Palantir Technologies reported three quarters of 2026 in which revenue, gross profit and operating income all rose faster than the cost lines the company reports separately. The clearest way to read the year is to separate what the software business earned from what the balance sheet earned. The figures below come from the company's 10-Q filings for the quarters ended March 31, June 30 and September 30, 2026, with the third-quarter report filed on November 3, 2026.
Three quarters of rising profit
According to the company's filings, revenue rose from $1.63 billion in the first quarter to $1.94 billion in the second and $2.31 billion in the third. Operating income followed the same path, from $754 million to $912 million and then $1.08 billion. Operating margin held in a narrow band, 46.2% in the first quarter, 47.1% in the second and 46.9% in the third. In other words, the company added profit at roughly the same rate as revenue rather than gaining margin steadily through the year.
| Metric (US$) | Q1 2026 | Q2 2026 | Q3 2026 |
|---|---|---|---|
| Revenue | $1,632.6M | $1,935.5M | $2,313.4M |
| Gross profit | $1,416.8M | $1,638.6M | $1,930.1M |
| Gross margin | 86.8% | 84.7% | 83.4% |
| Operating income | $754.0M | $912.0M | $1,084.8M |
| Operating margin | 46.2% | 47.1% | 46.9% |
| Interest and investment income | $66.4M | $77.5M | $88.9M |
| Pre-tax income | $888.6M | $1,081.3M | $1,148.0M |
| Net income | $870.5M | $1,061.9M | $1,128.0M |
Operating leverage: real, but not expanding
Between the first and third quarters, revenue grew about 42% and operating income about 44%. The incremental operating margin, meaning the extra operating income earned per extra dollar of revenue, was about 52% from the first quarter to the second and about 46% from the second to the third. So the business kept converting most of its new revenue into operating profit, but the conversion was slightly weaker in the most recent quarter.
The gross margin trend deserves equal attention. It fell from 86.8% in the first quarter to 84.7% in the second and 83.4% in the third. Gross profit still rose from $1.42 billion to $1.93 billion over the period, but cost of revenue grew faster than revenue. Operating margin stayed close to 47% because operating expenses also grew, not because the company lowered its cost of delivering software. Gross profit less operating income, a derived figure, rose from about $663 million in the first quarter to about $845 million in the third.
Among the operating expense lines the company reports separately in these filings, research and development rose from $161 million in the first quarter to $220 million in the third, an increase of about 36%. General and administrative expense rose from $183 million to $229 million, about 25%. Both grew more slowly than revenue, which is why the operating line widened. The company's filings show the spending growth, and the reader can judge whether it is an investment in the platform or a cost of growth.
How much of the profit comes from interest
Interest and investment income is a real but modest contributor. In its third-quarter 10-Q, the company reported $88.9 million of interest and investment income, about 7.7% of the $1.15 billion of pre-tax income for the quarter, and about 8.2% of operating income. The share was 7.5% in the first quarter and 7.2% in the second. Put plainly, roughly nine-tenths of pre-tax income in each quarter came from operations rather than from the cash and investment balance.
The non-operating line matters more in the first half of the year than in the third quarter. In the first quarter, interest income and other non-operating income together added about $135 million on top of operating income. The combined figure was about $169 million in the second quarter and fell to about $63 million in the third, when other non-operating items were a $26 million expense. This is why net income grew more slowly than operating income. From the first quarter to the third, operating income rose about 44%, while net income rose about 30%. Income taxes were small in each period, between $12 million and $15 million, and the company's diluted share count was essentially flat at roughly 2.57 billion shares.
What the filings support, and what they do not
Three quarters of 2026 show a software business that grew revenue by about 42% and operating income by about 44% without a material change in operating margin. The core operating line, not interest on cash, produced nearly all of the pre-tax profit. The softer points are a gross margin that declined by about 3.4 percentage points over the year and a third-quarter incremental margin below the first-half pace. Those are the figures a reader should weigh against the growth rate. The filings for these periods do not, on their own, establish whether the decline in gross margin is structural or the result of the mix of contracts signed in the quarter, and the company did not disclose a breakdown that would settle that question in the figures reviewed here.