We're still going through Palantir's leaked S-1, which at the time of this writing has not yet been filed and released by the SEC. This morning, We discussed some financial data from Palantirincluding sales, margins and net losses.
The company's customer base – and its high level of focus – is a recurring theme in the leaked S-1 file theinformationsuperhighway read all day.
At the end of the first half of 2020, Palantir had exactly 125 customers. Palantir notes that customers from different parts of the same government department or company are considered separately (Palantir's example is that CDC and NIH are both part of the Department of Health and Human Services, but are billed separately and therefore count as separate customers for purposes of calculation.
At the end of 2019, the average revenue per customer for Palantir was $ 5.6 million. That's a gigantic number compared to a lot of other SaaS stocks, but that's mainly due to the fact that Palantir doesn't have the soft-onboarding strategies of products like Slack or Amazon Web Services where small businesses use a product even though they use it, they are not massive money makers.
Palantir notes that the average revenue per customer has increased by 30% over the past decade.
Perhaps even more worrying is Palantir's sheer sales concentration. The company's three largest customers – which were not disclosed – together accounted for 28% of the company's sales in 2019. The top twenty customers accounted for 67% of total sales, with each of these customers having average sales of $ 24.8 million.
As we reported this morning, 53.5% of the company's revenue comes from government contracts and the remainder from commercial customers.
According to Palantir's filing, 40% of sales are in the US and 60% internationally. The company claims to have customers in 150 countries (of course, matching 150 countries with 125 customers remains a math exercise for the reader).
Palantir sees great growth opportunities in both government and commercial businesses. On the government side, the company said in its notice to shareholders:
The systematic failure of government institutions to care for the public – shattered health systems, erosion of data protection, strained criminal justice systems, and outdated methods of warfare – will continue to oblige both the public and private sectors to change. We believe that the underperformance and loss of legitimacy of many of these institutions will only increase the speed at which they need to change.
Palantir argues that its total addressable market is $ 119 billion.