per customer and that is you know 2% of customers account for 40% of total revenue. But only 2% of customers account for 40% of revenue. And most most people would say, well, that is a concentration risk, you know, tying up so much revenue and only 2% of your customers. I'm like, dude, these guys are scaling like faster than the average. Like these guys grew 76% year-over-year. Like I mean that's higher than the net retention rate.

142:51 Like these guys are outscaling the average customer by a lot. Like these guys are really really like imagine like your largest customers, they've been with you probably for a long time. They already spend hundreds of millions with you and they're like, "Dude, we need more." Like that is really really impressive. >> Mhm. That really tells you about what we were saying before. You can grow more by going deeper and then expand by decency rather than just trying to go bigger with numbers as a snowflake, surface now and so on do also that to me that number was stuck in my mind because 67% yearonear on the top 20 and the top 20 being a huge chunk of the revenue >> 76 6 and I saw that in Q2 that number was 56 and in Q1 it was 41. So the bigger they become the more they scale the faster they scale. Well either you have it wrong or I have it wrong. In Q1 it was 55% then 66 and now 76.

144:10 So one of us has it wrong. >> Okay. But still doesn't change the essence. >> Yeah. Yeah. Yeah. The the analysis is the same. Yeah. I think I approximated more >> but but that's the idea. >> Yeah. >> Also, >> go ahead. >> Go ahead. >> I was just going to say the stock air reaction to it being down 4% after hours. I I'll just go real quick. I think it's macro, guys. I don't think anything in the numbers here structurally or fundamentally warrant a 5% hit. But if Apple can't even stay flat, you know, like this is one of those markets where if every big tech name's taking a hit, you know, the algos are going to take everything down right here. So, I think that's what's happening. But curious if you think it's more than that.

144:54 >> I mean, what should be a fair reaction to these earnings in your opinion? >> So, it was about 179 before the print. >> Go ahead, Amir. at the very least like because you know expectations are being raised like new new commentary from Alex Garp of what we will be getting in 2028 I believe like a all-time high is is warranted like the the stock for every passing quarter just raises our expectations which were already super high like they just keep like raising the bar so my if I was the market I would reward Palanter with an all-time Okay.

145:36 >> Yeah. Also, I think >> obviously I'm not the market, but >> I think this is where people have to recognize their emotions. Two weeks ago, when Palunteer shot up to 210 on a random Friday with no major headline, was anyone complaining? No, there was no reason for that. >> No, I I don't think anyone was compl. So, you know, two weeks later, this is an individual stock in a very ugly macro when it falls from 210. Like, at the same time, is it that bad? No. Was it that good? No. Like, it's always somewhere in the middle. and over time it plays itself out. but I I don't think the reaction on the stock really is a manifestation of of of of what the earnings implied, but rather what this macro, what the midterms, what oil prices are entailing. And that's just every single company on earnings in Q3, the biggest companies in the world have dropped. And it's one of those things where you either buy the dip and say the market's being stupid or, you know, you let it play out over time. But I don't think this is a reflection of the market being upset at the results.

146:34 I mean, there are really only like three things that you could hypothetically even be upset about. One, RPO is down. Net new deals decelerated, you know, even though Q3 is typically the slowest one. And what else? Like customer count isn't exploding. Like like what can you possibly be upset over to like send the stock negative like on fundamentals? Like there's very li limited stuff in this print. I mean I I I don't get it at all. Like do do you guys see anything like negative that the market could even attach to?

147:14 >> I mean TCV at 6% RPOS's flat Q over Q like maybe but I don't think the street looks at those and gets that aggressive with it especially when you're growing at 96% and have 60% margin. So I really do think this is more macro and sector driven not >> not anything to do I mean rule of 40 at 158 like the fact that it's ever look at this it went from 81% which is already double the conventional rule of 40 two years ago to now 158 like you talk about one of the most efficient companies in the entire market that's what we're looking at it's just >> I mean the worst that we can say is that it is flattening a little it flattening a little bit while still being completely an outlier.

