Palantir Formally Files for an IPO, and It’s Not Your Typical IPO at All

One of the top initial public offerings that has been waiting in the halls for years has been Palantir Technologies. That wait is now over. Palantir has filed its formal paperwork with the Securities and Exchange Commission to conduct a form IPO. The filing is for up to $100 million in common shares, but the actual IPO is likely to be far larger than this placeholder amount that is used in IPO filings of all sizes. The company intends to apply to list its Class A common stock on the New York Stock Exchange under the “PLTR” stock symbol.

Palantir was founded in 2003 and its focus was on the intelligence community to assist in counterterrorism investigations and operations before it began selling to commercial enterprises. The company builds software platforms for large mission-critical institutions which must remain functionable even in times of crisis and uncertainty. In the first half of 2020, Palantir’s platforms were used by just 125 customers that include some of the largest and most significant institutions in the world.

Palantir has been a very secretive company. The company’s 2018 revenues of $595.4 million grew to $742.5 million in 2019. And revenues of $$322.6 million in the first half of 2019 rose to $481.2 million in the first half of 2020. The net loss of -$579.6 million in 2018 was almost unchanged from the -$580 million in 2018, but the -$161.2 million in the first half of 2019 was narrower than the -$280.5 million in the first half of 2019.

In 2019, the average revenue per customer was $5.6 million and the average revenue from each of its top 20 customers was $24.8 million. Palantir’s filing included an estimate that the total addressable market for its software across the commercial and government sectors around the world is approximately $119 billion.

As of June 30, 2020, Palantir has some $1.497 billion in cash and cash equivalents. It also had total assets of $1.892 billion.

Palantir has been a very secretive company. On top of two classes of shares (A shares and B shares), the company intends to authorize a third class of common stock via “Class F” common stock for the founders. According to the SEC filing, each Class A common share gets 1 vote and each Class B common share gets 10 votes and is convertible at any time into a class A share. The Class F common shares will have a variable number of votes and are convertible into 1 share of Class B share.

All shares of the Class F stock will be held by a voting trust established by Alexander Karp, Stephen Cohen, and Peter Thiel. The SEC filing also showed that the Founder Voting Trust Agreement and the Founder Voting Agreement will give these founders the ability to control up to 49.999999% of the total voting power of Palantir’s capital stock.

Reports had already been out that Palantir was planning a direct stock offering to come public rather than using the traditional underwriting model. The IPO filing states that there will be no book building process and no price at which underwriters initially sold shares to the public (to help inform efficient and sufficient price discovery with respect to the opening trades on the NYSE). That filing also confirmed that there will be no underwriters assuming risk in connection with the initial resale of shares around the IPO.

Palantir is not a typical company coming public, nor is its IPO process. This has been a member of our TOP IPOs TO WATCH for some time.

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