SAN FRANCISCO – Palantir, a Silicon Valley company with strong links to the defense and intelligence communities, is set to be the latest in a string of tech companies to bid well on Wall Street before turning a profit.
The company sent financial documents to its investors on Thursday night, ahead of its planned debut in the public markets later this year. The documents, which offer the first complete look at the company’s finances and operations and were obtained by The New York Times, show growing business expenses and deep losses.
Palantir’s revenue in 2019 was $ 742.5 million, almost 25 percent more than the year before. The net loss of $ 580 million was about the same as 2018. And spending was up 2 percent in 2019 to just over $ 1 billion.
The company, which has raised more than $ 3 billion in financing 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. Details of the financial documents were previously reported by tech news site TechCrunch.
The company licenses two pieces of software, called Gotham and Foundry, and offers cloud computing services and personal support. The software is designed to assist in data analysis and is widely used by government agencies for tasks such as managing complex supply chains or tracking down suspected terrorism.
Despite efforts to land more commercial customers, Palantir will earn $ 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 will be issued. In most direct ads, shareholders are not bound by a traditional lockup period before they can sell their stock. But Palantir has imposed a lockup period during which ordinary shareholders can sell 20 percent of their shares immediately, but have to wait until after December 31 to sell more.
The company has submitted its confidential submission to open via direct mail on July 6th.
The company has set up a structure to ensure that its founders retain power. They have a special class of shares, called Class F, that will have a variable number of votes to ensure that the founders control 49.999999 percent of the voting power of the company, regardless of how many shares they actually own.
In the documents, Palantir made the case for its services, which primarily serve government entrepreneurs, and cited 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 at which they are required to change,” the document said.
But there are also many risks mentioned 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.
