Palantir CFO Dave Glazer: US commercial revenue up 90%+ with fewer than 400 customers — 'the runway ahead is massive'

Oh, hey. Just me. Oh, how you doing? Sorry. What's up? I'm John. Welcome. What's up? Great to meet you. How you doing? Good. Good. Uh, how's the day? Could you kick us off? Grab the mic. Kick us off with an introduction for those who don't know. Okay. Uh, I'm Dave. Uh, Dave Glazer. Been a Palunteer for 12 years.

Uh, and I'm a CFO. PreIPO. Pre-IPO. Yeah. Like basically. Or DPO, right? DO. Yeah. uh since like when our our prior CFO retired who's actually on the show recently talked to him. He retired in 2017 and since then I've been leading the finance team. Yeah.

Uh so my big question for you uh gross margins for the Fortune 500 in the AI era. Are we going to see a structural shift? You know the the the the inference bills are skyrocketing. Inference per token is is dropping. But then Jevans paradox and we're doing more token inference than ever before.

reasoning models are kind of staying expensive and we saw in the journal earlier this week maybe last week uh software company called notion said that they saw their gross margins drop from 90 to 80% not bad still but uh there is does seem to be some sort of impact and I'm wondering how you think it might play out for the really big companies yeah look I I think so one of the things that we've been sort of saying is like LMS are commodity commodity cognition right and so like essentially it's like It's getting they're getting better and better y right uh ELO score is better and better tokens are getting cheaper right uh and as Alex said I don't know if you watch keto but like you know he's talking about okay like what like how do you actually derive value from that raw output of an LM and so it's like I think it's like the raw output it is getting cheaper we're still like very early days on these models and you're seeing them just sort of like up and to the right in ELO score and so these like things combined I think are going to make it cheaper and cheaper over time and I think we'll see sort of on on gross margin I think you look at some of the other things like hyperscaler costs, right, from a lot of these places that I think like people's gross margins have survived, right?

They're more efficient.

They're all this and so I think like we will see, but like I think that is it's going to be much more about like how are you deriving value from them like well the cost is going to be so overwhelming but they're super like totally it's like focus on the value and I I do think over time it's like people are going to be able to manage those costs.

Yeah. Yeah. It feels like it feels like higher costs potentially but so much more value and it's pretty easy to tell. Yeah. I'm spending a lot on inferencing a certain LLM API, but obviously I'm delivering more value and so I'm charging. Also, you have to think about the position that Palanteer sits in.

We got a product demo earlier. Hivemind was leveraging like a bunch of different models and like that position of having leverage and being like we are the product, we have the data, we have the customer relationship, and we can vend in whatever intelligence sources we need in order to accomplish the task.

Like that's a better position than being if you're a GBT rapper and your product is really 40 and you're just kind of like reselling that, right? Yeah. Yeah. Uh yeah. Sorry. Yeah. Yeah. Like and I do think it's like Yeah.

Like I think it's going to be all about the value rather than like well the the value is there but the cost is so prohibitive. Yeah. H how are you pos how are you thinking about positioning uh Paler story in commercial in the United States over the next couple years? Like what is the right framework?

People have always had the wrong mindset. Uh it's consulting shop. What are they even doing? Blah blah blah. Like what is the right frame of mind to be in? Look, I I I think the right frame of mind is like we're delivering a tremendous amount of value. Yeah. Uh to these customer with these customers, right?

It's like like and and they're needed to in this, right? And it's like you deliver that value uh and we're like just at the beginning. So you look at like our our US commercial business like grew over 90% last quarter. It's still relatively small, right? And it's like we have there's so much runway there.

Uh right like we it's like just that that business has like sub 400 customers. Yeah. Right.

Like that is when you when you look sort of across a lot of other companies it's like that's you know so it's like we're doing all this with such a like a small customer base and obviously it's rapidly growing but you know it's like it just shows the amount of runway that's ahead. Yeah.

Do you do you think that uh people should be thinking about the commercial business as like a a bundle like a a competitor to a bundle of products that already exist or something that's entirely net new or displacing an entirely different uh class of spend in the enterprise?

Like how can how should people even wrap their mind around that? Some version of all the above, right? So it's like when you think about you know you're not like headtohead who are we competing with, right? And then everyone's like but I don't get it. It's like is it a combination, right?

