Tuesday, September 29, 2020

"The Palantir non-IPO: 5 things to know about the (formerly) secretive software company’s direct listing" (SPOOKY)

From MarketWatch:
11 SEC filings later, Palantir plans to list its stock while co-founders hold on to creative class of shares with ‘variable’ votes
Palantir Technologies Inc. was known for years as being the most secretive unicorn startup in Silicon Valley, but going public has turned the company from a shrinking violet to an exploding fountain of information.
Palantir publicly filed for a direct listing on Aug. 25, and plenty has happened in the month since.
  • In its original filing, Palantir Chief Executive Alexander Karp loudly and publicly broke up with Silicon Valley in a letter at the very beginning of the document, a unique approach that sought to defend Palantir’s secretive work building surveillance and warfare capabilities for the U.S. government and allies. The letter confirmed earlier reports that Palantir had moved its headquarters from Palo Alto, Calif., to Denver, and seemed to denigrate advertising-based businesses such as Facebook Inc. FB, 0.78%, for which co-founder Peter Thiel serves as a board member. “Our company was founded in Silicon Valley,” Karp wrote. “But we seem to share fewer and fewer of the technology sector’s values and commitments.” 
  • Executives held a public webcast in which they discussed the company and its financial performance for two full hours, which again led off with a unique personal message from Karp, who was filmed while cross-country skiing. Executives then spent a half hour taking questions from potential investors, with both those videos posted online for later consumption
  • Meanwhile, protesters have demonstrated at the company’s old headquarters in Palo Alto, its new headquarters in Denver and its office in New York, mostly focusing on the company’s work with the Immigration and Customs Enforcement division of the U.S. government.
After all of that, The Wall Street Journal reported Sept. 24 that Palantir had informed investors that shares were expected to begin trading around $10 apiece, a price that would give the company a valuation of roughly $22 billion. Shares are expected to begin trading Sept. 30 on the New York Stock Exchange under the ticker symbol PLTR.

Here is what you need to know about Palantir’s direct listing.

Big-data software that got its start with the CIA
The core reason Palantir has been both secretive and controversial since its founding in 2003 is that it began with money from the Central Intelligence Agency to develop data-crunching software for the government. Palantir received original funding from In-Q-Tel, the CIA-funded nonprofit venture-capital arm, to develop its first major product, Gotham, which launched in 2008 to help government entities with surveillance and warfare planning, among other uses.

“Defense agencies in the United States then began using Gotham to investigate potential threats and to help protect soldiers from improvised explosive devices,” Palantir disclosed. “Today, the platform is widely used by government agencies in the United States and its allies.”

Palantir has moved beyond that business, however, and started serving corporate clients in 2016 with its second platform, Foundry. Palantir now says that a little more than half — 53% — of its customers come from the private sector instead of government, even as Palantir considers different divisions in the same government departments as separate customers.

While the majority of Palantir customers may be commercial businesses, that doesn’t mean the majority of its revenue comes from those contracts. Palantir had only 125 customers in the first half of this year that paid an average of $5.6 million each in 2019, but the top 20 customers spent an average of $24.8 million in spending in 2019. And its three largest customers — which Palantir does not name — account for up to a third of the company’s revenue and on average have been customers since well before Foundry was launched....