dLocal operates a payments ecosystem in (primarily) emerging markets where traditional finance networks have low penetration (e.g., card networks such as Visa, Mastercard, etc.). dLocal handles hundreds of alternative payment methods (APMs), currency conversions, compliance infrastructure, fraud prevention, tax integrations, and settlement services. In essence, they eliminate the need for merchants to build local integrations in emerging markets, which are often highly complex and fragmented. The business is inherently sticky, as evidenced by its very impressive customer retention rate.

Company profile

Theme: EM Fintech, Direction: Buy

Symbol: DLO, Exchange: NASDAQ
Sector: Technology, Industry: Software - Infrastructure
Fair intrinsic value: $33.07 (152.02%), as of April 12, 2026
Market capitalization: $3 959 million
Pricing data: P/S 3.6x, P/E 20.1x

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One man’s trash is another man’s treasure

 dLocal operates across many EMs, but to truly grasp how money flows through dLocal’s platform, it is best to visualize the payment volumes across a grid. One axis represents the geographies, while the other axis represents the direction of money. For the geographies, the payment volume is either cross-border or local-to-local. For the direction, money is either being acquired (pay-ins) or disbursed (pay-outs). These are not mutually exclusive, since each transaction is classified across both segments simultaneously. For example, a pay-in can be both cross-border and local-to-local.

• Cross-border

  • A transaction where dLocal collects funds in one currency and settles them into a different currency (and typically a different geography).

• Local-to-local

  • A transaction where dLocal collects and settles funds in the same currency.

The reason global merchants use dLocal in a geography where they have their own corporate entities is because of dLocal’s already present infrastructure. Despite having a local entity, having to integrate with various local payment methods, dealing with regulations, and obtaining licenses is a headache. Instead, they utilize dLocal’s “One API” platform, which is already built and operational.

Both segments are currently at a 50% split in terms of mix.

Figure 1: Geographically segmented TPV and TPV growth

• Pay-ins

  • dLocal’s merchant customers receive payment from their end customers.

• Pay-outs

  • dLocal disburses money on behalf of its merchant customers to the relevant business partners, suppliers, contractors, drivers, or customers.

Pay-ins have historically accounted for ~70% of the mix in the directional segment.

Figure 2: Directional segmented TPV and TPV growth

dLocal sees structural tailwinds and moats connected to local-to-local and pay-outs specifically, since those flows are harder for global players such as Stripe and Adyen to replicate without dLocal’s local licenses, APM network, and regulatory expertise. Shifting the mix towards that combination will result in stickier local flows and is a core part of dLocal’s “one dLocal” flywheel and differentiation in the EM space.

However, that is not the most profitable combination, which would be cross-border pay-ins. While management does not break out the specific take-rates tied to the TPV, they do provide brief commentary regarding positive drivers for net take-rates. Cross-border pay-ins benefit from the most monetizable variables across the TPV grid since it includes the inherently sticky nature of pay-ins, together with processing complicated FX spreads.

Local-to-local pay-outs, while over time will be a core driver, likely carry a lower margin since it is a focus segment. That does not mean “growth at all costs” where dLocal has to sacrifice margins extensively, but it means that they have to take a big enough market share among domestic rails, and also carry more processing and liquidity costs.

The payment volume itself is highly diversified across all parts of the economy, both across consumer categories and corporate categories. That means that TPV benefits from many parts of the economy growing in the EM’s, and the diversification means that there is less risk associated with the overall growth of the payment volumes. The only segment that has been actively growing its share across the TPV mix over the reportable periods is commerce, from 15% of overall TPV in 2022 to 34% in 2025.

Figure 3: Directional segmented TPV and TPV growth

If we look at what all the payment volume translates to in terms of revenue, it has been an impressive growth story, and a story that is not about to end anytime soon. Since 2019, revenue has grown at a compounded annual growth rate of 64%, which can be attributed to a variety of tailwinds and execution for the business.

Figure 4: Gross take rate and total revenue

Seeing the gross take rate decline over time may seem alarming and a sign of competitive pressures. However, in dLocal’s case, it is a sign of scale rather than competition, unlike what may be observed in global payment service providers like Stripe, Adyen, and PayPal. The reason cited by management is that they favor payment volume growth over raw take rates, as it would impact prospects.

For large and scaling customers, there are volume discounts. As volume scales, the large merchants negotiate lower pricing or move to volume-tiered pricing, which is also favorable for dLocal since a large majority of both TPV and revenue growth is from existing merchants. Similarly, as the TPV mix shifts more toward pay-outs, it will have an impact on the take rates and margins due to being inherently less monetizable than pay-ins. The tradeoff is that it comes with stickiness and volume, which is still a favorable proposition for dLocal, and one that management embraces.

However, the take rate compression should start to slow down significantly as the mix starts to incorporate more profitable services such as BNPL, stablecoins, tokenized cards, AI routing, and more. In summary, deeper merchant relationships drive stickiness, which drives more volume, and in turn, provides more scale advantages. Winning the infrastructure layer in EM’s at a massive scale is more important than unit economics at this stage. That becomes very evident when viewing the source of growth, which is predominantly driven by existing merchants.

Retention is a core driver and a risk

To get a sense of how important it is to nurture existing merchants and scale the relationship with them, we don’t need to look further than the revenue bridge between 2024 and 2025. 96% of the added revenue in the period was from existing merchants.

Figure 5: Revenue bridge (2024 - 2025)

Looking at the net revenue retention over the past years, we can see that an overwhelming majority of growth is attributed to existing customers. By breaking it down into two cohorts of existing and new customers, the chart tells a clear picture of the importance of nurturing relationships with existing customers in order to drive growth for the business.

Figure 6: Cohort revenue growth

Historically, dLocal released merchant cohort data, which allowed us to track the “land and expand” go-to-market strategy. The 2023 cohort grew its TPV by a massive 719% from 2023 to 2024, and the 2018 cohort has grown at a 120% CAGR. However, as impressive as 120% CAGR is, the 2020 cohort has grown at a 154% CAGR. When viewed through this lens, it makes a bit more sense that take rates are taking a back seat in favor of scaling the payment volumes and deepening merchant relationships (making them stickier).

Figure 7: Total payment volume by merchant cohort, in $ millions

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That is also the problem right now: FICO has too much pricing power in the eyes of regulators. I previously detailed FHFA Director Pulte’s comments about FICO being a core reason for the unsustainable housing market. This time, it is Senator Josh Hawley opening an investigation into FICO through a letter to FICO CEO William Lansing. The letter reads as a bullish investment case into the company, and cites many of the core reasons I am very excited about the company. However, much like with what Director Pulte brought forward, the concerns raised are misdirected.

