Palantir: The Most Mysterious IPO of 2020

Preface: bit of a lighter, less analytical one this week, as Fanny I take a little time away from the office. Back to regularly scheduled programming next Sunday, though. Enjoy!

Palantir is one of those companies that almost everyone (in the tech world, at least) has heard of, but very few actually know much about.

This blind spot when it comes to the secretive deep-tech company began to come into the spotlight through the first half of 2020, as there have been talks of a possible Palantir IPO on the horizon.

Sure enough, after years of quiet rumors about the company one day going public, and hopefully offering even just a glimpse at the intriguing inner workings of the firm, Palantir quietly filed documents with the SEC with intent to go public later this year. No date is set as of yet, and no public S-1 has come out of it so far, but the news has definitely pushed the company into the tech and investing world spotlights.

This week, I want to dive into a look into Palantir’s story, what they actually…do, and explore some recently leaked figures from the company ahead of its public debut. With that said, here we go!

Some numbers

TechCrunch recently published an article with some key figures from Palantir’s upcoming S-1, “leaked” (quotation marks very much mine) by a company insider. The first look into precise numbers from the company was long-awaited and, honestly, kinda surprising!

Sure enough, the leak offered an unexpected key figure, in the form of a net loss of roughly $580M in 2019 on top-line revenue upwards of $742M for the period. This number was maybe the most surprising from this most recent leak. Tech companies incurring significant operating losses is nothing new, of course. What is new though, is a tech company running a 78% loss going into its 17th (!) year of activity.

In fairness, revenue is trending upwards, up over 25% YoY from 2018, and net losses are reducing, in turn, gradually — from a 97% loss in 2018.

Equally surprising was the discovery that around $900M of the combined losses spanning 2018 and 2019, were attributed to spend on sales and marketing. For a company known for having primarily governments as its core clients, the figure raised some eyebrows. Of course, there’s no breakdown available quite yet of how this spend was calculated. Ex-insiders at the company claim that a large part of this cash burn can be attributed to the extensive technical development carried out in the client pitching process — building custom solutions on a prospect-by-prospect basis through the deal process. Nonetheless, a sales and marketing spend representing around 40% of expenditures for a company with just roughly 125 clients as of Q2 2020 is something you don’t see every day.

This consolidated client base was an interesting reveal, too. It would appear that just the 3 top clients of Palantir represent almost 30% of the firm’s 2019 revenue — the top 20 being responsible for 67% of revenues.

This short list of active customers and the disproportionate revenues generated by just a handful of accounts has the effect of making Palantir look increasingly like less of a technology product company and more of a digital services consulting firm. Add this to their extensive investment in the RFP process through custom-built solutions long before a deal is on the table, Palantir begins to resemble a McKinsey or Bain quite quickly, albeit even more secretive. Similarly to the traditional consultants, Palantir promotes its “forward-deployed engineers” on-site at its clients’ offices — integrating client systems with Palantir’s, the company starts to look like a hybrid software/consulting agency — quite a distance from the pure technology company it bills itself as.

So, what’s a Palantir?

With all that number-stuff out the way, let’s have a look at what Palantir actually… does.

Palantir, in a nutshell, specializes in big data analysis and technical systems development. It works primarily with governmental organizations from national health authorities to defense ministries in developing custom software to drive operations via big data insights.

Trying to explain that without sounding boring is a challenge of its own. It gets more exciting in a minute, promise.

Oh, but first a fun fact! The company is full of nerdy references. Offices by the name “The Shire” and “Rivendell” can be found, for example across California. The company name itself, in fact, comes from The Lord of the Rings, in which palantír were “seeing-stones” which allowed their users to communicate with each other or to see faraway parts of the world — a fitting name, then. Don’t even get me started on their counter-terrorism division named Palantir Gotham

The firm was co-founded by a team of 5, 4 of whom were recent PayPal alumni. Of the squad, the most recognizable member remains, of course, renowned tech billionaire and face of the PayPal Mafia, Peter Thiel. The company was largely formed from the talent which once comprised the financial crimes division at PayPal — and this served as one of Palantir’s key entry points into its market. Some of the company’s first clients were members of the United States Intelligence Community (USIC), across financial crime and national security verticals.

Today, the company has 3 main client and service segments, spanning:

  • Financial institutions
  • Law firms
  • Governments

It’s these operations with governmental clients that Palantir is best known for today, primarily for its numerous projects with the US Department of Defense — whose engagements have a large counter-terrorism focus. For these clients, Palantir’s primary value proposition is one of ‘connecting dots’ between agencies. Building powerful cross-platform and cross-agency intelligence databases with massive data mining functionalities has made Palantir the go-to choice for a number of government agencies’ intelligence platform needs.

Palantir offers such a wide range of services that any one specific use case can be hard to discern without digging a bit. So I’ll give an example of the types of use cases Palantir has been used for in the past.

leaked document from 2013 offered some insight into a Palantir-powered solution, here, working with the Pentagon, where Palantir was used to track patterns in roadside bomb deployment and was able to conclude that garage-door openers were being used as remote detonators.

