Although Palantir is by far the smallest company on the Cloud Wars Top 10, the extraordinary demand it is generating among customer CEOs is accelerating the profound shift among business leaders away from isolated AI trials to enterprise-wide initiatives designed to exploit AI’s full potential.
No doubt every Cloud Wars Top 10 vendor is seeing or at least sensing that mindset shift among customers. But the quantifiable market momentum Palantir has created is establishing some new marketplace standards that other cloud and AI vendors will soon have to live up to whether they like it or not.
Let me start with the punchline, and I’ll then share the supporting details to back up that claim. The customer story that’s flagged in the headline and is the basis of today’s analysis was revealed by Palantir CRO Ryan Taylor last month on the company’s Q3 earnings call. (By the way, here’s a detail that reflects just how different Palantir is from other big tech companies: in addition to being Chief Revenue Officer, Taylor is also Palantir’s Chief Legal Officer. I’ve got a special gift for anyone who can show me another multibillion-dollar company with an executive holding that dual title!)
“A leading medical-device manufacturer signed a multiyear expansion just five months after their initial contract, increasing ACV more than eightfold,” Taylor said on the call.
“Two weeks into their initial contract, the conversation evolved from a single use case to pursuing the opportunity of becoming an AI-first enterprise. Their CEO approached me to embrace a shared vision for an enterprise-wide AIP (A.I. Platform) deployment to transform their entire organization.”
So, from the stunning financial details — jacking up the investment in Palantir AI solutions by 700% after just five months! — to the strategic rationale of “becoming an AI-first enterprise,” this is a remarkable example of the appetite CEOs have for AI capabilities that trigger outsized business outcomes.
Another eye-popping customer story shared by Taylor on the call involved insurer TWG Global, whose CEO “has taken personal ownership of their AI transformation, meeting with our team regularly to orchestrate a company-wide transformation around AIP.”
That end-to-end transformation includes “reimagining every function, from underwriting to claims processing, leading to a significant expansion of our work together,” said Taylor, who then shared this comment from TWG’s co-chairman Thomas Toll:
“What was once a competitive advantage is now a competitive necessity. Companies that fail to incorporate AI into their core operations will be outpaced by those that do.”
Scaling beyond a traditional transactional relationship, TWG and Palantir earlier this year created a partnership to jointly create AI solutions for the entire financial-services industry:
… a collaboration that commits to remaking how financial-service providers of all sizes can successfully adopt AI and scale the technology across the entire enterprise to drive long-term market competitiveness and unlock unprecedented value creation.
“Palantir is proud to partner with xAI and TWG Global to revolutionize AI adoption in the financial services industry,” said Alex Karp, Co-Founder and Chief Executive Officer of Palantir Technologies. “Some of the West’s most critical institutions are spending too much time navigating cobbled-together systems and not enough time leveraging the transformative power of AI to unlock enormous growth. Placing AI at the core of operations empowers these companies to drive faster, more meaningful outcomes for customers and — consequently — generate far greater value for society.”
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The Facts Behind the Headline
While I shared some of Palantir’s remarkable Q3 financial results a month ago in this video, it’s worth a quick revisit to illuminate the tumultuous changes that the AI Revolution is unleashing across the global economy — and the enormous potential for businesses and leaders bold enough to commit to end-to-end transformations rather than slick but low-value proofs of concept. Some Q3 highlights:
- overall revenue up 63% year-over-year and 18% sequentially;
- U.S. commercial business up 121% year-over-year and 29% sequentially;
- closed 204 deals worth $1 million or more, with 91 deals worth $5 million or more and 53 worth $10 million or more; and
- in U.S. commercial business, which now accounts for 34% of overall revenue, Palantir closed $1.3 billion, up 6X on a weighted-dollar duration basis.
Remember: all of the customers commited to Palantir could have picked dozens of other bigger cloud and AI companies — but they chose Palantir.
Final Thought
And why did so many customers make that choice? CRO/CLO Taylor has his own theory, and while it’s certainly subjective, it also has lots of stunning financial evidence to support it. Here are two separate comments made by Taylor on the Q3 earnings call:
- “The trajectory is clear. Customers are converting to larger enterprise agreements in shorter timeframes, reflecting both the expanding scope of their AI ambitions and the immediate impact our software delivers.”
- “This transformation reflects a broader pattern we’re seeing across our customer base. AI is a strategic imperative owned at the C-suite level, with executive leadership recognizing that enterprise-wide AI adoption is the defining factor separating the AI haves and the AI have-nots. We’re seeing C-suite-driven AI transformations across our customers.”
Ignore the future at your peril.
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