It's like we're not really we're competing against like the Frankenstein monster that almost every large corporation has and then you're also competing like particularly in government but it also applies in you know particularly large corporations is like customuilt software.

So it's like those two you're competing against that and over time you're obviously going to sort of eat into a lot of into a lot of the spend but it's like only because of the value that's being delivered and then it's like you don't maybe need some of these point products. Yeah. Yeah.

It it it feels like the it's like it's like transformation new net new technology that would not get built in the enterprise otherwise. Correct. And then once you've built that once you built that like compounding data asset then perhaps you don't need some of the other products. Yeah. That makes sense.

How is your framework or philosophy approaching the finance function at Palunteer changed? Because I I feel like there's like very distinct eras where you know the it changes them every day. Does it does it do you do you feel like you have to to update it every day?

Like because because in some ways like when you talk when we talked with Karp earlier, it's like yeah, he's bringing that same energy and like philosophy uh uh it feels like it's it's somewhat consistent uh even though you know numbers go up and down and and all that good stuff. Yeah.

Look, well look, I I challenge any CFO working for Karp to have hair, right?

Uh so look um I think you got to step back and say like okay like how do we approach finance right and it's like this is a company like and you know people have said it a lot like we don't have a playbook right and obviously there's a way that's run the the company's been built over the last you know 20 20ish years like I've been lucky enough to be here for 12 of them but like you know and and and because of that it's like we're very unique right and what that means is like we are constantly changing what we're doing right and so like a lot of things you know you talk about for deployment engineers in the early days oh that's consulting that's obviously helped us build the product that we have today, right?

And so but you weren't what you weren't optimizing on in those days was financial statements that Wall Street would want, right?

Because it's and and then it's like but because of what we built today, not because or because of what we built, we have financial statements Wall Street loves, but it wasn't built for that purpose, right? And which is crazy valuable, right?

Because it means we're we're so differentiated and we're doing things the way that like we want to do them, right? and and and built the company was built that way. Um, so can you tell me the story of how the COVID era changed Palunteer's financials?

I remember seeing that T& fell off a cliff and it never really came back and that was at the time I was talking to people who were looking at the company. Uh, they were pretty excited about what that meant and it felt like it was almost like a structural shift for the company. But is that a reasonable story to tell?

Is that apocryphal? Look, it's it's it's it's part of the story, right? And and so I think like what what happened with co it was we could no longer like you you just couldn't be as much at a customer site, right? And so then it's like well we got to extend the product further, right?

And like and this is a story that keeps happening in Palunteer. It's like well you know we only have um you know uh around 4,000 people, right? And or you or you look at sort of our our headcount growth like if you go back two years it's up 12% from two years ago revenue is up 88%. It's like, well, how do you do that?

It's like, well, the product's got to be better. Yep. Right. And and you have to have products like AFTTE, like all these all these things that are constantly evolving and like that is a story of Palunteer. It's like you're trying to do something. You're either resource constraint or somehow constrained.

It's like what do you do to meet that and almost always is productled. Yeah, that makes a ton of sense. Uh I know you're have a busy day, so we'll let you go. Awesome. Thanks so much for helping. Thanks for joining. We'll talk to you soon. Uh we will bring in our next guests in a minute.

Jordan, do you have any breaking news here from Skooks? Skook says, "Alex Karp trying his best to get TBPN banned from YouTube. " I will say, uh, I think it was like the the least familyfriendly 10 minutes segment of the hundreds of hours that we put out. It was some of the best. Some of the best. Some of the best.

It was a lot of fun. I'm glad that Skooks enjoyed the stream. Uh, and uh, and thank you for YouTube for keeping us up. Keeping us up. We might keep going strong. Thank you to Reream for keeping the stream live. Thank you. Uh couldn't do it without him. Uh we will bring in our next guest guests.

We are ready to keep rocking and rolling here in at two chairs. Two chairs coming in. Come on in. Come on in. Pull over. How you doing? We got we got an indie car driver for you. Oh, fantastic. Performance engineer. Very cool. And then a finance guy. Fantastic. I mean, you have to sell me now. I'm in. How you doing?

Good to meet you. I'm John. Hey. Pleasure. I'm Johnny. Nice to meet you. How you doing?