Screenshot 1: Senator Hawley’s oversight letter to FICO, highlighted bullish remarks

Company profile

March 31, 2026 Follow-up coverage
Direction: Buy
Previous fair intrinsic value: $2081.66, as of January 12, 2026

Symbol: FICO, Exchange: NYSE
Sector: Technology, Industry: Software - Application
Theme: High quality
Fair intrinsic value: $2051.6 (95.33%), as of March 31, 2026
Market capitalization: $25 168 million
Pricing data: P/S 12.2x, P/E 38.3x

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The best business model in the world continues to dominate

I typically start off my coverage of a company by breaking down the operations and the financials, but this time I want to deal with the elephant in the room first. Both Director Pulte and Senator Hawley both cite that FICO has raised the prices for its royalties per score pull significantly, and both cite concerns over how FICO’s pricing power may impact the consumer. Let’s break it down by looking at the number.

First, it’s important to understand that closing costs vary depending on the lender, the borrower, the state, and many other variables. However, what drives closing costs and the overall consumer impact is the cost of producing a loan. The cost to produce a loan must be recovered through a rate, a point of origination (direct up-front cost for the borrower), or a mix of both. For example, a $12,000 production expense could be charged to the borrower through $3,000 in closing fees, and the rest through a rate spread. Another lender might charge $0 in fees and price everything into the rate. In any case, the cost and more will be recouped for an issued loan. The Mortgage Bankers Association (MBA) tracks the production expense per loan, and we can use this as a relative measure to see if it correlates with the raise of FICO scores royalties to gauge the impact.

Figure 1: FICO Royalty per Score pull, total production expense per loan, cumulative increase %

We can see that the TPE/loan increased by 45% in 2022 compared to 2020, while FICO’s royalties remained at $0.60 per pull, a 0% increase in price. From 2022 to 2025, FICO increased the royalty per score pull by 725%, but the TPE/loan remains relatively static. By 2022, the TPE/loan had increased by 45% cumulatively from 2020, then 55%, 46%, and 47% for 2023, 2024, and 2025, respectively. The TPE/loan is not correlated to FICO’s price increases, and there is a good reason for that.

The FICO royalty makes up 0.04% of the total production expense per loan. In 2020, that was 0.01%, both equally non-meaningful to overall production expenses. However, Senator Hawley comments on this directly with the following:

If the concern is indeed about the average borrower feeling the pain from FICO’s price increases, and in turn, is hurting the mortgage market, then it is most definitely relevant to look at whether FICO’s royalties constitute a meaningful share of overall closing costs or not. It clearly does not, given the objective data, and the probe should be ended with that. However, I think Senator Hawley is correct to ask the question about FICO exercising monopolistic pricing power. We can dig into that data as well.

Is FICO right to raise its royalties per score pull?

I believe FICO is justified in its price increases, and it has definitely been underpriced historically. In fact, I still think it is underpriced, and they should increase the price even further. Why do I say that? Because the markup from bureaus and resellers over the past five years has been as high as 1844%. While FICO only charged $0.60 per score pull, or $1.80 on a tri-merge basis, the total estimated cost per pull was $35. That implies a full 1844% markup from bureaus and resellers. The mathematical model of the credit report is the integral and centerpiece, so why should it be a mere 5% of the overall cost per pull? The line item presented to banks and borrowers is a lump sum with bureau data fees and CRA fees, not allowing for transparency of who is making it out like a bandit.

Since 2020, FICO has increased its cost per score pull by 725%; however, its share of the estimated total cost per pull only increased from 5% to 14%. FICO, the core and integral part of a FICO score, is still by far the minority in terms of overall costs for a score pull.

Figure 2: Estimated costs per credit score pull, markup from bureaus and resellers

FICO launched the mortgage direct licensing program to cut out a lot of the markups associated with pulling a FICO credit score, and in turn, also provide a lot more transparency. Senator Hawley claims that FICO doubled its prices from 2025 to 2026, from ~$5 to $10, while not providing a meaningfully better product. While that is partially true, the $10 per score is, on average, the same price that resellers paid for FICO scores in 2025, which gives a clear picture of how muddied the bundled line item was.

The other pricing option for FICO scores, by going directly to lenders through resellers, is a performance model. In the performance model, the price per score remains the same at $4.95, with a $33 funding fee on closed loans. This directly combats the statement made by Senator Hawley in his letter that FICO is actively hurting first-time borrowers who typically have their credit scores pulled multiple times. This is effectively a 50% reduction in average per-score fees compared to what resellers paid for FICO scores in 2025.

I don’t see how FICO should be blamed for various types of lenders having to undergo multiple credit score pulls. If Senator Hawley wants to combat this, FICO, which only provides the mathematical scoring models, has no impact on the practice.

One final point that Senator Hawley raises is that FICO’s dominance is the result of a regulatory framework that required lenders selling to GSEs to exclusively use FICO scores for over three decades.

The framing Senator Hawley puts forward overstates the role of regulation. There was no federal statute, FHFA rule, or HUD regulation that mandated GSEs to adopt or exclusively use FICO scores. The GSEs themselves chose to incorporate FICO into their underwriting and delivery guidelines in 1995 because it was already widely used by lenders and seen as a gold standard. GSE guidelines are contractual and business requirements that lenders follow to sell loans, not regulations imposed by a government agency. In fact, in 2018, Congress passed the 2018 Credit Score Competition Act specifically to require FHFA to create a validation process for alternative credit score models. FICO was the standard through GSE policy, not through a binding regulatory mandate.

In summary, FICO score royalties have no impact on the production expense for loans. FICO exercising its pricing power does not hurt the end consumer in a meaningful way, as its overall royalty constitutes a negligible part of overall closing costs, even after a 725% increase. A FICO royalty only constitutes 0.04% on total production expenses in 2025, and of an estimated cost per pull on a tri-merge basis, the markup from bureaus and resellers is still 641% (down from 1844% pre-increases). These investigations into FICO scores will not help the mortgage market or borrowers. FICO is an easy target to go after, as it creates headlines with the pricing increases. However, the math behind the increases justifies them and does not hurt the overall mortgage market, and as such, I don’t see a scenario where FICO is meaningfully hurt over these probes.

I see FICO retaining complete monopolistic dominance as it is too deeply embedded in the finance ecosystem. For a more detailed breakdown on FICO’s monopoly, see my previous FICO coverage.

