Big corporations (defined as those above +500m revenue) from non-modern tech roots are starting to generate huge amounts of siloed data.
These corporations will need excellent data integration to provide competitive customer service in the future.
They have been building crappy solutions around it with external IT consultants from different firms, or building home made solutions that do not cut it. Having worked at Santander Bank's HQ in Madrid I can attest to this. Other solutions provide good data platforms but need some stitching together that cannot be maintained at an adequate level either by institutions led by non-software people.
It is probable that some manufacturing comes back to America with the next stimulus package, and good data platforms could help its productive competitiveness.
Proliferating data has also affected priorities regarding state security and solutions are needed. Ethically, it poses tough questions regarding freedom, but unlike the rest of the big Valley players Palantir tries to address it.
What Palantir does is provide an end-to-end data platform that is easy to interact with and is based on open-source software. It can act as a central reference for the company if the contract scales considerably.
There is also no need to stitch any software up and the platform is deployed by Palantir engineers. Siloes are eliminated.
Palantir's products allow for both technical and non-technical interaction with the platform.
After challenging the US Army over non-compliance of section 2377, Palantir has grown their federal contracts considerably, and it is to be expected that it stays that way in the future, as the market is not yet populated.
Palantir Apollo the continuous delivery product working behind the scenes helps make deployments easier. It has reduced installation time x5 and is capable of handling 40,000+ quarterly upgrades. This provides very good economics for the business and drives up the margins.
Palantir relies on their customers scaling their operations to drive up their margins and that is proving to be the point so far.
Both Gotham and Foundry seem to be unique products in the market in terms of fully seamless data integration.
They have proven their security capabilities over many federal contracts.
I do not believe Palantir has real competition in the government sector. Booz Allen is the closest thing but still does not exactly match Gotham. The seamless data integrations makes the complexity of Palantir's products something unseen. On the commercial side of things, fastly growing Snowflake could be a threat, but I think they underestimate the difficulty in big corporations of setting up the infrastructure to fully integrate data, and have it reap noticeable benefits.Metrics
Huge commercial ($56bn) and government ($63bn) TAMs.
Big revenues $742.6m for FY 2019 and growing 49% H1 2020.
Great margins and going up: gross margins are 78% and contribution ones are 55%. Going up to 69% for some customers in the scale phase.
Customer lifetime: 6.6 years for top 20 customers. Taking into account Foundry came to market into 2016 it is significant.
S&M cost is going down.
Even if Palantir only fulfilled part of its potential it can be a huge company that sets the new standard for big scale data platforms in the years to come.