Palantir's balance sheet has arrived. The stock was up as much as 16% in late trading on the back of a good balance sheet. My concern here is choosing the right companies. Choosing companies that are growing and increasing their profits. Even if we choose the right companies, stock prices sometimes may not move in line with the company's performance. They depend on many factors. But we know this. If the company is the right one, that is, a fast-growing company that creates its own monopoly and is highly competitive, valuations will eventually follow it. In this context, Palantir is a company that I have admired for a long time. There are some very special things in the balance sheet it brings. I want to evaluate these for you.
Palantir is also a high-risk company and you should definitely make your own assessment. I had no problem with the company maintaining earnings per share. But I had a slight concern about the turnover. Fortunately, Wall Street analysts' expectations were not disappointed in terms of profit per share, and Palantir even exceeded expectations in terms of turnover. I use seekingalpha very extensively to do this type of analysis. The latest balance sheet figures have not been uploaded to seekingalpha yet, but some news and comments have been uploaded. Some of the news and comments say; Palantir achieved $608 million in turnover.
This represents 19.6% year-over-year growth and exceeds the target of $5.55 million. In my prediction, I thought 20% growth would be great. Because in fact, Palantir has been having a bit of difficulty in growing its turnover lately. Year-on-year growth had dropped to 12%. It had increased to 16% in the previous quarter. It would be great if we went to 20% this quarter and 20% is here.
This is the main reason for the sharp upward movement of the stock. In terms of earnings per share, 8 cents profit per share was achieved in this quarter, which was in line with the targets. appeconomyinsights has again prepared our beautiful classic visual about what is going on at Palantir. Palantir has two sources of revenue. One of them offers services to government institutions, especially the American military, regarding processing big data. There is also a commercial dimension. In other words, it offers the same services to commercial companies. It enables these companies to combine their data with artificial intelligence and make more accurate decisions and increase their efficiency. This is the basic job it does and it really has a very unique structure.
There is a turnover of 32.4 million dollars on the state side. 11% growth came here. It was 10% in the previous quarter. In my prediction, I thought it would be good if it came between 11% and 12%. The reason for this is that the state in America is currently predominantly in the hands of democrats. However, the founder of Palantir is Peter Thiel, who is close to republicans. He is also Elon Musk's partner at Paypal and is a staunch republican. That's why we guess that they are having difficulties in some tenders. But that's enough, I think this growth will accelerate again after the elections in America.
And when it comes to spending money on defense, the US spends money in the end. The army is already trying to make the right decisions on this issue, regardless of who governs the state or who is in the government. Growth on the commercial side is extremely positive. There is a 32% increase here. A turnover of 284 million dollars was reached year by year. The total of the two brings us to 608 million dollars. Here we see a 20% increase in turnover from year to year. It's an extremely good number. I think this will increase even more in the future.
On the gross profit side, it increased gross profit by 3 basis points. The gross profit of this company is an incredible 82%. It has a very high gross profit. This reflects positively on both main operating profit and net profit. The cost of sales was around 109 million dollars. Main operating profit is $66 million. Now this is very, very important. Because Palantir is actually a company that deserves to be included in the S&P 500 index. Because it has been making a net profit according to the GAP accounting standard for four consecutive quarters.
But there was a criticism. A significant portion of this profit comes from interest. This company has a lot of money. He earns a good interest income from there. S&P 500 managers don't like this. They like the core business decision to be high. Here we see an increase of 14 bass points and it has reached 11%, which is quite positive. The company has an interest income of $44 million. When we include this, there is a profit of 97 million dollars. There's year-over-year growth and a 16.9% basis point increase, super positive.
When we look at the company's main operating expenses, we always aim for decreases there, too. We want it to increase at least as much as the revenue, so that the company's operating leverage grows. Sales and marketing expenses reached 32% of the turnover. Here we see that we are in a better situation by 5 basis points compared to last year. General administrative expenses amounted to 127 million dollars, 21% of the turnover. This means an improvement of 9 basis points compared to last year. Research and development values here reached 109 million dollars. There is an increase compared to last year, two points. But if there is an increase, let it be here. Because this is actually an expense item that allows the company to develop more wonderful products that guarantee its future.
When we look at it this way, we are faced with a 10 out of 10 balance sheet in terms of turnover. There is a growth of 20%, just as I expected and desired. Again, the majority of this growth comes from the commercial side, as we expected. There are some very strange things going on in commercial terms when you separate America and non-America. The gross profit was already very good, but it continued to climb a little more. Core operating profit continued to increase. This is very important, especially for the company to enter the S&P 500 and it has managed to keep its expenses under control. Balance sheet number 10.
The company's investor presentation also contains very interesting details. You can also access this at investors.palantir.com. The first line is the line that really fascinates me and is the line that Wall Street likes very much. Revenue growth at commercial customers in the United States is 70% year-over-year this quarter. I certainly didn't expect that. It is a number much higher than my expectations and a very positive number. Because it's one of the biggest concerns about Palantir. Either this is always doing business for the state, if it does not grow on the commercial side, the state ultimately has a certain capacity for consumption. And that's where politics comes into play in America. International politics also comes into play. Not every country will want to go and entrust its defense system to Palantir.
I was saying that growth on the commercial side is very important in an American company during this period. There is 70% year-on-year growth this quarter. It is well above my expectation and when we look at it from quarter to quarter, there is a 12% increase. We have reached 131 million dollars. I liked this line the most. There are other lines I like, but this one is tremendous. When we look globally, commercial turnover increased by 32%. Again, this is above my expectations. But the weight of this comes from America again. When we look at it from quarter to quarter, there is an increase of 13% here too. This is also very positive.