Continued dominance

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Company profile

Theme: SuperApp, Direction: Buy

Symbol: GRAB Exchange: NASDAQ
Sector: Technology, Industry: Software - Application
Fair intrinsic value: $7.25 (+96.42%), as of March 24, 2026
Market capitalization: $15 520 million
Pricing data: P/S 4.61x, P/E 57.91x

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The stock has cratered from an already extremely cheap quote, the CEO has been fired, and uncertainty is the highest it has ever been. However, the stock is not the only thing that has cratered; so has the intrinsic value. Is there any reason remaining to own stock as of right now?

Company profile

March 12, 2026, Follow-up coverage
Direction: Hold
Previous fair intrinsic value: $145.90, as of November 2, 2025

Symbol: PYPL, Exchange: NASDAQ
Sector: Financials, Industry: Credit Services
Theme: Deep value
Fair intrinsic value: $68.73 (+52.66%), as of March 12, 2025
Market capitalization: $43 219 million
Pricing data: P/S 1.30x, P/E 8.26x

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Uncertainty gets punished

On a surface level, PayPal was truly set up to capitalize on the agentic wave that we are seeing across the AI industry. They have partnerships with OpenAI, Google, Mastercard, Perplexity, and just about every other major player in the space in order to enable user purchases within AI platforms. In addition, they have the single greatest source of actual purchase data relating to e-commerce, so why has the ads business not been launched and been a success yet? The questions relating to execution have been piling on, and investors’ patience has seemingly run out.

In my coverage of PayPal, I have deemed it a deep value opportunity, since the stock quote implied that the stock would not only stop growing, but actually decline. Where the stock quote is currently trading, it implies about a -7% CAGR at 13% FCFF margins over the next 10 years. Such a narrative has not materialized, and PayPal, while not as undervalued as I initially thought, is still trading very undervalued. However, the undervaluation could be justified given that they are quickly decelerating the business in an overall industry outlook that is set to grow in the mid-teens.

Former CEO Alex Chriss took over a sinking ship, and famously mentioned that PayPal was going to “shock the world” in January of 2024, and with a solid track record at Intuit, many investors believed him. What followed was two years of no material progress towards the goals of capturing the AI commerce market, launching a successful and prominent ads business, or meaningful innovation.

What followed in the Q4 2025 results was a fired CEO and horrific guidance for the fiscal year 2026 of declining transaction margin dollars and EPS. PayPal pulled their revenue guidance several periods ago, and instead, they give us transaction margin dollars guidance as a way to track their path towards “profitable growth”. To reach profitable growth, they sacrificed the performance of core drivers to exit the race to the bottom that all payment solution providers are participating in (resulting in a decline in take rate for all participants). Now, they’re still losing take rate, but even worse, there’s no trade-off in rapid payment volume growth. It’s a lose-lose situation in that regard.

Searching for a positive note with a lantern

While PayPal didn’t make material progress towards becoming the premier commerce orchestrator as promised, not all is doom and gloom. As mentioned, the company still has growth, and is not showing indications of ~8% annual declines as the quote implies. However, the growth in revenue for FY2025 was a mere 4.3% Y/Y, while being participants in a digital payments market that grew ~20% Y/Y, and is expected to compound annually at a rate of ~20% over the coming 7-10 years.

Figure 1: Segmented revenues

The core segment, transaction revenues, only grew 3.3%. The other value-added services (OVAS) grew 14.2%, showing signs of life after a flat 2024. The 14.2% increase signals that the business is gaining traction across credit and interest products, as well as subscription and partnership fees.

Figure 2: Other value-added services revenues

All the segmented total payment volume segments grew more than 3.3%, which means that the take rate decreased for the transactions. The whole purpose of having an off-year to reposition the business was to stop the bleeding take rate at the expense of growth, but as mentioned, PayPal lost on both ends.

Figure 3: Take rates

The highest margin segment, branded checkout, only increased 4% on a currency-neutral basis for the year, and 1% in Q4 2025. Peer-to-peer (P2P) is accelerating as a result of Venmo’s growth, but the real pain is felt in the payment service provider (PSP) solution, which accounts for a majority of the TPV.

Figure 4: Segmented TPV growth rates

Venmo is one of the strongest financial services in the U.S., and is consistently at the top of most downloaded apps in the Apple and Android app stores. However, for a long time, it has not been properly monetized or given enough attention. One of the few developments under Alex Chriss’s management was improved substantially. Historically, even though Venmo was owned by PayPal, the two operated in silos without communication, essentially operating independently. That has changed, and Venmo is now starting to see innovation, growth, and monetization. However, even Venmo, while gaining traction as of late, is still stuck at where it was three years ago. In Q1 of 2023, Venmo made up 18% of total TPV. In Q4 of 2025, it makes up 18% of total TPV; essentially, there hasn’t been any progress.

Figure 5: Venmo TPV

Looking at the core focus for 2025, transaction margin dollars, we saw an increase of 6%. This is expected to decrease in 2026, per management guidance as of Q4 2025. On a positive note, the transaction margins have been increasing for two years in a row, after dropping from 65.26% in 2013 to a low of 46.03% in 2023. As of 2025, the transaction margin is 46.62%, implying that the bleeding has ceased for the time being.

Figure 6: Transaction margin dollars

Looking at the operational statistics, it is a bit of a mixed bag. For the first time since 2022, PayPal managed to grow the average active accounts by ~7 million, representing 1.8% growth Y/Y.

Despite 7 million additional active accounts, the number of payment transactions decreased by ~1 million compared to 2024. For reference, it is the first time in reported history that PayPal failed to grow the number of payment transactions Y/Y. Historically, payment transactions have been growing on average by ~20% CAGR since 2013, and that includes the -3.7% in 2025.

Since total TPV grew by 6.7% Y/Y (10% FXN) while total payment transactions decreased, it means that the average payment value increased, crossing $70 for the first time (~11% growth).

