Palantir Technologies Inc. (PLTR) Cash Flow Statement

The consistent OCF/NI ratio above 1.0, peaking at 5.83x in 2024Q4, suggests that reported profits are backed by actual cash generation, not aggressive accruals. The gap between net income and operating cash flow is favorable, as SBC—a non-cash expense—is added back, while working capital changes have been modest. This implies that the company's earnings are of high quality, with cash conversion efficiency that supports the sustainability of its profitability.

The FCF trajectory shows a clear inflection point starting in 2025Q2, with margins jumping from 34.4% to 53.0% and continuing to climb. This expansion is driven by revenue growth outpacing cash costs, and it now exceeds the peer group's FCF margins (e.g., Datadog at 29.1%). The sustained high FCF margin suggests that the business model is highly scalable, with minimal incremental capital required to support growth.

CapEx has consistently stayed below 1% of revenue, indicating that the company's infrastructure is largely cloud-based and does not require significant physical asset investment. This low capital intensity is a key driver of the high FCF margins and suggests that the company can convert a large portion of revenue into free cash flow without heavy reinvestment. The minimal depreciation (e.g., $8.2M in 2026Q2) further confirms that the asset base is not a constraint on cash generation.

The quarterly working capital changes are highly variable, with negative changes in most periods, which typically indicates that cash collections are lagging revenue recognition. However, the positive changes in 2024Q4 and 2025Q2 suggest that collections caught up, possibly due to large contract payments. This volatility is consistent with the lumpy nature of government contracts and may obscure the underlying efficiency of the company's collections process. Investors should monitor the trend in days sales outstanding to assess whether this volatility is normalizing.

The company has not initiated a dividend and has only executed token buybacks, suggesting that management is prioritizing reinvestment and balance sheet strength over shareholder returns. With FCF now exceeding $1B per quarter, the cash pile is likely expanding rapidly, which may indicate that management is preparing for strategic M&A or other capital deployment opportunities. The lack of capital return, combined with a fortress balance sheet, suggests that the company has significant financial flexibility, but investors may expect a shift in capital allocation as the cash balance grows.