However, a closer reading of Palantir’s latest 10-K suggests the situation is more nuanced than the headline implies.
First, AR growth in FY2025 broadly tracked revenue growth. Receivables rose from about $575M to $1.04B (~+81%), while revenue increased from ~$2.4B to $4.5B (+86%). This kept days-sales-outstanding (DSO) roughly stable at ~85 days, slightly better than the prior year (~87 days). In other words, collections efficiency did not deteriorate.
Second, credit quality indicators remain benign. The company reports its allowance for credit losses as immaterial, and there is no disclosure of meaningful write-offs or aging deterioration. If receivables were becoming problematic, we would typically expect to see stress first in these metrics.
Third, Palantir’s billing model differs from subscription SaaS peers often used for comparison. Its mix of government and large enterprise contracts involves milestone-based billing and acceptance cycles, which structurally produces higher and lumpier receivables. When benchmarked against defense and government IT contractors — rather than pure SaaS — Palantir’s DSO sits squarely within sector norms.
That said, the AR discussion is not irrelevant. Working-capital swings did increase in FY2025, with receivables absorbing about $450M of operating cash versus ~$211M the prior year. This reflects the scale and timing of large contracts and means free cash flow can be volatile quarter to quarter. Investors should continue to monitor DSO trends and cash conversion as the business grows.
In summary, AR is a legitimate area to watch in Palantir — but current filings do not support the view that receivables signal deteriorating collections or aggressive accounting. The evidence so far points more toward normal scaling dynamics of a government- and project-oriented software contractor than to a structural red flag.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