Figure 7: Average payment value per transaction

The saving grace and investment thesis

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Returns since inception (May 26, 2025):
Type-F Thematic: AI: 21.73%
S&P 500: 14.63%
Performance against index: +11.86%

As of: 10 March, 2026

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Returns since inception (July 31, 2025):
Type-F Thematic: Energy: 16.92%
S&P 500: 9.05%
Performance against index: +7.87%

As of: 10 March, 2026

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Returns since inception (May 26, 2025):
Type-F Thematic: Barrier To Entry: 16.71%
S&P 500: 14.74%
Performance against index: 1.97%

As of: 10 March, 2026

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Returns since inception (May 27, 2025):
Type-F Thematic: Financials: -6.49%
S&P 500: 14.74%
Performance against index: -21,23%%

As of: 10 March, 2026

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Illustration 1: PayPay’s ecosystem

Company profile

Theme: Financial SuperApp, Direction: Buy (within fair value range)

Symbol: PAYP, Exchange: NASDAQ
Sector: Financials, Industry: Credit Services
Fair intrinsic value: $18 927 billion, as of March 6, 2026
Targeted IPO valuation: $14 000 - $20 000 billion
Major underwriters: Goldman Sachs, J.P. Morgan, Mizuho, Morgan Stanley

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Not just another Fintech

The Tokyo Stock Exchange has been largely stagnant for 25 years; however, that has now changed. The Nikkei index is up 53% over the past year and has had a massive resurgence as of late. Many Japanese companies have seen extreme upside in a relatively short amount of time, as outside investor interest has skyrocketed. An interest that SoftBank wants to leverage by expanding overseas with its PayPay subsidiary.

PayPay was initially expected to float in December, but due to the U.S. government shutdown, it was postponed. In mid-February 2026, PayPay Corp filed for a U.S. IPO and is expected to float as soon as this month (March).

Another fintech company may not be too exciting for Western investors, as it is regarded as a highly competitive space with eroding margin profiles. That is not true for Japan. Japan’s unique culture and core demographies turn that narrative on its head, as the country is predominantly cash-heavy and has an aging population. A digital payments transformation is a secular tailwind, and there are not many players in the space vying for market share.

In 2018, Japan’s government set a goal of reaching 40% cashless payments by 2025. Japan was lagging behind the rest of the developed countries. For reference, at the start of 2018, Japan sat at 21% cashless, while South Korea’s cashless ratio was ~90%, China’s was over 60%, and the U.S. around 50%. The government realized that maintaining a physical cash infrastructure was costing the economy trillions of yen annually. The same year that the goal was outlined by the government, PayPay was launched through a joint venture between SoftBank Group and Yahoo Japan.

As a stark contrast to the cashless adoption, Japan has the highest smartphone penetration rate globally of adults under 50 (~100%). That is an impressive feat, considering how late Japan was to adopt smartphones, as they relied on an advanced ecosystem of domestic feature phones (flip phones) that already had features such as mobile TV, internet, email, and digital wallets. All that was needed to start the cashless revolution was a catalyst and someone to capitalize on the opportunity. The catalyst was the Japanese government, and the company to take advantage of the opportunity was PayPay. The 2025 goal of reaching 40% cashless, laid out by the Japanese government, was effectively reached by the end of 2023.

Figure 1: Japan’s cashless payment ratio, end of period

How PayPay dominates

Depending on which third-party estimates of Japan’s smartphone penetration you use, about two-thirds of all Japanese smartphone users are registered for a PayPay account. In the most optimistic assumption, implying that 98% of all Japanese use a smartphone in 2025, PayPay has a ~60% registry rate. A rate that is still trending upwards aggressively.

Figure 2: PayPay registered users and market share of Japanese smartphone users

The PayPay usage rate translates to an even higher overall market share of the primary service, which is code-based in-store payments. Over the past four years, of the ¥64.56 trillion in-store QR code payments volume, around 67% was paid through PayPay. Calculated using the following formula:

Figure 3: PayPay in-store code payments market share

The playbook that PayPay employed to capture a majority of the market combines network effects with a powerful flywheel effect. The key elements of the strategy can be outlined as follows:

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The last sell-off of a similar nature occurred in April of 2025, followed by a rally of ~415%. Robinhood is a better company than it was then, with greater prospects and better fundamentals. This is one opportunity we may not get many times in this stock, as the company diversifies across more lines of business and grows increasingly more dominant.

Company profile

February 27, 2026 Follow-up coverage
Direction: Buy
Previous fair intrinsic value: $172.50, as of November 25, 2025

Symbol: HOOD, Exchange: NASDAQ
Sector: Financial Services, Industry: Capital Markets
Theme: Growth
Fair intrinsic value: $158.88 (+108%), as of February 27, 2026
Market capitalization: $103 914 million
Pricing data: P/S 23x, P/E 55x

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2026 will be a crucial year for innovation

The execution has been unrelenting, and each new line of business has grown to be industry-leading in a relatively short time. Robinhood never seems to settle, and already has shared what the core drivers will be over the coming 10 years, as well as the priorities for 2026 in their Q4 2025 earnings presentation:

• Legend: 10-year core driver

  • Legend: 2026 priority

• Become the number one company in the active traders segment

  • Prediction markets

  • SuperApp design

  • Cortex, Social

• Become the number one company in wallet share for the next generation

  • Family investing

  • Private markets

• Global financial ecosystem

  • Tokenization and the Robinhood chain

  • Launch in new markets

In 2025, Robinhood had 55 major product and feature releases across its platforms. The narrative surrounding Robinhood is no longer that they are a mere broker; they are the fastest-shipping financial technology company in the public markets. That is also one of the main reasons that my interest in Robinhood was piqued.

Looking at prediction markets, it is remarkable how quickly Robinhood managed to become dominant. While they still do not have a majority market share across all prediction markets, they are quickly getting there. Robinhood is currently partnered with Kalshi for integrating prediction markets in the Robinhood ecosystem, and the first contracts were made available in Q4 of 2024, in relation to the presidential election. At that point, there were 300 million event contracts traded on the platform. A year later, in Q4 of 2025, there were 8,500 million contracts traded on the platform.

Figure 1: Event contracts traded on Robinhood

With the help of Robinhood, Kalshi has risen to become the largest prediction markets platform in the world with 54% market share. Over the past three quarters, Robinhood has accounted for a majority of the volume transacted on Kalshi. For reference, the quarter before Kalshi was integrated onto Robinhood, the platform had 2.88% market share. From Q3 2024 to Q4 2025, Kalshi has grown its notional volume by 22409%.

Figure 2: Prediction markets breakdown

With prediction markets being a core focus for 2026, Robinhood is already making major strides at the beginning of the fiscal year. On January 21 of this year, Robinhood closed a deal to acquire MIAX Derivatives Exchange (MIAXdx) through a joint venture with Susquehanna International Group (SIG). The joint venture purchased a 90% equity stake in the exchange, and I expect that most of the Kalshi back-end will be replaced through 2026. The target is a CFTC-licensed designated contract market (DCM), a derivatives clearing organization (DCO), and a swap execution facility (SEF).

MIAXdx will allow Robinhood to cut out the middleman and avoid a revenue share with Kalshi. Doing it through a joint venture with SIG provides day-one liquidity, which will help achieve reasonable spreads and reliable trade execution for the users.

