Peter Thiel’s Palantir spreads its tentacles throughout Europe

By Bloomberg   |   26 February 2017   |   4:55 am

Palantir Technologies Inc., the data mining company named after the all-seeing stone from the Lord of the Rings, likes to apply J.R.R. Tolkien references to many aspects of its business. The name of its London office is Grey Havens, a major strategic port in the fantasy trilogy’s Middle Earth setting.

It’s an apt moniker since the U.K. capital has become a vital hub driving growth of the $20 billion startup. Palantir has roughly tripled annual revenue from Europe over the past three years, said Alex Karp, the chief executive officer who started the company with billionaire Peter Thiel.

In a recent interview outlining the company’s progress in Europe, Karp said the region is Palantir’s fastest-growing outside the U.S., and he plans to continue expanding operations throughout the continent. Last month, Palantir touted two major new deals in Europe, with German health-care giant Merck KGaA and French airplane manufacturer Airbus SE.

Along with the European growth, Palantir has reduced the speed at which it’s burning through cash by 60 percent across the company, Karp said. This should enable the 13-year-old business to become profitable this year ahead of a potential sale or initial public offering, he said. The U.K. operations are already turning a profit.

Self-sufficiency has been an elusive milestone for the aging Silicon Valley startup, known as much for its work with government spies as for its eye-popping valuation. It’s also gained renown through its ties to Thiel, its polarizing co-founder, chairman and ally of U.S. President Donald Trump.

When a nation or company buys access to Palantir, it can use the data analytics software to pull far-flung digital information into a single repository and mine it for patterns. But the arrangement also includes consulting, which means Palantir’s headcount has swelled along with each customer it adds. Palantir employees typically set up at customers’ offices to help customize the software and format customer data to flow into the system. They also tinker with privacy controls to limit which information each class of user can view, modify or share, according to a Palantir white paper. While Karp, 49, is keen to discuss his commitment to protecting civil liberties, Palantir has faced criticism for empowering the expansion of spying efforts by the U.S. and its allies.

The governments of Denmark and the U.K. are among those that rely on Palantir. After meeting with Palantir representatives in 2008, U.K. intelligence officials described the software as “extremely sophisticated and mature,” according to a report on Wednesday in the Intercept, citing documents obtained by Edward Snowden. Palantir is used by the U.K. digital arm, tasked with improving the government’s data management, which awarded the company a 735,000 pound ($915 million) contract in late 2015, according to government filings.

Since Palantir was founded in 2004 with federal contracts and funding from the U.S. Central Intelligence Agency, it has strived to branch into the private sector. Palantir said corporate customers now represent roughly half of revenue. In Europe, it counts AXA SA, BP Plc, Credit Suisse Group AG, Deutsche Bank AG, GlaxoSmithKline Plc, Standard Chartered Plc and Zurich Insurance Group AG among its customers.

Of Palantir’s 2,000 employees, more than 300 now report into the London office, which serves as its European headquarters, according to the company. That’s up from 97 at the beginning of 2015, according to Palantir’s U.K. company accounts.

Revenue at Palantir Technologies UK Ltd. increased to 51 million pounds in 2015, up 102 percent from 2014, according to the latest figures published Dec. 30 with the U.K. business registry Companies House. Profit increased to 1.24 million pounds over the same time period, up from 990,400 pounds the year before, according to the filings, which haven’t been previously reported.

In 2015 Palantir’s global bookings were $1.7 billion, a number Karp declined to update for last year. He said with the company approaching profitability, he’s considering an IPO, a private equity deal or another option to allow employees to cash out their shares.

Karp said he’s keeping a close eye on headcount. He said certain tasks that used to require human intervention have recently been “productized,” helping Palantir reduce hiring needs and increase margins.


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