148:02 >> So that doesn't make much sense to me. Something that I was trying to rationalize is a few quarters ago, so end of last year, we got the first jump above the 200s after the earnings. It didn't last long despite the earnings were phenomenal. And then we got completely smashed. And I like to visualize the contraosition between the price and the EV says EV EBIDA multiple that gives us a proxy of the price to free cash flow essentially. And we notice how we are essentially again in the 200 area but with the multiples being way way way lower. So as of today also considering that these results keep put the multiples even lower because right now we are looking at next 12 months Ebida that is not only higher because a quarter just passed but also because we have an increase in the estimates so this number will be even lower given this as of today I don't see reasons why it shouldn't deserve the 200 at least.

149:28 >> Yeah, I would agree. I mean, as air said, if you take the government business out, you're looking at something around 200 just on commercial. I mean, if he's he said in the letter, 15 billion next year on commercial, if that's 17 to 18 and then government's another five to six, like >> this is going to be a company doing 20 to$22 billion dollars of revenue. And I would say as of today, Karp's Karp seems to have quite a decent track record into saying and delivering.

149:58 >> I I think I found why the street is upset guys. Bur told us that today's sales outstanding really matters and it actually increased this quarter. So that's where the stock dropped. It went from 52.5 days to 57.5. So that's I'm I'm looking forward to see what Bur has to say like having a feeling like see you guys told you stock is down. I was right all along like crazy.

150:31 >> Do you think car Bur is done with Palunteer or he will try to hit again? He didn't he cover his Palanteer one specifically, but keep his Nvidia ones. >> Seems like he's he's more bearish on the semis. >> He covered every short, but he rolled his puts into December 27th. So, he took off the short-term puts, which actually if he left them, this was 3 weeks ago. This was September 29th. If he let the puts like rest, not on pound Nvidia because the strikes were too, but Nebius and Micron, he would have crushed it.

151:05 but he rolled them right before they dumped. So, he's still up on them, but now he has to wait a year for Theta to expire, which who knows what happened. Maybe they Vshape in a year, but he still has puts on Palenter and Nvidia. I just I don't know if Nvidia is going to 100, if pounder is going to 50, but that's the strikes that he has around those those ranges. in terms of Apple guys, so obviously the street doesn't like it. CFO said when you remove the tariff refunds both company and product gross margins would be down about one point sequentially primarily driven by higher memory costs.

151:37 So that means without the refunds from the tariffs they actually would have went negative year-over-year in terms of growth on gross margins which is not something the street wants to see and that has to due to rising memory prices. Now Intel said the exact same thing and the street wasn't happy when Intel said that as well. Now Intel had more of a PC demand issue. Apple doesn't seem to have a demand issue. They seem to have deeper supply constraints when it comes to memory. for the December quarter, we expect constraints on Mac and iPad primarily driven by memory as demand has been higher than what we expected.

152:09 But this is a name that's basically been sitting at all-time highs for the majority of this selloff. Micron's actually up a little bit after hours. Apple down three. If we are in a full-on selloff, which we haven't experienced across the broader market, the S&P is, you know, 2% away from alltime highs. Apple's going lower. It's inevitable, right? Like it's hard for a company like that to keep its premium in a world in which the whole market is selling off.

152:33 So far, this market has been selling off semis and high beta tech. And you know, there's been a lot of companies that have been in bare markets. But you also see rotation into utilities and consumer discretionaries, consumer staples, healthcare names. if Apple actually gets hit tomorrow, then, you know, this is a macro that's a bit more unp pretty and it might given the midterms, but I think we can't really judge until after the midterms and then we'll get to see how the market reacts to everything else.

153:02 I will just give you guys the headline numbers on Grab real quick and then we'll finish up with any of our thoughts on pound. They actually release results 2 hours early. They usually do it at 7:00 p.m. I will talk a lot more about this tomorrow morning, but from the numbers I'm looking at on the headline, these are pretty incredible numbers. Revenue 30% year-over-year. Their first billion dollar quarter 1.12 billion. So they will now be averaging at least a billion for the foreseeable future. Justin up 73% year-over-year to 237 million. Adjusted free cash flows up 100% 533 million. Fully year group revenue was raised to 4.2 billion. The most important thing is they raised this EBA number. I had a feeling they were gunning for 800 million and they just guided now to 60% growth on adjusted Ibida which is what my models have been saying they're going to do for the next few years. They guided earlier in the year at 45%. So that's a pretty dramatic increase to now 800 million monthly active users 57 million. They had 54 million last quarter. That's up 20% year-over-year from 47 last year. And they have 500 million left in our share buyback program. They repurchased 400 million worth of shares in September and October. So, we'll go deeper into those numbers tomorrow morning.

