Dive Brief:
- Palantir leaned on teams of AI deployment experts to drive unprecedented growth in its government and commercial sector businesses, executives said Monday during a Q2 2026 earnings call. The software platform vendor’s revenue increased 93% year over year to almost $2 billion in the three months ended June 30.
- “Our entire business nearly doubled in the span of 12 months,” Palantir Cofounder and CEO Alex Karp told shareholders Monday in an open letter. “Put simply, we have now generated more profit in a single quarter than we did in total revenue in the same period the year before,” he said, pointing to $1.1 billion in Q2 profits.
- Palantir EVP and CTO Shyam Sankar credited the company’s flagship Artificial Intelligence Platform and teams of forward deployed engineers for the record growth. “Remember, only Palantir has FDEs,” he said during the earnings call. “Everyone else has sparkling sales engineers.”
Dive Insight:
Palantir executives tapped into frustrations faced by enterprises that have yet to see a return on AI investments, peppering the quarterly call with fiery rhetoric that pitted businesses against the LLM industry.
“Enterprises that are not using Palantir are seeing their token meters spinning endlessly just to get slop without any correlation to value,” CRO and Chief Legal Officer Ryan Taylor said during the call. “This token model may be working for the labs, but it is not working for anyone else. It's breaking corporate budgets without results to justify the expense.”
While Palantir was not among the initial cohort backing the Linux Foundation’s Tokenomics initiative to standardize and rein in AI costs that launched this week, LLM economics were at the heart of Karp’s pitch to shareholders.
“We do not get paid for clicks or tokens or chats,” he said. “The gamification of the most significant development in modern economic history seems to us misplaced … We have always declined, and will continue to decline, entering into a parasitic relationship with our partners.”
Palantir was ahead of the pack in dispatching IT modernization teams to its government and enterprise clients, according to Noah Dantes, research manager at Omdia, a Channel Dive sister company. The company pioneered the FDE model in the early 2010s, ahead of competitors who followed suit as the generative AI boom took hold of the tech industry, Dantes said.
Big tech has since embraced the model.
AWS invested $1 billion in a dedicated FDE organization in June. Google Cloud made a similar move in May and Microsoft created an AI-deployment organization staffed with thousands of industry and engineering experts last month. OpenAI and Anthropic have also pivoted to FDEs this year.
The trend represents a challenge but not an existential threat to the channel, according to Dantes.
“Even Palantir isn’t able to displace the channel partner,” Dantes said, pointing to the company’s robust partner program. “Ultimately, FDEs are another resource for government and massive enterprise customers to take advantage of in complex use cases. AWS, OpenAI and the rest might be behind Palantir in regard to FDEs, but they have had massive success with government and enterprise AI projects. That’s because of the channel partner.”
Palantir’s focus is split almost evenly in the U.S. between government and enterprise clients. The company’s U.S. commercial revenue grew 149% year over year to $764 million in Q2. The U.S. government contributed $809 million to Palantir’s revenue during the same period, marking a 90% year-over-year increase.
Embedded engineers were only one contributor to the revenue windfall, according to Dantes, who pointed to the AI boom and the company’s close ties with the current administration. “Somewhere down the list you eventually get to FDEs,” he said.
Three days before Karp delivered his shareholders’ letter, the White House confirmed that Federal CIO and Acting Director of the Technology Transformation Services Greg Barbaccia would be leaving the government to join Palantir later this month, according to a FedScoop report. Barbaccia previously spent a decade with Palantir, including serving as the company’s intelligence and investigations division head, according to his LinkedIn profile.
