Palantir is basically a consulting shop with fancy marketing designed to shift perception so it doesn’t get valued at the low multiples that being a consulting business normally entails.
>Do you think Accenture would have 50-60% margins if it were smaller?
Most definitely. Margins go down as revenue goes up. Given that Accenture produces 15x more revenue than Palantir (at least based on the figures the OP provided), it actually makes a lot of sense that these margins compare like they do.
This is a pretty well-understood concept in business. Firms will effectively choose to work on the best opportunities in order of expected value within the capacity they have. In other words, if you order the margins of the projects either of these firms can work on, it might look something like:
> 50%, 30%, 15%, 5%, 5%, 5%
Palantir, being smaller, only has the capacity to work on three projects, so they choose the ones with the highest margins (so 50%, 30%, and 15% for an average margin of about 30%). Accenture, being larger, has the capacity to work on six projects, so they choose all of these, leading to a lower average margin. Both firms make profit on all of the projects, so Accenture isn't making a mistake by working on these projects.
This is fine and all, but it's also important to recognize that Accenture's capacity and magnitude of revenue (and profit) makes them much more valuable in a vacuum than Palantir. Their margins are lower, but the produce way more profit, which matters when you're investment firms, etc., needing to pile cash into investments that can actually meet your capacity needs (on top of the strategic benefits of being larger, etc.)
remove "other" and their operating margin is 46%
now since we are playing pretend game of framework is a platform what in reality is bespoke work for a given customer gets committed back to "platform" and now you amortizing that part instead of straight up deducting. Given you are growing at a meaningful clip this continually lets you paint a better picture than what the actual operating reality. They also love emphasizing non-GAAP margins so they can exclude RSU part of comp.
Only somewhat related, but I find it disconcerting to just have screenshots of LLM output in the middle of an essay, especially without alt-text. Not a good reading experience imo.
Palantir is basically a consulting shop with fancy marketing designed to shift perception so it doesn’t get valued at the low multiples that being a consulting business normally entails.
A consulting shop with like 50% net margins? Must be really good marketing.
2025 Accenture $69.7 billion in revenue operating income of $10.23 billion 2025 Palantir 4.48 billion in revenue operating income 1.41B
And?
Do you think Accenture would have 50-60% margins if it were smaller?
>Do you think Accenture would have 50-60% margins if it were smaller?
Most definitely. Margins go down as revenue goes up. Given that Accenture produces 15x more revenue than Palantir (at least based on the figures the OP provided), it actually makes a lot of sense that these margins compare like they do.
This is a pretty well-understood concept in business. Firms will effectively choose to work on the best opportunities in order of expected value within the capacity they have. In other words, if you order the margins of the projects either of these firms can work on, it might look something like:
> 50%, 30%, 15%, 5%, 5%, 5%
Palantir, being smaller, only has the capacity to work on three projects, so they choose the ones with the highest margins (so 50%, 30%, and 15% for an average margin of about 30%). Accenture, being larger, has the capacity to work on six projects, so they choose all of these, leading to a lower average margin. Both firms make profit on all of the projects, so Accenture isn't making a mistake by working on these projects.
This is fine and all, but it's also important to recognize that Accenture's capacity and magnitude of revenue (and profit) makes them much more valuable in a vacuum than Palantir. Their margins are lower, but the produce way more profit, which matters when you're investment firms, etc., needing to pile cash into investments that can actually meet your capacity needs (on top of the strategic benefits of being larger, etc.)
Yes, I'm aware margins go down as you get larger. I'm aware that being large has advantages in terms of capital deployment etc.
But yet, no, there is no scale at which Accenture produces 50% net margin. Because it's a consulting shop.
remove "other" and their operating margin is 46% now since we are playing pretend game of framework is a platform what in reality is bespoke work for a given customer gets committed back to "platform" and now you amortizing that part instead of straight up deducting. Given you are growing at a meaningful clip this continually lets you paint a better picture than what the actual operating reality. They also love emphasizing non-GAAP margins so they can exclude RSU part of comp.
[dead]
you can just state things without reading the article nowadays!
> i wrote this essay bc i want to move the discourse away from the low signal bullshit around ”what is or isn’t an FDE”, and towards what is palantir?
> Palantir is a vertically integrated outcome based software solution provider
Nailed it AFAICT.
From TFA, https://ethanding.com/foundry-viz/ is indeed a neat visualization of the public Palantir docs.
Only somewhat related, but I find it disconcerting to just have screenshots of LLM output in the middle of an essay, especially without alt-text. Not a good reading experience imo.