154:09 again, I think oil prices have been holding down grab all year, but this is a company trading at 11 billion, 5 billion in cash. They're guiding for 4.2 billion in revenue. I think there are many names that have been discounted due to what's going on in the macro. Arie, any final thoughts on this counter quarter and the comments we heard from the team today? I was thinking how much impact can have the the sentence Karp said once you go palunteer you never go back combined with before we needed to flirt for moms now is a first time out first time in the bed I I I I am I enjoy how Karp speaks. I enjoy Karp letters. I know a lot of people don't, but I want my CEO to be that excited. I mean, this guy has been running this company for over 20 years and he's still excited and he's still talking up a storm about how excited he is for the future of the company. Like, that's something I want in a CEO of and and at the end, you know, every quarter he finds a way to tell retail investors how much he genuinely cares. I mean, I was at the institutional sovereignty boot camp last week and he came up to me and said, "How's retail feeling?" You know, that's like the the number one thing he cares about. because you know he he knows that retail supported so much when the world didn't believe and now retail ended up supporting what quite literally I think you can say is one of the greatest software companies of all time if not the greatest software company of all time given these results and so I'm a fan of how much he cares >> seriously what are the alternatives because as far as we see all the hyperscalers are more focused into building data centers rather than serving clients The other big software companies Salesforce Service Now where where they are like they are they just have a declining growth rates.

156:06 >> Yeah. And and that's insane when you consider the distribution that they have. I mean we already talked about yeah Palanteer has not even 1.1K customers they are exhibiting this kind of growth. and then you look at u peers that are saying that they are you know doing agentic AI they are providing value with AI like like Salesforce that are approaching you know 200,000 customers and they are nowhere like imagine the distribution network they have like you already have your foot inside of their door like why aren't you doing anything with it so yeah I think you're completely correct Ronnie >> >> we have a football team a football captain leading our way. Now >> I don't get the reference. Maybe I'm stupid.

156:54 >> He he said he said he said we've gone from like the nerd to the football captain in the call. >> Oh yeah. Oh yeah remark. Yeah. And he said he he he also like but by the way I was never the chad you know. another niche metric that I just calculated is that the average revenue per customer increased by 63% excluding the top 20 as I mentioned like you have to remove those because those account for like 40% of revenue up to now 4.1 million over the trailing 12 months and a year ago that was 2.5 and and let me tell you I I don't have the chart up right now. I'll be posting it on X and stuff like that. But it's really really difficult to increase the average revenue per customer. Like it was stagnating, then it flatlined and now just finally over the past you know four quarters it has been steadily rising and it had quite a big jump this quarter. so yeah really really impressive you know how they're managing to increase average revenue per customer at such a rapid pace.

158:03 Just just wanted to highlight that. >> And that story Karp said about >> starting at 25. >> Oh, sorry. >> No, but Ryan Taylor being in his car and having to pull over to like close a deal. Like you can tell the excitement in the company when the CRO is driving, has to pull over cuz he's probably getting an important phone call phone call that can close a deal and he's just stuck in his car all day closing deals.

158:26 Like it's just one of those moments where I don't think that excitement and momentum fades away because the market is growing and then their ability to actually offer something that's valuable, not just the reselling of tokens like a lot of these software companies have essentially pivoted their business model to is why this company has a premium and is why the dip can get bought. The macro is the macro and whatever happens with geopolitics and oil prices that is something they don't have much control over.

158:52 in terms of delivering the results and the guide that they need to, I think they're doing it and I think they've been doing it every single quarter this year. >> How about some questions of what the viewers want to know? So guys, would you be buying Palunteer at these levels? >> Where are we at? 172. So I think so there's two layers to this. I think number one, we're in a really weird macro and the S&P is barely down from alltime highs. If the S&P were to take a meaningful drop because Trump were to escalate tensions in Iran, everything's going down. And I think it's hard to buy the dip in general on anything, much less Palunteer simply because everything is going down. I mean, if Google, Microsoft, Amazon can barely catch a bid, it's going to be tough for a lot of other companies to do so. Number two is where the market thinks 2027 is going to go from a political perspective. So, I think after the midterms, there has to be an understanding of, okay, did the Republicans sweep? to the Democrat sweep. Is it a gridlock situation where one has the House, one has the Senate?