Prediction markets are starting to transition from being purely retail-driven to having broader institutional adoption. Prediction markets can be used as tools for hedging macro and regulatory risks in ways previously not possible. There are other tailwinds for the markets as well; the increased adoption has triggered a cultural shift where any event is seen as a tradable opportunity. These now span across cultural events, sports, entertainment, technological advancements, and pretty much anything imaginable. Robinhood has been cautious of what type of contracts is offer, and rightfully so, as some market participants are really starting to push the limits in regard to what a prediction market can look like. Doing so is an open invitation to become regulated.

Prediction market was not the only segment in which Robinhood grew market share; it is up across the board. The two most important segments to grow market share in, however, are options and crypto, which are the two most profitable segments. The options market share grew from 6.8% in 2024 to 7.5% in 2025. The cryptocurrency share (volume measured against BTC, ETC and DOGE) rose from 0.63% to 0.78% over the same time period. Equities, while providing a lot lower yield due to the maturity of public markets, grew to above 1% for the first time in recorded history.

Figure 3: Segmented revenues

In regard to the priorities, prediction markets have been the core focus of management and investors alike, as Robinhood estimates that the PM volumes could potentially drive trillions in annual volume over time. The first year had over a $300 million run rate, making it the fastest-growing line of business in Robinhood’s history. However, the other 2026 priorities are just as exciting as the lifetime value of customers.

In pursuit of the SuperApp, it is important to bring on all of one’s financial needs, including the family. Robinhood has already introduced credit cards and banking, and with the start of Cortex as an assistant for financial needs, it is starting to look like customers can bring over all their assets to Robinhood’s platform. The 530A accounts, or “Trump accounts”, will allow every U.S. child born between January 1, 2025 and December 31, 2028, to be eligible to receive a $1000 contribution from the U.S. Treasury; a rollout which Robinhood is deeply involved in. Robinhood has offered technical and capital infrastructure to host these accounts, and the U.S. Treasury Department is considering Robinhood to be one of up to three initial trustees for the program. In addition, Robinhood offers retirement accounts, which have been growing at a triple-digit Y/Y growth rate every period.

Figure 4: Retirement assets under management

With the wide breadth of offerings across equities, crypto, options, and prediction markets, users have no reason to be on multiple platforms. Robinhood is also an early mover into tokenization, and currently has ~2000 stock tokens in Europe. The company has expressed a massive opportunity ahead of them where anything of value can be tokenized and traded, for example, art pieces, watches, and homes. Robinhood has already launched the Robinhood Chain on the public testnet. External developers are able to build, access, and transfer on the network without intermediaries or platform lock-in, which is a way to build out an early advantage as a first-mover as the world of finance moves towards blockchain technology. Over time, whole exchanges can exist on Robinhood’s chain.

The last incentive has a more immediate impact. Robinhood just launched a publicly traded closed-end fund, which has managed to secure shares in some highly sought-after companies like Stripe, Databricks and Revolut. The goal is to democratize venture capital, as these pre-IPO companies were historically inaccessible to average retail investors. Private placements typically come at pretty high fees and require accreditation, which Robinhood’s CEF doesn’t require. There is a flat 2% management fee, no carry, and no minimum, which makes it one of the most efficient ways to gain exposure to these kinds of companies.

The backbone of the business is highly robust

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Figure 1: Nvidia Corporation market capitalization

As evident from the market cap expansion, it has been an explosive ride since the launch of ChatGPT. The question is, for how long can it continue?

Company profile

February 18, 2026 Initiated coverage
Direction: Buy
Previous fair intrinsic value: N/A, as of N/A

Symbol: NVDA, Exchange: NASDAQ
Sector: Technology, Industry: Semiconductors
Theme: AI Hardware
Fair intrinsic value: $210.44 (14%), as of February 18, 2026
Market capitalization: $4 528 621 million
Pricing data: P/S 24x, P/E 46x

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Not by coincidence

Nvidia has built dominance time and time again by being the first mover into new markets. The company was founded in 1993 with the goal of bringing 3D graphics to the consumer PC market. With the release of the GeForce 256, the term “GPU” was coined for the first time. Since the company’s inception, they have held a dominant share of the gaming market. They were first to release semiconductors aimed at crypto mining, capturing a majority of that market itself. Now, after the launch of ChatGPT, they also pivoted the whole business and have since gained a dominant market share in the data center segment.

Figure 2: Data center market share distribution

ChatGPT launched in 2022 and triggered a structural panic across the whole tech industry. Hyperscalers began expending capital as if their survival depended on it in order to train and run large language models (LLMs). Nvidia was the first to pounce on the secular tailwind, and they never let go of their grip. The way Nvidia managed to dominate can be attributed to several factors, none of which are mere luck.

Data centers historically ran on CPUs, which are built to solve sequential problems one at a time. GPUs are inherently unsuited for data center workloads as they are meant for rendering, not solving complex problems. What GPUs thrive at, however, is solving many simpler tasks simultaneously. LLM training involves many simple matrix multiplications that have to be solved, something CPUs are very inefficient at. This was when the market realized that they needed parallel processing, and Nvidia was the most sophisticated parallel processing hardware that was available in the market.

The most significant reason that Nvidia has managed to retain its dominance is its Compute Unified Device Architecture (CUDA) platform. It allows programmers to use GPUs for computing, not just game rendering. Nvidia has been making CUDA available to researchers and universities for over a decade, which has resulted in a majority of available open-source AI libraries, math frameworks, and deep learning models being specifically written for CUDA. Having CUDA created a deep moat and makes customers reluctant to switch to a different vendor, as it would entail rewriting many years of code from scratch.

Nvidia is relentless in its ambition; it doesn’t merely stop at semiconductors. In 2020, Nvidia acquired Mellanox to develop its NVLink product. NVLink is a proprietary technology that allows multiple GPUs to process as a single, efficient cluster. When a hyperscaler places a large order of GPUs, they can’t buy loosely from various vendors; they need an integrated system. Nvidia has managed to not only supply the semiconductors for AI training but also the networking capabilities, server architecture, and the software stack as one complete package.

There was no time in the AI arms race to wait for AMD and Intel to catch up, since Hopper was already available. This made the inbound volumes at Nvidia explode, and the hyperscalers were insensitive to price. By the time there were equivalent offerings from competitors, Nvidia had already absorbed a majority market share and was on to the next generation.

The culmination of the AI revolution so far

The unprecedented demand in an explosively growing market has allowed Nvidia to reap the rewards drastically. After a flat year in 2023, Nvidia grew revenues >110% for two years in a row and is close to having increased total revenues by 10 times over three years.

