After “beating earnings” for the past four quarters in a row, Palantir Technologies (Nasdaq: PLTR) stock will attempt to do it again on Monday.

The formerly private defense technologies giant, which has already rocketed 5x in value over the last 12 months, is set to report its fiscal Q4 2024 numbers on Monday, February 3, probably reporting before the opening bell. Expectations are high, to say the least.

Q3 recap

After all, describing quarterly earnings last quarter, CEO Alexander Karp led off with this unapologetic boast: “We absolutely eviscerated this quarter, driven by unrelenting AI demand that won’t slow down.”

Q3 sales surged 30% year over year, led by 44% growth in the U.S., and with a customer count up 39% from Q3 2023. GAAP earnings at Palantir literally doubled, up 100% in Q3. And free cash flow for the quarter, $435 million, was nearly triple the company’s reported net income of $149 million.

Q4 preview

Management told investors it expects to report between $767 million to $771 million in Q4 revenue on Monday, with adjusted income of about $300 million. (Management did not give a GAAP estimate). If it hits these numbers for the quarter, Palantir says its total revenue for all of fiscal 2024 will exceed $2.8 billion, and it expects to convert $1 billion of that into free cash flow, making for a free cash flow margin of 35%.

What analysts expect

As good as those numbers sound, Wall Street is even more optimistic. Analysts think Palantir is low-balling investors, and will actually report Q4 revenue in excess of $781 million and full year revenue of at least $2.81 billion.

On earnings, $0.11 per share is the target, although that’s probably a non-GAAP figure. Also, it works out to only 38% earnings growth year over year, significantly slower than the growth we saw last quarter. Thus, Palantir arguably has at least two paths to “beat” earnings on Monday.

On the one hand, the company could deliver greater revenue than it has promised (whether or not it reports better revenue than Wall Street expects). Alternatively, Palantir could report better earnings than it’s supposed to. Even if it doesn’t literally double earnings a second time in a row, just beating the Street’s forecast 38% growth would probably be considered a win for Palantir, and could cause the stock to skyrocket.

This stock is trading for 75 times trailing sales, more than 180 times trailing free cash flow, and more than 400 times trailing earnings, and looks overvalued. But recent history suggests investors are looking for reasons to buy Palantir despite its valuation, not because of it.

With two good “excuses” to choose from, I think they’ll find a reason to want to buy Palantir after earnings.

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