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Palantir Technologies, Inc.
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== Risks == ==== Risks related to Business and Industry ==== # The company has a history of losses ; operating expenses are estimated to increase further and the company may not be able to maintain profitability in the future.<ref name=":2">https://www.sec.gov/ix?doc=/Archives/edgar/data/1321655/000132165523000011/pltr-20221231.htm#i906e7aef1c274338a29de70844f3334b_61</ref> # Sale efforts involve considerable time and expenses , sales cycles are long and often unpredictable<ref name=":2" /> # Historically, existing customers have expanded their relationships with Palantir, which has resulted in a limited number of customers accounting for a substantial portion of its revenue. If existing customers do not make subsequent purchases or renew their contracts, or if relationships with the largest customers are impaired or terminated, Palantir's revenue could decline, and the results of operations would be adversely impacted.<ref name=":2" /> # Results of operations and key business measures are likely to fluctuate significantly on a quarterly basis in future periods and may not fully reflect the underlying performance of the business, which makes future results difficult to predict and could cause results of operations to fall below expectations.<ref name=":2" /> # Seasonality may cause fluctuations in results of operations and financial position<ref name=":2" /> # Palantir's platforms are complex and may have a lengthy implementation process, and any failure of platforms to satisfy its customers or perform as desired could harm business, results of operations, and financial condition.<ref name=":2" /> # New and existing platforms and changes to existing platforms could fail to attain sufficient market acceptance for many reasons, including: ## Failure to predict market demand accurately in terms of product functionality and to supply offerings that meet this demand in a timely fashion; ## Product defects, errors, or failures or inability to satisfy customer service level requirements; ## Negative publicity or negative private statements about the security, performance, or effectiveness of platforms or product enhancements; ## Delays in releasing to the market our new offerings or enhancements to existing offerings, including new product modules; ## Introduction or anticipated introduction of competing platforms or functionalities by competitors;<ref name=":2" /> # The competitive position of Palantir's platforms depends in part on its ability to operate with third-party products and services, and if its not successful in maintaining and expanding the compatibility of platforms with such third-party products and services, its business, financial condition, and results of operations could be adversely impacted.<ref name=":2" /> # If Palantir is unable to hire, retain, train, and motivate qualified personnel and senior management, including Alexander Karp, one of its founders and Chief Executive Officer, and deploy personnel and resources to meet customer demand around the world, business could suffer.<ref name=":2" /> # Reputation and business may be harmed by news or social media coverage of Palantir, including but not limited to coverage that presents, or relies on, inaccurate, misleading, incomplete, or otherwise damaging information.<ref name=":2" /> # Pricing structures for Palantir's platforms and services change from time to time, which could adversely impact the business, financial condition, and results of operations<ref name=":2" /> # If customers are not able or willing to accept Palantir's product-based business model, instead of a labour-based business model, business and results of operations could be negatively impacted.<ref name=":2" /> # Palantir does not work with the Chinese communist party and have chosen not to host its platforms in China, which may limit its growth prospects.<ref name=":2" /> # In the future, Palantir may not be able to secure the financing necessary to operate and grow business as planned, or to make acquisitions.<ref name=":2" /> ==== Risks to the Class A Common Stock ==== # Trading price of Class A common stock is likely to be volatile and may decline, regardless of the company’s operating performance. Factors that could affect the stock price include: ## price and volume fluctuations in the overall stock market from time to time; ## volatility in the trading prices and trading volumes of technology stocks; ## changes in operating performance and stock market valuations of other technology companies generally, or those in industry in particular; ## sales or expected sales of shares of Class A common stock by us or company’s stockholders; ## short-selling of Class A common stock or related derivative securities; ## Changes to the management ## General macroeconomic volatilities<ref name=":2" /> # Although Palantir currently is not considered to be a “controlled company” under the New York Stock Exchange (“NYSE”) corporate governance rules, it may in the future become a controlled company due to the concentration of voting power among its Founders and their affiliates.<ref name=":2" /> # The company is not inclined to pay cash dividends in the foreseeable future; intends to retain future earnings for the purpose of expansions.<ref name=":2" /> # The multiple class structure of common stock has the effect of concentrating voting power with certain stockholders, in particular, Founders and their affiliates, which will effectively eliminate investor’s ability to influence the outcome of important transactions, including a change in control. The Founder Voting Trust Agreement and the Founder Voting Agreement have a similar effect.<ref name=":2" /> # In certain circumstances in the future, the Founders and their affiliates could have voting power that exceeds 49.999999% of the Voting Power.<ref name=":2" /> ==== Risks related to relationships and business with the public sector ==== # A significant portion of Palantir’s business depends on sales to the public sector, and failure to receive and maintain government contracts or changes in the contracting or fiscal policies of the public sector has adversely affected and could continue to adversely affect business, results of operations, financial condition, and growth prospects.<ref name=":2" /> # The company derives a portion of its revenue from programs with governments and government agencies that are subject to security restrictions (ex: contracts involving classified information, classified contracts, and classified programs), which preclude the dissemination of information and technology that is classified for national security purposes under applicable law and regulation. This may limit investor insight into portions of the company’s business.<ref name=":2" /> # The U.S. government may procure non-commercial developmental services rather than commercial products, which could materially impact our future U.S. government business and revenue.<ref name=":2" /> # Because Palantir generates a substantial portion of its revenue from contracts with governments and government agencies, and in particular from contracts with the U.S. government and government agencies, its results of operations could be adversely affected by government spending caps or changes in government budgetary priorities, as well as by delays in the government budget process, program starts, or the award of contracts or orders under existing contract vehicles, including as a result of a new U.S. administration. Current U.S. government spending levels for defence-related and other programs may not be sustained beyond government fiscal year 2023<ref name=":2" /> ==== Risks related to legal laws, regulations and accounting ==== # The business is subject to complex and evolving U.S. and non-U.S. laws and regulations regarding privacy, data protection and security, technology protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, changes to business practices, monetary penalties, increased cost of operations, or otherwise harm to business.<ref name=":2" /> # More generally, some observers have noted the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, as observed with the subsequent adoption of state-level comprehensive consumer privacy legislation, including the following (collectively, the “State Privacy Laws”): ## the Virginia Consumer Data Protection Act, which was enacted in March 2021 and became effective on January 1, 2023; ## the Colorado Privacy Act, which was enacted in June 2021, and will become effective on July 1, 2023; ## the Utah Consumer Privacy Act, which was enacted in March 2022, and will become effective December 31, 2023; ## Connecticut’s Act Concerning Personal Data Privacy and Online Monitoring, which was enacted in May 2022 and most of which will become effective July 1, 2023; and ## Iowa’s Act Relating to Consumer Data Protection, which was enacted in March 2023 and will become effective January 1, 2025.<ref name=":2" /> # Failure to comply with governmental laws and regulations could harm business, and the company has been, and expect to be, the subject of legal and regulatory inquiries, which may result in monetary payments or may otherwise negatively impact our reputation, business, and results of operation.<ref name=":2" /> # Palantir has previously been, and are currently, or in the future may become, involved in a number of legal, regulatory, and administrative inquiries and proceedings, and unfavourable outcomes in litigation or other of these matters could negatively impact business, financial conditions, and results of operations.<ref name=":2" /> # Governmental trade controls, including export and import controls, sanctions, customs requirements, and related regimes, could subject the company to liability or loss of contracting privileges or limit its ability to compete in certain markets.<ref name=":2" />
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