Figure 3: Segmented revenue

In April of 2021, data center revenue made up 39% of Nvidia’s total revenues, a figure that has now reached 89% in the trailing twelve months. In terms of overall data center market share, Nvidia grew from 27% in April of 2021 to 86% at the time of writing. Over the same period, competitor AMD decreased from 8% to 7%, and Intel collapsed from 65% to 7%.

The money being poured into the semiconductor industry is largely attributed to the hyperscalers Meta , Google , Amazon , Microsoft , and Oracle . The capital expenditures at these companies increased by 71% Y/Y in 2025 and are currently expected to increase by another 71% in 2026, totaling $0.64 trillion.

Figure 4: Hyperscalers capital expenditures

At the end of the day, someone has to pay for Nvidia’s semiconductors. Capital expenditures at these companies can’t triple every other year indefinitely. That is where the risks start to appear for Nvidia.

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Burry’s original research piece can be found here:

Cassandra Unchained

Palantir’s New Clothes: Foundry, AIP, & the Failure of Reason

“You think it is helpful having a fluorescent green praying mantis coming into their offices telling them about German philosophy? Do you think that’s helpful? I can tell you it’s not helpful…

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2 months ago · 394 likes · 119 comments · Michael Burry

Company profile

Theme: Dominance, Direction: Buy

Symbol: PLTR, Exchange: NASDAQ
Sector: Technology, Industry: Software - Infrastructure
Fair intrinsic value: $206 (+56.48%), as of February 13, 2026
Market capitalization: $404 299 million
Pricing data: P/S 76x, P/E 208x

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Narratives matter in investing

Just like when Citron published an LLM-written short report on Palantir, my interest was immediately piqued when I learned that Michael Burry wrote a lengthy piece on one of the most dominant companies in the world. I am always interested in alternative approaches to my own, as it allows for self-reflection and widens one’s scope of a business. However, I was thoroughly disappointed to find that large parts of the report do not discuss the current business and its outlook. Instead, the report primarily paints a narrative told through a former FDE and Glassdoor reviews, in combination with tidbits of Palantir’s 20+ year history. In general, the report is grounded and thorough, but in aspects with little to no importance to the actual business.

I will be tackling key points from Burry’s report and presenting a counterargument to each. Those familiar with Palantir’s business may find these points non-material, but please keep in mind that these are presented as major bear arguments against the business.

SPACs lost money and were an unforgivable mistake, done to artificially boost Palantir’s revenues

This topic has historically been a recurring bear argument against the business, but I believe that it is misunderstood. On the surface, as Burry points out, Palantir invested in SPACs during a general market-wide SPAC bubble. Palantir calls these “strategic investments,” and it entails Palantir purchasing equity in a business, which in return agrees to purchase and leverage Palantir’s software. Most of the SPACs have either collapsed in price or have gone bankrupt since, which is why some investors see the SPAC investments as “lost money.”

This is rightfully called out as artificially boosting revenue, but that narrative is merely surface level. In general, the contracts that the SPACs signed were 2-5x more favorable than the average contract rate for the time, which Palantir still recognizes revenue from. In total, Palantir invested $450 million in a wide range of SPACs, and I estimate that the cumulative value returned to Palantir is $454 million as of Q4 2025. The cumulative value is defined as SPAC revenue recognition as well as estimated sale proceeds (per 13F filings). To date, Palantir has recognized a mere 1% return, but it was not a complete capital destroyer as it has been framed. Adjusted for time and inflation, it is still at a small loss.

However, the capital itself is not the core of the SPAC investments, nor is the contract value. Instead, I believe R&D and domain expertise were the true purpose behind these SPAC investments. The companies varied across a wide range of industries, which allowed Palantir to quickly gain domain expertise across many emerging technologies. All while having favorable contract deals in return for equity investments, which they were free to sell at their own leisure. I estimate $132.27 million in estimated sale proceeds, and many companies were sold shortly after acquiring equity.

Figure 1: Cumulative SPAC value and return on invested amount

The margins that Palantir has do not reflect a SaaS company. Palantir is a consultancy

Burry compares Palantir’s margin profile to that of a consultancy. Given Palantir’s forward-deployed engineer strategy for onboarding companies, Burry deems Palantir a consultancy. Consultancies like Deloitte and Accenture include consultant expenses in their cost of revenue. Palantir records the FDE expense primarily in R&D, which, according to Burry, is incorrect, and by accounting the same way a consultancy would, Palantir’s gross margin would not be >80%.

Burry implies if Palantir changes their accounting for the FDE expense, it would collapse the pricing multiple that Palantir is fetching on the market. While I do not know how the equity markets would react to Palantir having below 80% gross margins, I do know that no investor or analyst that I have seen covering Palantir ever puts any weight on the gross margins of Palantir. The intrinsic value driver is the operating margin line, which does not change depending on the FDE expenses being recorded in line with a consultancy or a SaaS.

He also points out that Palantir only has 27% operating margins as of Q3 but does not mention the dynamic of how Palantir is able to rapidly expand its margin profile. He also does not mention that the current margin is at 41%, with no signs of slowing down. This is the result of Palantir’s operating leverage.

Figure 2: Operating leverage

AIP is a mere wrapper of LLMs and relies on other companies

The main argument presented in the report is that Palantir products are inherently non-sticky, since both AIP and Foundry merely act as wrappers and integration layers of third-party software solutions. He also mentions that AIP was the result of a panic as OpenAI’s ChatGPT dropped and that it was built in mere weeks by repurposing a previously defunct Palantir solution.

Burry argues that Palantir lacked any AI capabilities prior to ChatGPT and operated using mere machine learning (ML). Since AIP, Palantir is now a wrapper of others’ technologies, which causes a massive risk to Palantir’s business as AIP’s success relies on the proficiency of LLMs.

He then cites various research papers on the low reliability of LLM responses and how they are prone to hallucinations. Burry argues that due to the risks of LLM accuracy, it warrants an extremely high risk adjustment to the company’s discount rate.

It is true that Palantir does not develop its own LLM, and that is by choice. LLMs are a commodity, and capital-intensive commodities at that. Since Palantir’s solutions are LLM agnostic, they do not need to participate in an extremely expensive CapEx race to train models. Whoever ends up winning that race, Palantir still benefits, as it serves as the orchestration layer.

The whole value proposition of AIP is that it mitigates hallucinations in order to be used for even the most mission-critical use cases. By providing context of the whole business using ontologies, guardrails are inherent so that LLMs can be integrated across a business and start extracting value without the fear of hallucinations from LLMs.

