UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission File Number: 001-39540

Palantir Technologies Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	68-0551851
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1555 Blake Street, Suite 250 Denver, Colorado	80202
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (720) 358-3679

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.001 per share	PLTR	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of August 5, 2021, there were 1,866,000,060 shares of the registrant’s Class A common stock outstanding, 86,117,515 shares of the registrant’s Class B common stock outstanding, and 1,005,000 shares of the registrant’s Class F common stock outstanding.

TABLE OF CONTENTS

		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Loss	6
	Condensed Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity (Deficit)	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Qualitative and Quantitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities	92
Item 3.	Defaults Upon Senior Securities	92
Item 4.	Mine Safety Disclosures	92
Item 5.	Other Information	92
Item 6.	Exhibits	93

2

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

3

Palantir Technologies Inc.

Condensed Consolidated Balance Sheets

(in thousands, except per share amounts)

(unaudited)

	As of June 30,		As of December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	2,341,156	$	2,011,323
Restricted cash		36,750		37,285
Accounts receivable		242,998		156,932
Prepaid expenses and other current assets		41,648		51,889
Total current assets		2,662,552		2,257,429
Property and equipment, net		24,824		29,541
Restricted cash, noncurrent		61,914		79,538
Operating lease right-of-use assets		209,243		217,075
Other assets		117,135		106,921
Total assets	$	3,075,668	$	2,690,504
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	30,914	$	16,358
Accrued liabilities		166,252		158,546
Deferred revenue (1)		194,511		189,520
Customer deposits		257,747		210,320
Operating lease liabilities		33,162		29,079
Total current liabilities		682,586		603,823
Deferred revenue, noncurrent (1)		40,518		50,525
Customer deposits, noncurrent		62,732		81,513
Debt, noncurrent, net		—		197,977
Operating lease liabilities, noncurrent		216,630		229,800
Other noncurrent liabilities		4,239		4,316
Total liabilities		1,006,705		1,167,954
Commitments and Contingencies (Note 8)
Stockholders’ equity:
Preferred stock, par value $0.001: 2,000,000 shares authorized and 0 issued and outstanding as of June 30, 2021 and December 31, 2020		—		—
Common stock, $0.001 par value: 20,000,000 Class A shares authorized as of June 30, 2021 and December 31, 2020; 1,855,143 shares issued and outstanding as of June 30, 2021, and 1,542,058 shares issued and outstanding as of December 31, 2020; 2,700,000 Class B shares authorized as of June 30, 2021 and December 31, 2020; 80,430 shares issued and outstanding as of June 30, and 249,077 shares issued and outstanding as of December 31, 2020; and 1,005 Class F shares authorized, issued, and outstanding as of June 30, 2021 and December 31, 2020		1,937		1,792
Additional paid-in capital		7,294,369		6,488,857
Accumulated other comprehensive income (loss)		65		(2,745)
Accumulated deficit		(5,227,408)		(4,965,354)
Total stockholders’ equity		2,068,963		1,522,550
Total liabilities and stockholders’ equity	$	3,075,668	$	2,690,504

(1) Deferred revenue as of June 30, 2021 and December 31, 2020 includes $53.2 million and $68.2 million, respectively, from Palantir Technologies Japan, K.K. See Note 6. Equity Method Investments, for more information.

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Palantir Technologies Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenue	$	375,642		$	251,889		$	716,876		$	481,216
Cost of revenue		90,926			68,410			165,037			132,704
Gross profit		284,716			183,479			551,839			348,512
Operating expenses:
Sales and marketing		162,379			102,518			298,476			201,171
Research and development		110,524			86,815			208,995			152,615
General and administrative		157,961			93,291			304,530			164,056
Total operating expenses		430,864			282,624			812,001			517,842
Loss from operations		(146,148	)		(99,145	)		(260,162	)		(169,330	)
Interest income		372			551			748			3,818
Interest expense		(590	)		(5,646	)		(2,430	)		(10,240	)
Change in fair value of warrants		—			(3,683	)		—			10,012
Other income (expense), net		2,125			(1,589	)		(2,769	)		4,511
Loss before provision (benefit) for income taxes		(144,241	)		(109,512	)		(264,613	)		(161,229	)
Provision (benefit) for income taxes		(5,661	)		943			(2,559	)		3,500
Net loss	$	(138,580	)	$	(110,455	)	$	(262,054	)	$	(164,729	)
Net loss per share attributable to common stockholders, basic	$	(0.07	)	$	(0.17	)	$	(0.14	)	$	(0.27	)
Net loss per share attributable to common stockholders, diluted	$	(0.07	)	$	(0.17	)	$	(0.14	)	$	(0.28	)
Weighted-average shares of common stock outstanding used in computing net loss per share attributable to common stockholders, basic		1,894,606			640,450			1,858,085			616,150
Weighted-average shares of common stock outstanding used in computing net loss per share attributable to common stockholders, diluted		1,894,606			640,669			1,858,085			618,635

