Palantir's revenue is growing faster than the new contracts that feed it

Palantir's revenue grew 96% from a year earlier in the September 2026 quarter. Its U.S. commercial business, which sells software to American companies, grew 148% and now brings in more than the company's work for the U.S. government. The figures that point to future revenue moved far less. The value of U.S. commercial contracts signed in the quarter, which Palantir reports as total contract value, rose 11% from a year earlier and fell by about 31% from the quarter before, calculated from the reported figures.

The gap matters because of how this revenue is earned. A software contract is booked as revenue over the period it runs, so the sales reported last quarter rest heavily on deals signed in earlier quarters, while total contract value is an early sign of what later quarters can draw on. Across the whole company it rose 6% from a year earlier, to $2.918 billion.

Management put the slowdown down to the length of the contracts rather than appetite for the software. David Glazer, the chief financial officer, said several deals worth tens of millions of dollars each had shorter terms, as customers moved quickly to adopt the first version of its AI software. "As we continue to deliver value with Sovereign AI, over time, we expect both the duration and size of these contracts to increase," he said. Alex Karp, the chief executive, described customers deploying faster on shorter first contracts that can then be expanded a great deal. A shorter term lowers the value counted at signing without necessarily lowering what a customer pays each year. There is some support for that reading: net dollar retention, the company's measure of how much more its existing customers now spend, was 165%, up from 157% in the quarter before.

The backlog points the same way as bookings. Total remaining deal value, the signed contract value not yet turned into revenue, rose 2% from the quarter before to $13.4 billion, and remaining performance obligations, a narrower accounting measure of contracted revenue, were flat at $4.9 billion. Set against revenue, that cushion has thinned. At the pace of the past four quarters, remaining deal value now equals 1.84 years of revenue, against 2.21 years a year earlier, calculated from the reported figures. Revenue is growing far faster than the value of new contracts being signed.

Palantir leaves contracts with an original term of a year or less out of remaining performance obligations, so any of the shorter first contracts that run a year or less would not appear in that figure at all.

None of this has reached the reported results or the company's forecasts. Management raised its revenue guidance for the year to $8.530-8.534 billion, from $8.15-8.158 billion in August, after last quarter's revenue came in 7.0% above the midpoint of the range it had guided, calculated from the reported figures. Glazer's explanation can be checked against later results: if the first contracts are short because customers are starting small, renewals at larger sizes should lift total contract value and remaining deal value again.