I also understand that Burry is wrong regarding AIP and Foundry not providing actual functionality by acting as integration layers and LLM wrappers. This is a false narrative that completely disregards the extensive list of AIPCon customers who have presented tailored solutions to their business, where AIP acts as an operating system. Customers build on top of the operating system, and solutions are used to solve specific use cases within each business.

I agree that a mere LLM wrapper and an integration layer are prone to competition and that the approach is not sticky. However, that is not the case with AIP; the actual dynamic is sticky by nature, since the solutions are deeply integrated and built to solve use cases specific to the company.

Palantir’s net dollar retention is fake and artificially boosted

By scaling small AIP customers, for example, from $500 thousand to $2 million, Palantir gets a high retention on a low base, which inflates the blended figure.

The actual dynamic unfolding is that the largest, most integrated customers are the ones elevating the NDR. 20 customers account for 42% of the business, and they are growing at 45% Y/Y on a TTM basis. The current NDR is 39%, meaning that the ones who are already paying the most are also the ones scaling faster than the average.

Figure 3: Top 20 customer cohort growth

In addition, Burry states that an earlier acquire-expand-scale strategy did not work, as NDR dropped off sharply until AIP was launched. Palantir spent large amounts of capital to acquire a customer, without reaping the benefits of scaling those very same customers before they dropped Palantir as a provider.

I agree that Palantir had to find an accelerator and a more streamlined way to onboard customers and scale them; that is the purpose of AIP. I do not see how this detracts from Palantir’s outlook; it simply confirms that Palantir identified a weakness and resolved it.

The customer count is low. Competitors have more customers and are better positioned to leverage competitive alternatives.

This is another claim that I believe should be framed differently to reflect reality. Palantir has managed to grow at an undeniably impressive rate without having to burn excessive amounts of capital to acquire customers.

If Palantir is able to grow at such a rate without a large influx of customers, what will growth look like when customer acquisition accelerates? Burry correctly identifies that deploying FDEs for onboarding creates a barrier to rapid expansion, since all inbound volume can’t be addressed simultaneously. However, Palantir is developing AI FDEs, which are able to build out ontologies and set up environments for customers, which will simultaneously handle volume and also decrease the costs associated with acquiring customers.

Salesforce is approaching 200,000 customers. Databricks and Snowflake have between 12,000 and 17,000 customers. Palantir is at a mere 954 customers with equivalent or higher revenues.

The implied customer acquisition cost payback time is 3 months as of Q4 2025, meaning a customer pays the acquisition cost within one period. The metric indicates a healthy dynamic where customers are being acquired at an increasingly profitable rate.

Stock-based compensation is rampant, and founders are enriching themselves at shareholders’ expense

Michael Burry has modeled a 4% dilution rate for his intrinsic valuation. Actual Y/Y share dilution is down to 1.8%, and the trend indicates further decline. While Palantir has had high dilution rates historically, that is not the case currently.

Figure 4: Weighted-average diluted shares outstanding and share dilution rate

The option expense balance has been increasing, but it is not at a level where there is an implied 4% dilution rate each period over the next 15 years as Burry is forecasting. The 10K report is not out at the time of writing, which is why there are no Q4 2025 numbers.

Figure 5: Options expense balance

In addition, stock-based compensation as a percentage of revenues has dropped significantly and continues to trend downwards. As of Q4 2025, the SBC as a percentage of revenues is at 14%, which is significantly below the average for the SaaS peer group (around 23%).

Burry’s valuation

The key assumptions to Burry’s $46 fair intrinsic value are:

• 50% growth year 1-5, followed by 20% for year 6-15.

• 4% dilution rate.

• 16.6% discount rate.

• 4% terminal growth rate.

• ~43% FCFF margin each period.

As just discussed, Palantir is not indicating that a 4% dilution rate is probable over the next 15 years. Using ~4% over ~1% dilution rate erases about 40% from the fair intrinsic value.

The 16.6% discount rate is absurdly high and reflects a risk profile for the company that is not rooted in reality. The company is accelerating growth continuously, with contract balances implying a long run rate of high growth. In addition, while revenue is accelerating, the company is meaningfully expanding margins. Given what we know about the business, there are also no disruptive threats that Palantir is facing. Throughout all of this, there is no debt on Palantir’s balance sheet. A 16.6% discount rate reflects a distressed business facing many competitive threats, none of which are true for Palantir. Applying a discount rate that is based on February’s ERP, the current risk-free rate, and ~2% business-specific risk would triple the fair intrinsic value.

The growth is also anemic given what we know about balances such as RPO, RDV, billings, and inbound volumes referenced by management. The management has guided for US revenue to increase 10x over the next 5 years. Assuming ~50% CAGR that then drops after 5 years is too low given what we know about the business outlook. However, Burry even argues that he is being too generous regarding revenue.

Finally, reversing Burry’s assumptions implies that the FCFF margin is the same as recorded in 2025 for each period. That assumption seems unfair to make given how rapidly Palantir is expanding margins, and especially given how strong Palantir’s operating leverage and network effects are. There is seemingly no ceiling to Palantir’s margin expansion, as they are guiding to become even more efficient by accelerating growth while reducing headcount.

If we use more realistic assumptions while keeping Burry’s somewhat low growth assumptions intact:

• 2% annual dilution

• 55% FCFF margins (in line with Q4 2025)

• 10.45% discount rate

We would get a fair intrinsic value per share of $193, implying a 45.58% upside.

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The sentiment for the Q4 earnings results by management is clearly one of confidence. All the pieces of the puzzle are aligning as intended, and the accelerator pedal is firmly pressed down. Corporations and government entities alike are realizing where actual AI value creation is happening, and they all want in. Palantir has gone from trying to get a foot through the door to showcase their capabilities to having inbound volume at a scale where they have to turn down potential customers.

Seemingly every financial metric is growing at a triple-digit pace, and what’s magical about it is that Palantir won’t stop accelerating anytime soon. Given Q4 results and the guidance outlined for 2026, Palantir has truly showcased why their slogan is “Software That Dominates.”

Company profile

February 5, 2026 Follow-up coverage
Direction: Buy
Previous fair intrinsic value: $169.69, as of November 9, 2025

Symbol: PLTR, Exchange: NASDAQ
Sector: Technology, Industry: Software - Infrastructure
Theme: AI Software
Fair intrinsic value: $204.45 (46.52%), as of February 5, 2026
Market capitalization: $359 106 million
Pricing data: P/S 80x, P/E 220x

Previous coverage:

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The best financial results in the SaaS world

In Q2 2022, Palantir abandoned their 30% CAGR target through 2025 that the company announced during its direct listing. At the time, revenue growth was decelerating for each passing quarter, a trend that would reach a low a year later in Q2 of 2023, when Palantir recorded 13% Y/Y growth. During the earnings call in Q2 2022, a Wall Street analyst noted that the 30% target was not reiterated.

