Palantir, Tech’s Next Big I.P.O., Lost $580 Million in 2019

Palantir, Tech’s Next Big I.P.O., Lost $580 Million in 2019

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SAN FRANCISCO — Palantir, a Silicon Valley company with strong links to the defense and intelligence communities, is poised to be the latest in a string of tech companies to offer shares on Wall Street well before turning a profit.

The company sent financial documents to its investors on Thursday night, ahead of its planned debut on the public markets later this year. The documents, which offer the first full look into the company’s financials and operations and were obtained by The New York Times, show growing operating expenses and deep losses.

Palantir’s revenue in 2019 was $742.5 million, nearly 25 percent more than the year before. Its net loss of $580 million was about the same as 2018. And expenses were up 2 percent in 2019 to a little more than $1 billion.

The company, which has raised more than $3 billion in funding and is valued by private market investors at $20 billion, has not turned a profit since it was founded in 2003.

A Palantir spokeswoman did not immediately respond to a request for comment on the figures. Details from the financial documents were reported earlier by the tech news site TechCrunch.

The company licenses two pieces of software, called Gotham and Foundry, and provides cloud-computing services and in-person support. Its software is designed to aid in data analysis and is widely used by government agencies for tasks like managing complex supply chains or tracking terrorism suspects.

Despite efforts to land more commercial customers, Palantir earned $345.5 million from its work with government agencies in 2019 and $397 million from commercial entities, the documents said.

The documents describe Palantir’s plan to go public via direct listing, in which no new shares are issued. In most direct listings, shareholders are not bound by a traditional lockup period before they can sell their stock. But Palantir has imposed a lockup period in which common stockholders can sell 20 percent of their shares immediately but must wait until after Dec. 31 to sell more.

The company submitted its confidential filing to go public via direct listing on July 6.

The company has arranged a structure to ensure its founders retain power. They have a special class of shares, called Class F, that will have a variable number of votes to ensure the founders control 49.999999 percent of the company’s voting power, no matter how many shares they actually own.

In the documents, Palantir made the case for its services, which primarily serve government contractors, citing the “systemic failures of government institutions to provide for the public,” as an opportunity.

“We believe that the underperformance and loss of legitimacy of many of these institutions will only increase the speed with which they are required to change,” the document said.

But there are also many risks listed in the documents, including privacy and data protection laws, negative media coverage, the potential loss of Alex Karp, its chief executive, and customer concentration — roughly one-third of its revenue comes from its top three customers.

This is a breaking story. It will be updated.



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