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Palantir Technologies Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net loss	$	(138,580	)	$	(110,455	)	$	(262,054	)	$	(164,729	)
Other comprehensive income:
Foreign currency translation adjustments		(800	)		577			2,810			1,603
Comprehensive loss	$	(139,380	)	$	(109,878	)	$	(259,244	)	$	(163,126	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Palantir Technologies Inc.

Condensed Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands)

(unaudited)

	Common Stock				Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount
Balance as of March 31, 2021		1,860,607	$	1,860	$	6,892,046		$	865		$	(5,088,828	)	$	1,805,943
Issuance of common stock from the exercise of stock options		59,171		59		167,769			—			—			167,828
Issuance of common stock upon vesting of restricted stock units (“RSUs”)		12,872		13		(13	)		—			—			—
Issuance of common stock upon net exercise of common stock warrants and other		3,928		5		1,707			—			—			1,712
Stock-based compensation		—		—		232,860			—			—			232,860
Other comprehensive loss		—		—		—			(800	)		—			(800	)
Net loss		—		—		—			—			(138,580	)		(138,580	)
Balance as of June 30, 2021		1,936,578	$	1,937	$	7,294,369		$	65		$	(5,227,408	)	$	2,068,963

	Common Stock				Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount
Balance as of December 31, 2020		1,792,140	$	1,792	$	6,488,857		$	(2,745	)	$	(4,965,354	)	$	1,522,550
Issuance of common stock from the exercise of stock options		114,471		114		376,574			—			—			376,688
Issuance of common stock upon vesting of RSUs		23,832		24		(24	)		—			—			—
Issuance of common stock upon vesting of growth units		1,471		1		(1	)		—			—			—
Issuance of common stock upon net exercise of common stock warrants and other		4,664		6		1,706			—			—			1,712
Stock-based compensation		—		—		427,257			—			—			427,257
Other comprehensive income		—		—		—			2,810			—			2,810
Net loss		—		—		—			—			(262,054	)		(262,054	)
Balance as of June 30, 2021		1,936,578	$	1,937	$	7,294,369		$	65		$	(5,227,408	)	$	2,068,963

7

Palantir Technologies Inc.

Condensed Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands)

(unaudited)