159:52 And then fundamentally, you know, what is Trump's next course of action? I think a lot of that stuff really matters for the market, not just Palunteer. Now, if you take their growth numbers and you you you looked out a couple years, yeah, I think at 170 175, you're getting something that's below its fair intrinsic value if they can hit the growth prospects, which Corp reaffirmed today on the call. So, from that perspective, it's a dip by. problem is I think Google's also a dip by but Google's in a crappy macro right now in regards to all their capex and free cash flow and I you know here's the other question the hyperscalers let's say 2027 is a bad year for them because they're just spending all their cash on data centers does that money flow into software companies like a pounder that's putting up results you know constantly or does the whole market get held down because the MAG 7 which are 40% of the S&P 500 get held down which means all the semis get held down which means everything gets held down so I think there's a lot more macro going into that question versus just is it undervalued But based on these numbers and based on the growth, yeah, I would say it's undervalued.

160:46 >> Don't don't you think like some constraint in data center output really forces people to consolidate into the top picks rather than just broadening. So it like it narrows down where something like a palunteer would be a major beneficiary if that were to happen. So I I think like it feels like to me that Palunteer is like in a win-win scenario regardless of what happens on like the data center buildout you know hyperscaler and neo cloud demand and stuff like that. It feels like if if there's a broadening that's fine for Palanteer and if it starts contracting that's good for Palanteer too is the way I see it. I think both things could be right at the same time just it's a matter of sequence for how fund managers typically reason they tend to first sell everything that is close to a theme and once the narrative on AI data center not being cool anymore cools off probably they just sell everything that somehow relates to tech AI I and then after a bit they start thinking okay maybe we oversold also valuable stuff let's try to assess what could be actually valuable and I say that because what we perceive as being the key driver of Palanteer's numbers the AI sovereignty theme is something that we care I mean apart from these 5,000 people listening now. I don't think there are so many in the investment community that actually care. At least when I talk with friends, nobody cares.

162:36 When I talk be them in the financial field or in the tech field, still nobody cares. And I think the same this is similar to what happened when people were all focusing to the models. And Palanteer was already trying to explain look the models are commodities like is useful but is useful as long as you put that commodity into an engine that produces value. And this sovereignty AI narrative is something that we know it's valuable. We see it is already a key driver in the numbers but is not arriving into the the mainstream narrative. It will take a bit. So as long until this big narrative actually becomes absorbed the stock is vulnerable to a cool down in the data center AI narrative I think.

163:39 >> So would you be buying or no? Right now I'm exposed enough so not >> man you guys are too safe boring answers like the the good for buying and I I have enough >> dude we got to buy this at 125 this year I didn't get the bottom at like 109 but 125 did that >> okay the the question was framed as assuming you are start building out a portfolio is this price something to get excited about for owning into the future That that's my question. Not not like, oh, macro is bad. I have exposure. I'm asking like a broad question. Not like actually like are you are you pressing the buy button tomorrow? That's not what I'm asking.

164:22 >> If I was >> I think this price is plenty attractive for future gains. I I'll say it. >> Yeah. Well, of course, for future gains, but like you're hedging your answer, too. Like would you buy it for three months from now? You think it's a good deal at 170? or if Trump escalates the war in Iran and and oil spikes to 150 and pounder goes back to 100 like obviously no that's why you can't what should I be buying in that scenario >> nothing that's not well that's my that's literally my point if this market not a flip because the Democrats win the midterms and Trump escalates which I don't think it'll happen but let's say it does nothing's a good deal right now dude like Google's trading at 15 times earnings the lowest in its history is that a good deal if like Trump escalates the world >> I'm buying Palanteer over Google any day.

165:08 >> Yeah, I get it. I get it. That's fine. That's fine. >> So, you I'll let you I'll let you slither away this time. >> No, but also my answer is influenced by I think price action after hours is indicative of my answer. This was a record quarter and the stock's down 3%. After being down 20% over the past week or past month. Why? Because this is a really crappy macro. In a good macro, this stock would not be down. And and neither would Google's or Microsofts or Metas. But it's a weird time right now in the markets. And and not to mention the stock rebounded from the low 100s, which the last time it collapsed 50% was because we had a SAS apocalypse narrative. I think if that narrative doesn't emerge again, I don't think we get back to those low levels. But, you know, there's your there's your margin of safety. But if if any other type of narrative emerges to the point where the entire market goes down, I mean, pounder has a multiple. That multiple can compress just like every other company, and that's when it becomes more attractive, which it did at 125 early this year.

