Palantir Technologies said it expects 2023 to be its first profitable year as the maker of data analytics software benefits from cost cuts and the artificial intelligence boom.
The company has reduced employees’ stock-based compensation and cut back on cloud expenditure in recent months in response to lower spending from recession-wary businesses, finance chief David Glazer told Reuters.
It has also slowed hiring to cut expenses, with headcount rising just three percent sequentially in the December quarter, compared with 31 percent for the whole of 2022.
The move underlines a trend of greater frugality by tech firms after rapid hiring during the pandemic left them with a bloated workforce.
The demand weakness, however, weighed on Palantir’s 2023 revenue forecast, which at between US$2.18 billion (A$3.13 billion) and US$2.23 billion was below the US$2.29 billion estimated by analysts, according to Refinitiv.
The downturn has especially hit Palantir’s revenue from newly public firms that use its services as economic uncertainty torpedoes the market for US stock listings.
That revenue is expected to nearly halve in the first quarter to US$16 million from a year earlier.
Still, company executives said the AI surge sparked by the rise of ChatGPT was proving to a be bright spot and would help its business in 2023, mirroring remarks from Big Tech firms.
“There are many different ways we can integrate with technologies like ChatGPT and apply those technologies to our customers data,” said chief revenue officer Ryan Taylor.
The company’s revenue rose 18 percent to US$509 million in the fourth quarter, beating analysts’ estimates for the period when it signed deals with US defense contractor Lockheed Martin and the UK military.