	Redeemable Convertible Preferred Stock				Convertible Preferred   Stock						Common Stock						Additional Paid-in Capital			Treasury Stock						Accumulated Other Comprehensive Income			Accumulated Deficit			Total Stockholders’ Deficit
	Shares		Amount		Shares			Amount			Shares			Amount						Shares			Amount
Balance as of March 31, 2020		4,017	$	33,569		742,812		$	2,093,562			588,033		$	595		$	1,918,372			7,201		$	(42,672	)	$	323		$	(3,853,237	)	$	(1,976,619	)
Issuance of Series K convertible preferred stock		—		—		121			947			—			—			—			—			—			—			—			—
Issuance of common stock from the exercise of stock options		—		—		—			—			30,381			31			22,083			—			—			—			—			22,114
Issuance of common stock, net of issuance costs		—		—		—			—			118,221			118			537,731			—			—			—			—			537,849
Retirement of treasury stock		—		—		—			—			—			(7	)		(42,665	)		(7,201	)		42,672			—			—			—
Stock-based compensation		—		—		—			—			—			—			127,833			—			—			—			—			127,833
Other comprehensive income		—		—		—			—			—			—			—			—			—			577			—			577
Net loss		—		—		—			—			—			—			—			—			—			—			(110,455	)		(110,455	)
Balance as of June 30, 2020		4,017	$	33,569		742,933		$	2,094,509			736,635		$	737		$	2,563,354			—		$	—		$	900		$	(3,963,692	)	$	(1,398,701	)
	Redeemable Convertible Preferred Stock				Convertible Preferred   Stock						Common Stock						Additional Paid-in Capital			Treasury Stock						Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Deficit
	Shares		Amount		Shares			Amount			Shares			Amount						Shares			Amount
Balance as of December 31, 2019		4,017	$	33,569		742,840		$	2,093,662			581,497		$	588		$	1,857,331			6,393		$	(38,895	)	$	(703	)	$	(3,798,963	)	$	(1,980,642	)
Conversion of Series H-1 convertible preferred stock to common stock		—		—		(28	)		(100	)		28			—			100			—			—			—			—			100
Issuance of Series K convertible preferred stock		—		—		121			947			—			—			—			—			—			—			—			—
Repurchase of common stock, held in treasury		—		—		—			—			(808	)		—			—			808			(3,777	)		—			—			(3,777	)
Issuance of common stock from the exercise of stock options		—		—		—			—			37,697			38			28,786			—			—			—			—			28,824
Issuance of common stock, net of issuance costs		—		—		—			—			118,221			118			537,731			—			—			—			—			537,849
Retirement of treasury stock		—		—		—			—			—			(7	)		(42,665	)		(7,201	)		42,672			—			—			—
Stock-based compensation		—		—		—			—			—			—			182,071			—			—			—			—			182,071
Other comprehensive income		—		—		—			—			—			—			—			—			—			1,603			—			1,603
Net loss		—		—		—			—			—			—			—			—			—			—			(164,729	)		(164,729	)
Balance as of June 30, 2020		4,017	$	33,569		742,933		$	2,094,509			736,635		$	737		$	2,563,354			—		$	—		$	900		$	(3,963,692	)	$	(1,398,701	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

8

Palantir Technologies Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2021			2020
Operating activities
Net loss	$	(262,054	)	$	(164,729	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		7,999			7,793
Stock-based compensation		426,473			181,955
Change in fair value of warrants		—			(10,012	)
Non-cash operating lease expense		14,435			19,831
Other operating activities		560			3,633
Changes in operating assets and liabilities:
Accounts receivable		(83,883	)		(56,583	)
Prepaid expenses and other current assets		12,770			(3,220	)
Other assets		(9,522	)		(9,937	)
Accounts payable		14,589			(35,012	)
Accrued liabilities		9,070			(30,366	)
Deferred revenue, current and noncurrent		(3,679	)		19,645
Customer deposits, current and noncurrent		28,668			(124,434	)
Operating lease liabilities, current and noncurrent		(15,795	)		(25,815	)
Other noncurrent liabilities		—			921
Net cash provided by (used in) operating activities		139,631			(226,330	)
Investing activities
Purchases of property and equipment		(1,405	)		(5,945	)
Proceeds from the sale of assets held for sale		—			250
Net cash used in investing activities		(1,405	)		(5,695	)
Financing activities
Proceeds from the issuance of common stock, net of issuance costs		—			542,922
Proceeds from issuance of debt, net of issuance costs		—			149,683
Principal payments on borrowings		(200,000	)		(250,000	)
Proceeds from the exercise of common stock options		376,688			28,824
Repurchase of common stock		—			(3,777	)
Other financing activities		(1,744	)		(377	)
Net cash provided by financing activities		174,944			467,275
Effect of foreign exchange on cash, cash equivalents, and restricted cash		(1,496	)		(197	)
Net increase in cash, cash equivalents, and restricted cash		311,674			235,053
Cash, cash equivalents, and restricted cash - beginning of period		2,128,146			1,401,962
Cash, cash equivalents, and restricted cash - end of period	$	2,439,820		$	1,637,015
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	3,425		$	8,144
Cash paid for interest		2,381			5,644
Supplemental disclosures of non-cash investing and financing information:
Common stock issuance costs included in accounts payable and accrued liabilities	$	—		$	5,072

The accompanying notes are an integral part of these condensed consolidated financial statements.

9

Palantir Technologies Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization

Palantir Technologies Inc. (including its subsidiaries, “Palantir,” or “the Company”) was incorporated in Delaware on May 6, 2003. The Company builds and deploys software platforms, Palantir Gotham and Palantir Foundry, that serve as the central operating systems for its customers.

2. Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The accompanying condensed consolidated financial statements include the accounts of Palantir Technologies Inc. and its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Investments in entities where the Company holds at least a 20% ownership interest and has the ability to exercise significant influence over the investee, but does not control, are accounted for using the equity method of accounting. For such investments, the share of the investee’s results of operations is included as a component of other income (expense), net in the condensed consolidated statements of operations and the investment balance is included in other assets and classified as noncurrent in the condensed consolidated balance sheets. The Company’s fiscal year ends on December 31.

The unaudited condensed consolidated balance sheet as of December 31, 2020 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including certain notes required by GAAP on an annual reporting basis. In management’s opinion, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the balance sheets and statements of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year or any future period.

The Company ceased to be an emerging growth company as of December 31, 2020, which accelerated its adoption of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). As a result, certain components of cash flows used in operating activities within the Company’s condensed consolidated statements of cash flows for the six months ended June 30, 2020 have been presented to conform to the new standard. The impact to the presentation of the other statements was not material.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included in its Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on February 26, 2021.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.

Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to, identification of performance obligations in customer contracts, the valuation of deferred tax assets and uncertain tax positions, collectability of accounts receivable, useful lives of tangible assets, and the incremental borrowing rate for operating leases. Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates and such differences could affect the Company’s financial position and results of operations.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are discussed in Note 2. Significant Accounting Policies in the notes to consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on February 26, 2021. There have been no significant changes to these policies during the six months ended June 30, 2021.

10

Palantir Technologies Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents primarily consist of amounts invested in money market funds.

Restricted cash primarily consists of cash and certificates of deposit that are held as collateral against letters of credit and guarantees that the Company is required to maintain for operating lease agreements, certain customer contracts, and other guarantees and financing arrangements.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the amounts shown in the condensed consolidated statements of cash flows (in thousands):

	As of June 30,
	2021		2020
Cash and cash equivalents	$	2,341,156	$	1,497,591
Restricted cash		36,750		37,069
Restricted cash, noncurrent		61,914		102,355
Total cash, cash equivalents, and restricted cash	$	2,439,820	$	1,637,015

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses, if any. The Company generally grants non-collateralized credit terms to its customers. Allowance for credit losses is based on the Company’s best estimate of probable losses inherent in its accounts receivable portfolio and is determined based on expectations of the customer’s ability to pay by considering factors such as customer type (commercial or government), historical experience, financial position of the customer, age of the accounts receivable, current economic conditions, including the ongoing COVID-19 pandemic, and reasonable and supportable forward-looking factors about its portfolio and future economic conditions. Accounts receivable are written-off and charged against an allowance for credit losses when the Company has exhausted collection efforts without success. Based upon the Company’s assessment as of June 30, 2021 and December 31, 2020, it did not record an allowance for credit losses as probable losses are not expected to be material.

Concentrations of Credit Risk and Other Concentrations

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, and accounts receivable. Cash equivalents primarily consist of money market funds with original maturities of three months or less, which are invested primarily with U.S. financial institutions. Cash deposits with financial institutions, including restricted cash, generally exceed federally insured limits. Management believes minimal credit risk exists with respect to these financial institutions and the Company has not experienced any losses on such amounts.

The Company is exposed to concentrations of credit risk with respect to accounts receivable presented on the condensed consolidated balance sheets. The Company’s accounts receivable balances as of June 30, 2021 and December 31, 2020 were $243.0 million and $156.9 million, respectively. Customer I represented 24% of total accounts receivable as of June 30, 2021. Customer G represented 13% of total accounts receivable as of December 31, 2020. No other customer represented more than 10% of total accounts receivable as of June 30, 2021 and December 31, 2020. The Company seeks to mitigate its credit risk with respect to accounts receivable by contracting with large commercial customers and government agencies and regularly monitoring the aging of accounts receivable balances. As of June 30, 2021 and December 31, 2020, the Company had not experienced any significant losses on its accounts receivable.

For the three and six months ended June 30, 2021, no customer represented more than 10% of total revenue. For the three and six months ended June 30, 2020, Customer F, which is in the government operating segment, represented 11% of total revenue and Customer A, which is in the commercial operating segment, represented 10% of total revenue, respectively. No other customer represented more than 10% of total revenue for the three and six months ended June 30, 2020.

11

Palantir Technologies Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The Company relies on the technology, infrastructure, and software applications, including software-as-a-service offerings, of third parties in order to host or operate certain key products and functions of its business.