166:03 It's also interesting because I just today had to apply for, you know, liquidating my interactive brokers account because I have new tax residency in Japan and they can't move it. So, I will be all cash. They will liquidate all of my positions. I have to reby everything. So, I will have to reacquire my palenteer position and it's going to hurt in the heart to see the you know raise the what's it called? average cost per share.

166:32 >> Does that does that does that screw you on taxes? Do you have to pay the tax on that? >> No, that's fine. It just hurts psychologically, you know, seeing the increase when I repurchase everything. We'll see. Interesting times ahead. I think Palanteer after this quarter yet again I mean we can all agree like they exceeded my expectations on everything except the operating margins and I mean on a trailing 12 months basis they're still at like all-time high margins. So I mean you can't even complain about that. I mean they exceeded my growth targets their future guidance their commentary about the future still exceeded my expectations. I mean, amazing quarter yet again. They crushed it and I'm kind of scared going in into the next one because now they've been beating our expectations for so many quarters in a row. Even though we like keep being more bullish consciously, they still keep beating that. So, I'm scared to be overly bullish in into the next one now. And they're probably going to beat that anyway. It's just that kind of company. Ara, you can explain to the audience why you're not going to jail for not paying the taxes on capital gain.

167:49 >> you don't pay capital gain taxes in Sweden. That's why when you have a specific account type, which I just found out they have that in Japan as well, but it is limited how much you can commit every year. But no capital gain taxes. >> We get that account type in America, don't we? That would be very nice to have that in America. I guess it's your retirement account in America is what it looks like. >> do do we think the stock perks up a little bit tomorrow or do you think it just continues the downtrend like every other stock that's reported? I guess is that when you will see all the analyst and there are 32 analysts now covering the stock with these numbers they're forced to raise the numbers. I mean do you see any reason for why they they just keep the same estimates that they had previously.

168:44 I think we just talked about the 2028, right? Like it's essentially their total revenue is almost what carp just said they're going to be doing US commercial alone like they will have to raise and once that you know avalanche of races comes in. Yeah, I I'm I I think it should probably start recovering tomorrow like barring that there isn't like some extreme macro event. But that said, I'm not famously known to be able to tell you know market sentiment or market movement. But just going by the vibes here. Yeah, I probably think that it starts recovering tomorrow like I I think this company deserves to be at alltime highs. I I as well >> course to have a better output on the reasoning of valuation. We should crunch some numbers better. But as of as of today, I'm quite confident in saying there is much upside at this price, especially given the estimates are still low. While I don't see that much downside that could bring the stock down to 120 unless something really bad happens.

170:00 >> No. >> Well, and and here's the thing. If it actually does go back to the SAS apocalypse prices now with this growth priced in, I think the PE already collapsed 30 points after hours with the growth expectations and the price going down. I mean, that PE is going to be well below 100 at that point with the best growth in all of SAS. >> Yeah. In terms of price to sales, >> in terms of free cash flow, >> if we were at the bottom at around 50 with something that grows for cash flow 2x in a year, >> I think we at 120 now it would be around 30x free cash flow, which is literally nothing cost less than Costco and many businesses.

170:45 Which is why to your point Amir like the real answer to the question is yes because I personally can't see it getting that low as the whole anthropic is going to kill every SAS company narrative like I don't think that happens again. I'm just worried about oil and like what happens there going to 27. But if that's not an issue then yeah I mean this is a pretty steep discount from the 212 price we had two weeks ago.

171:07 >> By the way guys I'm not even up this year. How can I have captain gains exceeding this year? What the are you talking about, >> dude? Robin Hood, Palent. >> Yeah, Hood. Palent FICO, bro. FICO. Oh my god. Open that chart, bro. Look at the year to date or even one year. Oh my god, bro. And you people are talking about Yeah. What are you going to do about your capital gains tax? What What are you guys talking about? Look at this, >> dude. This was a $2,000 stock in November 24. 2400.

