Palantir is growing as revenue growth accelerates. Is it too late to buy the stock?

Actions of Palantir Technologies (PLTR 2.49%) rebounded after the company once again reported an acceleration in revenue growth and raised its full-year guidance.

With the stock up nearly 70% year-to-date, let’s take a closer look at the company’s second-quarter results and see if it’s too late to buy the stock.

Growth continues to accelerate

For the fourth straight quarter, Palantir saw its year-over-year revenue growth accelerate to 27%, up from just 13% in the year-ago period.

Data by YCharts.

Breaking down the top line by segment, commercial revenue increased 33 percent to $307 million, led by a 55 percent increase in U.S. commercial revenue to $159 million. Excluding strategic commercial contracts, commercial revenue grew 40%, with US commercial revenue growing 70%. The company added 33 new customers to its US commercial business during the quarter.

Palantir’s artificial intelligence platform (AIP) continues to be the main driver of growth in its US commercial business. The company said “Bootcamps” remain its primary go-to-market strategy, but its biggest opportunity is moving from prototype to production with its customers.

International trade revenue rose 15% to $148 million, but fell 1% sequentially. The company said it continues to see headwinds in Europe but is capitalizing on opportunities in Asia and the Middle East.

On the government side of the business, revenue rose 23% to $371 million. US government revenue rose 24% year over year and 8% sequentially to $278 million. That was a nice improvement over the 12% year-over-year growth seen last quarter. International government revenue, meanwhile, rose 21% year-over-year and 18% sequentially to $93 million.

The company said it won several notable contracts this quarter. This included one from the Department of Defense (DoD) Chief Digital and Artificial Intelligence Office to implement an AI-enabled operating system across the DoD, as well as another contract to allow third-party and government developers to develop applications and integrations on top of it . The Maven platform.

Palantir raised its full-year revenue guidance again. It now expects revenue in the range of $2.742 billion to $2.750 billion. This is above its previous outlook of $2.677 billion to $2.689 billion. Management’s initial guidance for the full year had revenue falling between $2.652 billion and $2.668 billion.

The company also raised its full-year adjusted operating income guidance again to a range of $966 million to $974 million. That’s significantly higher than the original outlook of $834 million to $850 million.

For Q3, revenue is expected to be between $697 million and $701 million, while adjusted income from operations comes in at $233 million to $237 million.

Image source: Getty Images.

Is it too late to buy stocks?

One of the biggest problems with Palantir stock previously was that its growth didn’t match its lofty valuation. However, its top acceleration success and increased orientation drove the rating down.

Data by YCharts.

Trading at a forward price-to-sales (P/S) ratio of about 17.5 at the time of writing, the stock is still quite expensive.

AIP continues to hold a lot of promise and clearly resonates with its US commercial customers. Its Bootcamp strategy is working and starting to move customers from prototype to production. At the same time, US government business also saw a significant improvement.

The company’s guidance currently calls for revenue growth of between 25% and 26% next quarter, but if Palantir can beat its Q3 revenue guidance as it did last quarter, growth would land around 30% . The company’s valuation suddenly looks a lot less expensive if it can sustain growth at such levels.

Right now, it’s not too late to buy Palantir stock for long-term investors. That said, I would still prefer a less expensive valuation. As such, I would be more inclined to be a buyer in the event of a market pullback.