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes. ASU 2019-12 removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. The Company adopted ASU 2019-12 as of January 1, 2021 using transition methods allowed under each aspect of the guidance. The adoption of the standard did not have a material impact on the Company’s condensed consolidated financial statements.

3. Contract Liabilities and Remaining Performance Obligations

Contract Liabilities

The Company’s contract liabilities consist of deferred revenue and customer deposits. As of June 30, 2021 and December 31, 2020, the Company’s contract liability balances were $555.5 million and $531.9 million, respectively. Revenue of $285.4 million and $301.3 million was recognized during the six months ended June 30, 2021 and 2020, respectively, that was included in the contract liability balances as of December 31, 2020 and 2019, respectively.

Remaining Performance Obligations

The Company’s arrangements with its customers often have terms that span over multiple years. However, the Company generally allows its customers to terminate contracts for convenience prior to the end of the stated term with less than twelve months’ notice. Revenue allocated to remaining performance obligations represents noncancelable contracted revenue that has not yet been recognized, which includes deferred revenue and, in certain instances, amounts that will be invoiced. The Company has elected the practical expedient allowing the Company to not disclose remaining performance obligations for contracts with original terms of twelve months or less. Cancelable contracted revenue, which includes customer deposits, is not considered a remaining performance obligation.

The Company’s remaining performance obligations were $671.9 million as of June 30, 2021, of which the Company expects to recognize approximately 49% as revenue over the next twelve months.

Disaggregation of Revenue

See Note 13. Segment and Geographic Information, for disaggregated revenue by customer segment and geographic region.

4. Fair Value Measurements

Financial instruments consist of money market funds and certificates of deposit included in cash equivalents and restricted cash, accounts receivable, other assets accounted for at fair value, accounts payable, and accrued liabilities. money market funds and certificates of deposit are stated at fair value on a recurring basis. Accounts receivable, accounts payable, and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date.

The following tables present the Company’s assets that are measured at fair value on a recurring and nonrecurring basis and indicates the fair value hierarchy of the valuation (in thousands):

	As of June 30, 2021
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	963,873	$	963,873	$	—	$	—
Certificates of deposit		65,477		—		65,477		—
Total	$	1,029,350	$	963,873	$	65,477	$	—

12

Palantir Technologies Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

	As of December 31, 2020
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	1,075,783	$	1,075,783	$	—	$	—
Certificates of deposit		74,097		—		74,097		—
Total	$	1,149,880	$	1,075,783	$	74,097	$	—

Certificates of Deposit

The Company’s Level 2 instruments consist of restricted cash invested in certificates of deposit. The fair value of such instruments is estimated based on valuations obtained from third-party pricing services that utilize industry standard valuation models, including both income-based and market-based approaches, for which all significant inputs are observable either directly or indirectly. These inputs include interest rate curves, foreign exchange rates, and credit ratings.

Gross unrealized gains or losses for cash equivalents as of June 30, 2021 and December 31, 2020 were not material.

5. Balance Sheet Components

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	As of June 30, 2021		As of December 31, 2020
Leasehold improvements	$	81,057	$	85,196
Computer equipment, software, and other		23,199		22,275
Furniture and fixtures		10,069		9,976
Construction in progress		442		493
Total property and equipment, gross		114,767		117,940
Less: accumulated depreciation and amortization		(89,943)		(88,399)
Total property and equipment, net	$	24,824	$	29,541

Depreciation and amortization expense related to property and equipment, net was $3.1 million and $3.2 million for the three months ended June 30, 2021 and 2020, respectively, and $6.3 million and $6.8 million for the six months ended June 30, 2021 and 2020, respectively.

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	As of June 30, 2021		As of December 31, 2020
Accrued payroll and related expenses	$	95,574	$	85,466
Accrued other liabilities		70,678		73,080
Total accrued liabilities	$	166,252	$	158,546

6. Equity Method Investments

Palantir Technologies Japan, K.K.

During November 2019, the Company and SOMPO Holdings, Inc. (“SOMPO”) created a Japanese Kabushiki Kaisha (“K.K.”), Palantir Technologies Japan, K.K. (“Palantir Japan”), to distribute Palantir platforms to the Japanese market. Upon closing of the transaction with SOMPO, the Company purchased a total of 100,000 shares of Palantir Japan common stock for $25.0 million. The shares the Company received in exchange represent a 50% voting interest in Palantir Japan. The remaining 50% of the voting interest is held by SOMPO. The Company’s investment in Palantir Japan is accounted for as an equity method investment as the Company is able to exercise significant influence over, but does not control, the investee.