In the finance space, Palantir’s technology helped the Securities Investor Protection Corporation (SIPC) sift through over 20 terabytes of text and financial data spanning 40 years of records, leading to the arrest of a Mr. Bernie Madoff.

Connecting the dots of various agencies, aggregating data from wildly disparate sources, then, appears to be a powerful business! Though — as these recent leaks would indicate — a questionably profitable one.

More broadly, Palantir claims its platform has 4 main uses:

  • Data integration
  • Search and Discovery
  • Knowledge Management
  • Collaboration

Let’s have a quick look at each, one by one.

Data integration

As roughly described above, their data integration capabilities, synthesizing data sources from various formats and locations, connecting it in an ‘object based model’ via the framework Palantir calls “Dynamic Ontology”.

It’s this unique format of relationships between different data structures which fuels the Palantir platform’s ability to uncover ‘relationships’ between otherwise disparate data sources.

Search and Discovery

Through the renowned interface of the platform, non-technical users are able to query all types of data, across satellite imagery, financial records displayed in visual formats.

It’s this complex ability to take that synthesized and aggregated data, and use AI combined with human expertise to visually represent and analyse those connections that constitute’s Palantir’s best known benefits.

Knowledge Management

With such heavy roots in the intellignce community, military and other gonvernment entities, the regulation and oversight required in classifying sensitive and classified information is vital.

In a blockchain-esque breadcrumb trail of each access and modification of any and all data on the platform, Palantir’s software pitches itself as being the most highly-secure entrant on the market.


In connecting expertise across various verticals and analytical focuses, Palantir brings teams together from around the world, offering them the combined data lakes to foster cross-agency, cross-border collaboration.

Individual analysis gets published to a broader network on the platform, allowing others to collaborate and built on top of existing work.


Believe it or not, a private company helping governments expand their military capabilities doesn’t often go without its fair share of public controversy over the years, and Palantir leads the way in that department. From public admission of involvement with the Trump administration by assisting ICE in the deportation of undocumented immigrants, to taking up a Pentagon contract to deploy and monitor military drones (a project dropped by Google following significant backlash), Palantir’s governmental operations have been heavily criticized.

In 2016, it was revealed that Palantir had seen over 20% employee turnover, an eye-catching figure, given its staff of over 2,000 at the time. Later, the US government sued the company on allegations of hiring discrimination against Asian applicants.

Morale and public perception of Palantir were already lacking by this time, following its (unfortunately, quite public) failed attempts in 2014 to create a data-sharing “consortium” across US consumer goods companies, which would have led to an unprecedented bundling of market data across the CPG industry, powered by Palantir insights. Coca-Cola’s subsequent announcement in the following months — among other consumer goods giants — of their refusal to sign onto this inter-firm partnership did little to boost perception of the firm throughout the public sphere, nor industry professionals.

The IPO Path

Talks of a potential Palantir IPO have been long underway in tech and finance circles, largely fueled by intrigue into the inner workings of a company bound to such secrecy.

Investors once believed their chances of ever getting a peek at a fabled Palantir S-1 were little more than a pipe dream, after a 2016 statement by Alex Karp, CEO of Palantir, that the company wasn’t exploring an IPO, namely for the reason that it “would make running a company like [Palantir] very difficult”.

Fast forward to 2020, and investors are finally getting a chance to rejoice in the news of a planned upcoming public offering of the company later this year. Recent sources, though, would indicate that Palantir is looking to follow in the footsteps of Slack and Spotify these past couple years, opting for a direct listing, avoiding the IPO roadshow and fanfare, but also the cash infusion that goes with it.

Through a direct listing, a company doesn’t sell additional shares to the public market, rather just allowing existing shareholders (existing private investors and employees) to sell their stock to public market participants. This decision to forgo the cash-raising opportunity of an IPO is, it too, a surprising bit of news for a company that, well, needs the cash.

Instead, Palantir looks to be opting for the private money approach, having just recently raised over half a billion in new private capital, primarily fueled by Japanese holding company Sompo Holdings. 

In passing up the public money, Palantir is free to raise funds more quickly via private investors, all while skirting the roughly 7% fees collected by the banks underwriting the IPO — all while keeping the possibility to raise extra funds down the road via the public market, but without the bulky IPO process that goes along with it.

Parting Thoughts

All in all, the Palantir public listing is shaping up to be an intriguing one. This first half of the year and, you know… all that came with it… has made 2020 a bit of a quiet time for public offerings, be they IPOs or direct listings (at least we’ve had SPACs!).

I’m excited to dive into the (hopefully) soon-to-come release of the company’s S-1 filing and finally, maybe, just maybe, get a (heavily redacted) glimpse under the hood of the mysterious entity that is Palantir.

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