CEO Alex Karp responded in a plain and easy-to-understand tone.

Figure 1: Total revenue

Representing a 56% Y/Y growth rate, Palantir hit $4.5 billion in 2025. On a quarterly basis, the company grew 70%, further accelerating Q3’s 63% growth. As always with Palantir, the mere top-line number does not tell the full narrative. The raw number in itself, while impressive, pales in comparison to the manner in which that growth was achieved.

Out of the 70% Y/Y growth, 39% came from existing customers. Ever since AIP started seeing adoption, the value creation being witnessed by enterprises and government entities where it is deployed keeps justifying an ever-increasing cost. AIP is usage-based, which means that deploying it to solve a single use case may not move the needle, but seeing adoption across a whole company may double or triple that company’s spend on Palantir products.

Figure 2: Cohort growth

This makes the products infinitely scalable as long as the value being created exceeds the cost of the product. For instance, Palantir shared two cases during the Q4 earnings call that highlighted this dynamic. One customer grew annual contract value by 343%, while another customer grew ACV by 400%, both within the same year (Q1 to Q4). In addition, Lear shared that they started with 100 users and four use cases, which they then scaled to 16,000 users and 280 use cases. That is the underlying strength of the growth that Palantir is exhibiting, and it is what makes me believe that it is not about to slow down anytime soon.

On a segmented basis, U.S. Commercial is the crown jewel in terms of growth and the primary beneficiary of AIP. For 2025, U.S. Commercial grew 109%, and Palantir has guided the segment to grow at least another 115% in 2026. For Q4, U.S. Commercial grew a staggering 137%, eclipsing 122% of the prior quarter.

Figure 3: U.S. Commercial revenue

The guidance provided by Palantir for 2026 is strong, but I believe it is on the conservative side. Looking at remaining performance obligations, which essentially are a proxy for guaranteed commercial revenue to be recognized, there is $1.62 billion to be recognized over the next twelve months already. That is guaranteed revenue, with another $2.6 billion to be recognized over the long term. The reason RPO specifically ties to the commercial business is because many government contract types lack fixed terms, and as such, can’t be recorded as RPO. The RPO growth for the quarter is also in the triple digits, growing 143% Y/Y.

Figure 4: Remaining performance obligations

Adjacent to RPO is remaining deal value (RDV), which grew 145% Y/Y for U.S. Commercial specifically. The difference between RDV and RPO is that the full RDV is not guaranteed, as it also includes contractual options that may not be exercised. In any case, U.S. Commercial RDV is $4.4 billion, which further strengthens the narrative that there is a lot more revenue growth recognition waiting to be recorded, without accounting for any new growth. To put it in an easy-to-understand context, even if Palantir simply closes down its business over the next year, the raw RPO would be enough to surpass the full fiscal year 2025 U.S. commercial revenue.

In a surprising turn of events, the non-U.S. commercial segment reached an all-time high in Q4 2025. With a mere 7% Y/Y growth rate and the net outflow of 3 customers, a new record high of $170 million was recorded for the quarter. For the full year, non-U.S. commercial revenue grew 2%. As mentioned in previous reports, and as mentioned by management during a majority of earnings calls since going public, European growth is still absent from the business. Europe has been shooting itself in the foot when it comes to economic growth and the overall tech scene for a long period of time, and it is now a matter of time before they stop over-regulating and hindering their own success. European growth in particular is not a mere Palantir issue but an issue rooted in the fundamental culture within Europe as a whole.

The stagnant European growth can also be seen through a different perspective. Meaning, if Palantir is growing at this rate without Europe, what will it look like when Europe starts to adopt the products as well?

Figure 5: Non-U.S. Commercial growth

While the commercial end is struggling outside of the U.S. borders, the non-U.S. governments seem to have understood that they need Palantir. Y/Y growth more than doubled in 2025 compared to 2024, and similarly to the rest of Palantir’s business, this segment is also just getting started.

Figure 6: Non-U.S. Government growth

As for the U.S. government, I have been bringing attention to this segment for a long time. I expect the segment to grow at more than 40% CAGR over the next 10 years. While many see Palantir as a company aligned with the current administration, Palantir has operated and performed under both sides of the political spectrum. While Thiel is right-leaning, Karp is famously left-leaning.

Concentration risk is a real threat for a business, but among the best customers to have is the U.S. Government. In particular, when you are aiming to be the operating system of the West, U.S. government agencies will be key customers. Historically, many of the contracts awarded to Palantir are sole-sourced, meaning that the capabilities requested in the tender could only be provided by Palantir. However, it is true that Palantir is experiencing massive acceleration under the Trump administration, with executives stating that the current administration has gotten more done in one year than the previous administration got done in four years (in terms of government contract activity). The segment grew 66% Y/Y for the quarter, and once embedded in USG, it tends to be incredibly sticky by nature.

Figure 7: U.S. Government growth

What makes Palantir special is not merely growing at an incredible pace, but the manner of how it is growing. I already covered the cohort growth dynamic, but it goes deeper, and for each stone turned, another positive surprise is discovered. Q4 2025 was a clear inflection point in what kind of customer contracts that Palantir is recognizing. In particular, the downward trend of average revenue per customer has flipped aggressively to the upside. The ARPC is calculated excluding the top 20 largest customers since they alone account for 42% of overall revenues and would heavily skew the calculation.

Figure 8: Average revenue per customer (excl. top 20 customers)

Speaking of the top 20 customers accounting for 42% of revenue and concentration risks, these are safety nets. I have mentioned it in previous coverage of Palantir, but the largest customers of Palantir are also the fastest growing. In essence, it means that the customers who utilize Palantir the most, already pay hefty contracts to use Palantir, and are also those who can’t wait to pay more. Overall existing customer cohort growth was 39%, but the top 20 customers grew 45.5%. Since the top 20 customers are a part of existing customers (most likely), they are bringing up the 39% average significantly, meaning the “whales” are the fastest-growing cohort by a wide margin.

Figure 9: Top 20 customers growth and percent of total revenue, trailing-twelve-months

In summary, the manner in which Palantir is expanding their revenue is exponential in nature and also very scalable. The value proposition is exceptionally strong, as evident by the cohort growth rates. The nature of the land and expanding dynamics will sustain accelerated growth rates over an extended period of time.

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Contract balances and customer mix will fuel high growth

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