13

Palantir Technologies Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

7. Debt

2014 Credit Facility

In October 2014, the Company entered into an unsecured revolving credit facility which has been subsequently amended (the “2014 Credit Facility”). The 2014 Credit Facility incurred interest at the London Interbank Offered Rate (“LIBOR”) plus a margin of 2.75% per annum, subject to certain adjustments, and incurs a commitment fee of 0.375% assessed on the daily average undrawn portion of revolving commitments. Interest and commitment fees are payable at the end of an interest period or at each three-month interval if the interest period is longer than three months. The 2014 Credit Facility, as amended, matures on June 4, 2023. 

During April 2021, the Company entered into an amendment to the 2014 Credit Facility, which provided for an increase of $200.0 million to the revolving commitments of the existing lenders under the 2014 Credit Facility, for total revolving commitments of $400.0 million, and which also provided for an incremental loan facility for additional loans in an aggregate principal amount of up to $100.0 million with one or more existing or new lenders upon mutual agreement between the Company and such lenders. Upon entering into the amendment, the Company repaid its outstanding term loans of $200.0 million. As of June 30, 2021, the Company had no amounts outstanding under the 2014 Credit Facility and a $400.0 million undrawn revolving credit facility.

The 2014 Credit Facility contains customary representations and warranties, and certain financial and nonfinancial covenants, including but not limited to maintaining minimum liquidity of $50.0 million, and certain limitations on liens and indebtedness. The Company was in compliance with all covenants associated with the 2014 Credit Facility as of June 30, 2021.

8. Commitments and Contingencies

Purchase Commitments

In December 2019, the Company entered into, and subsequently amended during December 2020, a minimum annual commitment to purchase cloud hosting services of at least $1.49 billion over six contract years, with an optional carryover period through June 30, 2029, in exchange for various discounts on such services. If the spend does not meet the minimum annual commitment each year or at the end of the term, the Company is obligated to make a return payment. If the difference is greater than $30.0 million for each of the first three contract years or $50.0 million for each of the contract years thereafter (“relief amounts”), the Company has the option to pay the respective relief amount for that year for services to be utilized in the future and the excess amount of the difference above the relief amount would be added to the minimum annual commitment of the following year through the end of the contract. The Company satisfied its $126.0 million commitment for the contract year ended June 30, 2021. The commitment amount for the contract year ended June 30, 2022 is $167.0 million.

In June 2020, the Company entered into an additional commitment to purchase at least $45.0 million of cloud hosting services over a period of five years commencing on June 1, 2020 and ending on May 31, 2025. If the spend commitment is not met at the end of the term, the Company is obligated to pay the full amount of the outstanding balance (“shortfall payment”). The shortfall payment may be applied as a prepayment against consumption during an additional twelve-month coverage period expiring on May 31, 2026, at which time any unused amount would be forfeited. As of June 30, 2021, the Company had satisfied $6.0 million of its commitment.

14

Palantir Technologies Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Investment Commitments

The Company approved and entered into certain agreements (“Investment Agreements”) to purchase, or commit to purchase, shares of various entities, including special purpose acquisition companies and/or other privately-held or publicly-traded entities (each, an “Investee,” and such purchases, or commitments to purchase, the “Investments”). As of June 30, 2021, the Company had outstanding commitments, subject to the applicable terms and conditions, to purchase a total of 25.0 million shares for an aggregate purchase price of $250.0 million. The closings of certain of such Investments are contingent upon the completion of a proposed business combination between the applicable Investee and other applicable parties. As of June 30, 2021, none of such Investments had closed.

Additionally, in connection with signing the Investment Agreements, each Investee or an associated entity and the Company entered into a commercial contract for access to the Company’s products and services. The maximum potential revenue from these commercial contracts is $428 million, which is inclusive of $73 million from contractual options, and the terms of such contracts, including these contractual options, range from three to ten years. The majority of these commercial contracts are subject to various termination provisions, including for convenience in the event a proposed business combination is not completed.