Unfortunately, European companies and Asian companies are not yet aware of the huge productivity gains and turnover increases that will come from combining data with artificial intelligence. When we listen to the CEO, he says the same thing. He says that this issue is not yet fully understood in companies outside the United States. The AI revolution is happening in America right now. America is already far ahead of Europe in terms of awareness level and quality level in terms of companies. This is the reality of the matter and when we look at it this way, the growth in the world has been a little slower.
Total turnover growth of 20% year on year and 9% quarter on quarter is a superb figure. As long as we stay above 20%, Palantir will be considered a high-growth company, and that's very important. Because prices automatically increase faster in companies that grow faster than earnings. In the price divided by earnings divided by growth ratio, Palantir already looked cheap. Now it's even cheaper. Because the growth assumptions there did not foresee a regular growth of 20% from year to year.
They closed 103 new deals this quarter worth over $1 million. This appears to be more than double the same quarter last year. They increased the number of commercial customers in the United States from quarter to quarter, by 55% compared to last year, and by 22% compared to the previous quarter. This is again a very admirable number. Because selling this product is not that easy. This product integrates with your company's entire accounting system, inventory management system, and entire data system. For this reason, many people need to be convinced during the sales phase of the company, and it is a long process and quite expensive products. I'm talking about contracts over $1 million here. This rapid growth shows that demand for Palantir is currently increasing significantly.
Free cash flow reached $305 million. This means a margin of 50. Adjusted operating margin is 34%. They have achieved this for five consecutive quarters. This is important, but what's more important is this. They have achieved core operating profitability for four consecutive quarters, that is, in the last four quarters. This is a first for this company. They took care of this too. This is also important when it comes to entering the S&P 500. There is a margin of 11%. This will also increase in the future and they have reached GAP profitability, or bottom profit, for the fifth quarter in a row. Remember here, they see the benefit of interest. They have 15% net profit margins. In this way, GAP EPS was 4 cents in this quarter and adjusted EPS was 8 cents, much higher than expected.
When we look at the total for 2023, the growth on the commercial side in the United States is 36%. We look at it from year to year, that is, we compare the years. Turnover growth is 17% and we want this to increase to 20% annually. They started the year a little slow, but now they're picking up speed. While the customer increase rate was 35%, they reached 497 customers. The previous year they had 367 customers. This number is very important, by the way. Because Palantir does not easily leave the customer it enters, it stays there for a long time. So, when you increase from 367 customers to 497 customers, you maintain that difference for many years. This ensures that your turnover increases for many years when we look at the total. In the previous quarter, the increase in turnover from the previous year's customers to the following year was around 107%. This now comes to 108%.
In other words, you enter a customer once, and in the next year, your turnover at that customer not only remains the same, but also increases a little more. Because you have to think about it like service income. They also provide consultancy services as they do business and as customers use their software. He continues to pay more and more as he benefits from counseling. In this context, this figure actually shows me that Palantir is going to the next level.
Palantir's value jumped rapidly after its previous balance sheet. But then it gave back a significant part of that great rise and settled on a new plateau. The numbers also show that we may be heading towards a new plateau. Annual free cash flow generation is $731 million. Again, a delicious number. While GAP net income, that is, the course of net profit according to the GAP standard, is a loss of 123 million dollars in 2022, we have now reached a profit of 93 million dollars. This eliminates the doubt that Palantir only makes money from interest and the operation will never make money. Again, this ensures, in my eyes, that Palantir will achieve a base price at the next level.
Gross profit increased from 82% to 84% in the same quarter last year. In other words, they are both growing and doing so without compromising on price. This basically means that a company is strategically strong. There is a significant jump in the number of commercial customers in the United States. The main reason for this jump is that they organize AIP Boot Camp with customers. In this earnings call, the CEO said that we cannot keep up, there is so much demand. What's being done here?
They go to a customer, the customer opens their data to them. They embed that data into the Palantir software and show customers the output of the Palantir software. Customers must be so impressed that they immediately start purchasing. This accelerated the process. That's why I think this growth can be maintained.
They made 103 new agreements in the last quarter. Each of these is over $1 million, at least 37 are over $5 million, and 21 are over $10 million. These are very nice projects. Of course, the company also has plenty of cash. They have around $3.7 billion in cash. This company's debts are quite low compared to that cash. The current ratio is over 5. If you understand a little, you can guess how high this ratio is. So we see that short-term assets are 5 times more than short-term liabilities.
The turnover increase in the top 20 customers of the company continues with 11%. This is a good increase from the same quarter last year to this year and we also see serious increases in billing. So, it's a 10-number balance sheet and the CEO spoke super positively about the future. "One of the things I like most is that many employees apply to us," he said. That's also important because this is a technology company, after all. It must be able to recruit the best staff. So, this is creating excitement. He said that AIP bootcamps are getting excited. So, the turnover will continue to increase from there, and remember, once they gain a customer, they have the ability to keep it for a long time, and those customers constantly increase their turnover.
Palantir's lows earlier this year were around $7.50. It jumped up quite a bit after the second quarter results came out. Then it pulled back and formed a base around $13. After the third quarter balance sheet, it rose very quickly, up to 21 dollars. But then it pulled back and formed a bottom around $16. It rose around 20% on February 5. But my guess is that this new balance sheet will push our base to 17 - 18 dollars. So even if we go a little faster for a while, I think the point where we will sit will be 17 - 18 dollars. I really like this type of companies that move upward step by step.
Because with every balance sheet, these companies convince Wall Street analysts and investors that they deserve a slightly higher level of valuation. This may first be overshoot. In other words, it goes extremely upwards, but then we sell and stabilize. Here, in my eyes, I think Palantir's new bottom will be around 18 dollars, minimum 17.5 dollars. Of course, it depends a little on the general course of the stock market, but everything is positive and I feel very comfortable. It's a good company and the company is growing well.
The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.
