Palantir draws back the veil, Drone maker layoffs, New START’s expiration costs, and more
Palantir, the private Silicon Valley company whose software is used by the defense and intelligence communities, is pulling back the veil on its notoriously secretive business in advance of a looming, and much anticipated, IPO.
In an SEC filing this week, we’ve got a glimpse into the company’s revenue (and losses) and its CEO’s harsh criticism of his Silicon Valley peers. We’ll start with the latter: In a letter that was part of the company’s initial registration, Alexander Karp said Palantir seems “to share fewer and fewer of the technology sector’s values and commitments.” He said the company has “repeatedly turned down opportunities to sell, collect, or mine data.”
Karp also took a swing at tech companies that have resisted working for the Pentagon intelligence community. “Software projects with our nation’s defense and intelligence agencies, whose missions are to keep us safe, have become controversial, while companies built on advertising dollars are commonplace,” he wrote. “For many consumer internet companies, our thoughts and inclinations, behaviors and browsing habits, are the product for sale.”
In 2018, Google drew heat from employees who objected to the company’s efforts to help the Pentagon use artificial intelligence to identify and catalog people and objects in drone video feeds.
“Our software is used to target terrorists and to keep soldiers safe,” Karp wrote. “If we are going to ask someone to put themselves in harm’s way, we believe that we have a duty to give them what they need to do their job.”
Now to the financials: Palantir says it has 125 customers for its Gotham and Foundry platforms. The military and IC use Gotham “to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants,” according to the company’s filing.
The company claims it generated $742.6 million in revenue in 2019, up 25 percent from 2018, when revenue totled $595.4 million. So far this year, Palantir has generated $481.2 million, which it said is up 49 percent over the same period last year.
But, the company said it lost $579.6 million in 2019. This year it has already lost $164.7 million in the first half of 2020, but those losses are less than the $280.5 million it lost in the first half of 2019.
“The improvements in our operating results have principally been driven by increasing revenue and a significant decrease in the time and number of software engineers required to install and deploy our software platforms,” the filing states.
Palantir says its government business has improved dramatically since it won a 2018 lawsuit against the U.S. Army.
“Our victory in federal court has already had a significant impact on our business,” the filing states. “We generated a total of $51.9 million in revenue from our U.S. Army accounts from 2008 through September 2018, when the federal court ruled in our favor. After the ruling, in less than two years, between October 2018 and June 2020, we generated $134.5 million in revenue from those accounts.”
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How Much Would New START’s Expiration Cost?
With the New START treaty — which limits the number of U.S. and Russian strategic nuclear warheads and delivery systems — set to expire in 2021, the Congressional Budget Office looked at the cost implications if there were no limits on the U.S. nuclear arsenal. Since it’s unclear how policymakers might respond — as the report noted, they could change nothing — CBO looked at two ways the U.S. might expand its nuclear arsenal. If the U.S. increased the number of strategic delivery vehicles to higher levels in the START I or START II treaties, it could cost between $172 billion to $439 billion. That money would go toward buying additional weapons, like intercontinental ballistic missiles, B-21 bombers and Columbia-class submarines.
“The new report published today by the Congressional Budget Office further strengthens the strong case for extending New START,” Kingston Reif, director for disarmament and threat reduction policy at the Arms Control Association, said in response to the CBO assessment. “The report shows that the already excessive and unsustainable financial costs to maintain and modernize the U.S. nuclear arsenal could soar even higher if the treaty expires in five months with nothing to replace it and the United States choses to increase the size of the arsenal.”
Heritage’s NDAA Recommendations
As the House and Senate prepare to conference on the fiscal 2021 National Defense Authorization Act, the conservative Heritage Foundation has put together more than 30 recommendations for lawakers, including:
- Cancel the Boeing F-15EX fighter program and instead buy more Lockheed Martin-made F-35 Joint Strike Fighters (read Heritage’s argument, here).
- “Support additional ship purchases to ensure meeting the 2034 target of a 355-ship Navy.”
- Don’t ban nuclear testing.
- Support the Indo-Pacific Deterrence Initiative, “Maintain the prohibition on withdrawal of U.S. forces from the Korean Peninsula; Demonstrate support for Taiwan; Block funding for the removal of U.S. troops from Europe; Keep up the pressure through sanctions.”
Boeing was not happy about Heritage's recommendation to scrap the F-15EX. “It’s unfortunate that the Heritage Foundation has again misinterpreted the U. S. Air Force’s requirement for the F-15EX and the facts about that aircraft and the F-35,” Jeff Shockey, vice president of global sales and marketing for Boeing Defense, Space & Security, said in an emailed statement. “What’s more, the Air Force will save approximately $3 billion by transitioning F-15C/D units to the F-15EX instead of the F-35…. The fact is that the Air Force needs both aircraft to meet operational and fiscal requirements.”
General Dynamics Scores $870M Spanish Combat Vehicle Deal
The Spanish Defense Ministry awarded General Dynamics European Land the contract for 348 Piranha 8X8 vehicles. The Spanish Army will call the vehicles: “Dragón.” The project is expected to grow to 1,000 vehicles.
General Atomics Lays Off 6% of Workforce
Military drone maker General Atomics Aeronautical Systems is laying off 630 employees, about 6 percent of its workers, Defense News reports. The company is perhaps the top benefactor of the Trump administration’s decision earlier this month to relax drone export restrictions.
The World Economic Forum, held in Swiss Alps ski town Davos every January, has pushed the annual gathering until next summer due to the COVID-19 pandemic. It will instead hold a virtual event the week of Jan. 25.