The Company assessed the concurrent agreements under the non-monetary guidance within Accounting Standards Codification (“ASC”) 606 - Revenue from Contracts with Customers and the total revenue recognized from such commercial contracts during the three and six months ended June 30, 2021 was $3.0 million.

The following table presents details related to the Company’s investment commitments as of June 30, 2021 (in thousands):

Entity	Investment     Agreement Date		Committed     Share Amount		Committed Investment Amount
Lilium		March 30, 2021		4,100	$	41,000
Sarcos Robotics (1)		April 5, 2021		2,100		21,000
Roivant Sciences		May 1, 2021		3,000		30,000
Celularity (1)(2)		May 5, 2021		2,000		20,000
Mobility company		May 11, 2021		2,000		20,000
Wejo		May 28, 2021		3,500		35,000
Babylon Health (1)		June 3, 2021		3,500		35,000
Boxed (1)		June 13, 2021		2,000		20,000
Pear Therapeutics		June 21, 2021		1,000		10,000
Autonomous vehicle company(1)		June 22, 2021		1,800		18,000
Total				25,000	$	250,000

(1)  Commercial contract contains termination for convenience clauses in the event the proposed business combination and/or the Company’s proposed investment is not completed.

(2)  The Company’s investment closed during July 2021.

Litigation and Legal Proceedings

From time to time, third parties may assert patent infringement claims against the Company. In addition, from time to time, the Company may be subject to other legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of trademarks, copyrights, and other intellectual property rights; employment claims; securities claims; investor claims; corporate claims; class action claims; and general contract, tort, or other claims. The Company may from time to time also be subject to various legal or government claims, disputes, or investigations. Such matters may include, but not be limited to, claims, disputes, allegations, or investigations related to warranty; refund; breach of contract; breach, leak, or misuse of personal data or confidential information; employment; government procurement; intellectual property; government regulation or compliance (including but not limited to anti-corruption requirements, export or other trade controls, data privacy or data protection, cybersecurity requirements, or antitrust/competition law requirements); securities; investor; corporate; or other matters. The Company is unable to predict whether or when any such matters may arise, the outcome of these matters, or the ultimate legal and financial liability, and cannot reasonably estimate the possible loss or range of loss at this time and accordingly has not accrued a related liability.

On December 14, 2017, members of KT4 Partners LLC (Managing Member Marc Abramowitz) and Sandra Martin Clark, as trustee for the Marc Abramowitz Irrevocable Trust Number 7 (together, “KT4 Plaintiffs”), filed an action in the Delaware Superior Court against the Company and Disruptive Technology Advisers LLC. The complaint alleges tortious interference with prospective economic advantage and civil conspiracy in connection with a potential sale of stock by the KT4 Plaintiffs to a third party. The KT4 Plaintiffs seek compensatory and punitive damages, interest, fees, and costs.

15

Palantir Technologies Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The Company believes this lawsuit is without merit and is vigorously defending itself against it. Given the uncertainty of litigation, it may be reasonably possible that the Company will incur a loss with regards to the matter; however, it cannot currently estimate a range of possible losses. Accordingly, the Company is unable, at this time, to estimate the overall effects that may result from the lawsuit on its financial condition, results of operations, or cash flows.

As of June 30, 2021, the Company was not aware of any currently pending legal matters or claims, individually or in the aggregate, that were expected to have a material adverse impact on its condensed consolidated financial statements.

Letters of Credit and Guarantees

The Company had irrevocable standby letters of credit and guarantees, including bank guarantees, outstanding in the amounts of $98.7 million and $116.8 million as of June 30, 2021 and December 31, 2020, respectively, all of which were fully collateralized. The Company is required to maintain these letters of credit and guarantees primarily for operating lease agreements, certain customer contracts, and other guarantees and financing arrangements. As of June 30, 2021, these letters of credit and guarantees had expiration dates through August 2028.

Warranties and Indemnification

The Company generally provides a warranty for its software products and services and a service level agreement (“SLA”) for the Company’s performance of software operations via its operations and maintenance (“O&M”) services to its customers. The Company’s products are generally warranted to perform substantially as described in the associated product documentation during the subscription term or for a period of up to 90 days where the software is hosted by the customer; and the Company includes O&M services as part of its subscription and license agreements to support this warranty and maintain the operability of the software. The Company’s services are generally warranted to be performed in a professional manner and by an adequate staff with knowledge about the products. In the event there is a failure of such warranties, the Company generally is obligated to correct the product or service to conform to the warranty provision, as set forth in the applicable SLA, or, if the Company is unable to do so, the customer is entitled to seek a refund of the purchase price of the product and service (generally prorated over the contract term). Due to the absence of historical warranty claims, the Company’s expectations of future claims related to products under warranty continue to be insignificant. The Company has not recorded warranty expense or related accruals as of June 30, 2021 and December 31, 2020.