171:41 It deserves to be a $2,000 stock. It's getting there. Trust, bro. Trust. We'll see. Like, I've never seen a company actually targeted >> by like the government like regulators are actively going after that company. Like, what what what the is going on? What what what happened to free markets, bro? >> What the >> dude? Py basically. I mean, I don't know if he I don't know if he knows somebody who has shorts, but if he did, he single-handedly destroyed that company.

172:13 >> You know, Steve Iceman was like, "Yeah, I was talking to some analyst and I went short after that conversation." Like, bro, you have PON speed dial. He's telling me, "I'm going to nuke this company, bro. Watch me." And he's like, "Go full short." >> Oh, man. >> But this is why it's not just like the stock or the company. It's so many external factors in this game, right? >> So, sorry. I used to do I I I just saw in the chat someone asked, "Did you get your chair?" And I I just have to say that some people came to my stream a way back and I'm going to use this 5 seconds to show. Yes, Herman Miller, baby.

172:55 We got the Herman Miller. I got it. It's 20 years old. I got it secondhand. Thank you so much for everyone that contributed to the Amir Chair fund. >> Thank you so much, guys. Sorry, sorry to hijack the earnings live stream. I'm guessing we're not talking about anything important anymore. Anyway, but yeah, thank you so much, everyone. >> Yeah, you can subscribe to Amir right there. I'm also going to link Arie's Twitter and you can subscribe to Arie soon. I I will be with these guys in person in December. They're going to be coming over to New York, so it'll be nice to see them again. spoiler spoiler that >> that's okay. They don't know why they don't know why you're coming over yet.

173:35 >> If they let us into the country, bro, I mean, >> we're on a target list somewhere. >> You think you'll have a visa problem or >> No, I'm Swedish, bro. The What do you mean visa problem? No problems. It'll be fine. I don't know about Arie. >> I met the Viesta, so >> good. All good to go. >> Ready to go. Okay. I think that's it. Any any final thoughts on Palenter?

174:06 >> That's not how I expected the the reaction to be, especially given the numbers were above what we were expecting, which was already positive. >> Yeah, I I kind of like Dude, it's an ugly macro. I've been covering earnings for the past three weeks. Like no matter how good the results are, stocks are going down. And that's okay. That's what happens sometimes. It is what it is. But I care deeply on is the company executing? Is the growth sustainable? Are they expanding every single quarter? And they keep blowing away my expectations. And so, you know, there's some stocks where I really care about the price action. I'm like, man, why can't this thing go up? There's other stocks where I'm like, look, this is just a oneofone company. And the more they keep growing, the more happy I am.

174:54 if the market really does give a discount like it did earlier this year, we'll take advantage of that. >> Yeah, I think the the two biggest takeaways like >> aren't so much about this quarter in particular, but like where the company is headed and like we just keep getting like the most amazing guidance commentary from Karp. So, one sentence was like our market cap is covered only by our commercial business. So I just went straight to my model, deleted the whole government. I'm like, "Yeah, checks out in in my valuation model."

175:29 And then about, you know, $18 billion in US commercial and no not 18. What what did he say? >> Getting late. >> Yeah. 15 by 2028 in US commercial alone. Like those kind of nuggets really tell you like the trajectory that this company is on. And that would mean yeah essentially four straight years of over 100% growth year-over-year in US commercial. So 2025 was 109%.

176:03 I have this year I I will have to revise because my my model is below Palanteer's guidance for this year but at least 135% this year in US commercial about 125 next year and then another 100 in 2028. But I mean make of that what you will. Like when you start to extrapolate some of these things and then you look at okay Palanteer's largest customers, they're also the ones growing the fastest on average among all the customers. You start see oh my god the scalability of this company. The robustness of the growth like this is durable growth. This is not something like that comes and goes like you might see in chip I mean memory stocks that has like some some cyclicality to it like no no this is robust growth that they are seeing and the customers are getting more and more ingrained in in Palunteer as time moves on. So yeah really impressed by this business.

177:03 All right, thank you everybody for being with us. I'll be back tomorrow for the market open. We'll all be back in 90 days for the next Q4 2026 earnings as we enter 2027 and we will keep going from there. >> So, 90 days seems very much but it becomes like poof. >> Thank you everybody. See you guys tomorrow. Bye.