4 ms·

How much is Palantir in the consulting business vs. a SaaS? Whenever I read something about it I get IBM vibes, of a company which is partly doing some software

How much is Palantir in the consulting business vs. a SaaS? Whenever I read something about it I get IBM vibes, of a company which is partly doing some software platform stuff with a mix of good ol consulting. How off base is that impression?

Panini_Jones 6y ago
IBM is one of their main competitors. When I interviewed a few years ago, it was primarily consulting. Things could have changed, but I doubt they have.
zyang 6y ago
I have seen some of their SaaS demos. It might fool some high level decision makers, but anyone with technical background can see right through their fake-n-bake garbage.
deleted 6y ago
[deleted]
thesausageking 6y ago
One of their clever moves was calling their consultants "Forward Deployed Engineers". This let them hire better engineers than you normally could to be consultants (You're not a consultant, you're a "Forward Deployed Engineer"). This term also allowed them to book much more of their revenues as software licenses than services, which makes them look much more attractive to investors. With it, they were able to get a $20B valuation in the last round, where if they were viewed as a government IT services vendor they would've been lucky to be valued at $0.5B.
- deleted 6y ago
  [deleted]
- chrisseaton 6y ago
  It's also a name that sounds familiar to military people - might have made it easier for them to sell contracts into that space.
  - randycupertino 6y ago
    That's pretty brilliant. Rebranding!
- Pandabob 6y ago
  This made my day. Thanks for the insight.
- otoburb 6y ago
  >>This term also allowed them to book much more of their revenues as software licenses than services, which makes them look much more attractive to investors. Changing the job title of a professional services staff member, whether it's "FDE", "Consultant" or "Customer Success", doesn't change the final gross or operating margins. The financials and economics remain the same whether this is at the deal or firm level. >>With it, they were able to get a $20B valuation in the last round, where if they were viewed as a government IT services vendor they would've been lucky to be valued at $0.5B. If Palantir didn't sell a product then you're right that they would be viewed as a services company which drops their valuation multiple. But since they sell a product, and presumably charge license fees for the right to use, their classification as a product company seems to justified from a valuation perspective.
- bobwernstein 6y ago
  amazing insight
otoburb 6y ago
Hopefully when investors get to see the uncloaked financial statements and disclosures there will be a breakdown of the revenue streams between consulting (aka services), license and support across the two segments (government & commercial). Of the license revenue, I hope (but find it unlikely) management discusses a breakdown subscription (if any), term license revenue and one-time (e.g. perpetual/buyout).

Panini_Jones 6y ago

IBM is one of their main competitors. When I interviewed a few years ago, it was primarily consulting. Things could have changed, but I doubt they have.

zyang 6y ago

I have seen some of their SaaS demos. It might fool some high level decision makers, but anyone with technical background can see right through their fake-n-bake garbage.

deleted 6y ago

[deleted]

thesausageking 6y ago

One of their clever moves was calling their consultants "Forward Deployed Engineers". This let them hire better engineers than you normally could to be consultants (You're not a consultant, you're a "Forward Deployed Engineer"). This term also allowed them to book much more of their revenues as software licenses than services, which makes them look much more attractive to investors. With it, they were able to get a $20B valuation in the last round, where if they were viewed as a government IT services vendor they would've been lucky to be valued at $0.5B.

deleted 6y ago
[deleted]
chrisseaton 6y ago
It's also a name that sounds familiar to military people - might have made it easier for them to sell contracts into that space.
- randycupertino 6y ago
  That's pretty brilliant. Rebranding!
Pandabob 6y ago
This made my day. Thanks for the insight.
otoburb 6y ago
>>This term also allowed them to book much more of their revenues as software licenses than services, which makes them look much more attractive to investors. Changing the job title of a professional services staff member, whether it's "FDE", "Consultant" or "Customer Success", doesn't change the final gross or operating margins. The financials and economics remain the same whether this is at the deal or firm level. >>With it, they were able to get a $20B valuation in the last round, where if they were viewed as a government IT services vendor they would've been lucky to be valued at $0.5B. If Palantir didn't sell a product then you're right that they would be viewed as a services company which drops their valuation multiple. But since they sell a product, and presumably charge license fees for the right to use, their classification as a product company seems to justified from a valuation perspective.
bobwernstein 6y ago
amazing insight

otoburb 6y ago

Hopefully when investors get to see the uncloaked financial statements and disclosures there will be a breakdown of the revenue streams between consulting (aka services), license and support across the two segments (government & commercial). Of the license revenue, I hope (but find it unlikely) management discusses a breakdown subscription (if any), term license revenue and one-time (e.g. perpetual/buyout).