The Company generally agrees to indemnify its customers against legal claims that the Company’s software products infringe certain third-party intellectual property rights and accounts for its indemnification obligations. In the event of such a claim, the Company is generally obligated to defend its customer against the claim and to either settle the claim at the Company’s expense or pay damages that the customer is legally required to pay to the third-party claimant. In addition, in the event of an infringement, the Company generally agrees to secure the right for the customer to continue using the infringing product; to modify or replace the infringing product; or, if those options are not commercially practicable, to refund the cost of the software, as prorated over the period. To date, the Company has not been required to make any payment resulting from infringement claims asserted against its customers and does not believe that the Company will be liable for such claims in the foreseeable future. As such, the Company has not recorded a liability for infringement costs as of June 30, 2021 and December 31, 2020.

The Company has obligations under certain circumstances to indemnify each of the defendant directors and certain officers against judgments, fines, settlements, and expenses related to claims against such directors and certain officers and otherwise to the fullest extent permitted under the law and the Company’s bylaws and Amended and Restated Certificate of Incorporation.

9. Stockholders’ Equity

The Company’s Class A, Class B, and Class F common stock (collectively, the “common stock”) all have the same rights, except with respect to voting and conversion rights. Class A and Class B common stock have voting rights of 1 and 10 votes per share, respectively. The Class F common stock has the voting rights generally described below and each share of Class F common stock is convertible at any time, at the option of the holder thereof, into one share of Class B common stock. All shares of Class F common stock are held in a voting trust established by Stephen Cohen, Alexander Karp, and Peter Thiel (the “Founders”). The Class F common stock generally gives the Founders the ability to control up to 49.999999% of the total voting power of the Company’s capital stock, so long as the Founders and certain of their affiliates collectively meet a minimum ownership threshold, which was 100.0 million of the Company’s equity securities as of June 30, 2021.

Holders of common stock are entitled to dividends when, as and if declared by the Company’s Board of Directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. No dividends have been declared as of June 30, 2021.

In connection with the Company’s direct listing of its Class A common stock on the New York Stock Exchange (“Direct Listing”) in September 2020, all outstanding shares of redeemable convertible preferred stock and convertible preferred stock were converted into 4,017,378 and 793,725,807 shares of Class B common stock, respectively, and 1,005,000 shares of Class B common stock held by the Founders were exchanged for an equal number of shares of Class F common stock.

16

Palantir Technologies Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

The following represented the total authorized, issued, and outstanding shares for each class of common stock (in thousands):

	As of June 30, 2021				As of December 31, 2020
	Authorized		Issued and   Outstanding		Authorized		Issued and   Outstanding
Common stock:
Class A		20,000,000		1,855,143		20,000,000		1,542,058
Class B		2,700,000		80,430		2,700,000		249,077
Class F		1,005		1,005		1,005		1,005
Total		22,701,005		1,936,578		22,701,005		1,792,140

10. Stock-Based Compensation

Stock Options

The following table summarizes stock option activity for the six months ended June 30, 2021 (in thousands, except per share amounts):

	Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Balance as of December 31, 2020		535,767		$	6.12		7.99	$	9,340,245
Options exercised		(114,471	)		3.29
Options canceled and forfeited		(3,622	)		5.17
Balance as of June 30, 2021		417,674		$	6.90		8.49	$	8,128,222
Options vested and exercisable as of June 30, 2021		213,423		$	3.92		6.41	$	4,788,520

As of June 30, 2021, the unrecognized expense related to options outstanding was $1.0 billion, which is expected to be recognized over a weighted-average service period of 8.07 years.

RSUs

The following table summarizes the RSU activity for the six months ended June 30, 2021 (in thousands, except per share amounts):

	RSUs Outstanding		Weighted Average  Grant Date Fair  Value per Share
Unvested and outstanding as of December 31, 2020		184,870	$	6.97
RSUs granted		10,131		27.25
RSUs vested		(