Prominent short-seller Michael Burry says a fresh look at Palantir’s (PLTR) receivables data amounts to a warning shot at the company’s valuation.
In a new post on X, the Scion Asset Management founder points to two charts tracking Palantir’s accounts receivable growth and days sales outstanding, or DSO, noting that the numbers tell a different story than the company’s software narrative.
According to Burry, Palantir’s DSO shows that customers are paying more slowly, with accounts receivable exploding faster than revenue.
“This is a tomahawk dunk, a killshot. Palantir’s accounts receivable grew 20x while revenue growth grew 6x. DSO rose from 20 to 67 days. Q4, though, is the seasonal low, and seasonal lows have been rising – 20 → 44 → 40 → 46 → 55 → 63 → 67 days. Today’s ‘best’ quarter (67 days) is worse than the peak quarters of 2020–2021. The floor keeps rising.
Government customers pay slower, but the mix is far more commercial now. Larger deals are longer cycles, but Adobe does big deals, and its DSO has fallen from 50 to 29. Scaling rapidly with new customers, but HubSpot is one of the fastest growing, and its DSO has been flat at 36-40 days the entire time.”
According to Burry, the delayed payments are a huge red flag that could mean Palantir is not performing as advertised, so it has to make concessions.
“This also could mean increasingly aggressive revenue recognition, extended payment terms as a sales tactic/concession, contracts with back-end loaded cash – again a concession, and finally a customer just paying slower because the ROI//business use case is not strong enough to justify shorter or shortening payment terms. One would think that if the customer is so enthusiastic, they would pay on time or faster. This is not happening.”
Burry says Palantir’s cash collection behavior looks more like a consulting firm, even though the company is being valued like a high multiple software-as-a-service (SaaS) company.
“Rising DSO on an absolute and comparative basis to SaaS companies suggests the company is much more consultancy than Software/SaaS. Note that Palantir’s DSO is very close to Accenture on an absolute basis – 76 days at Accenture vs 72 or so in this current quarter at Palantir. But Palantir trends like Accenture, and unlike the SaaS/Software firms. Palantir trades at 70x sales because it has sold Wall Street that it is SaaS, not the single-digit multiple of a consultant.”
Burry appears to be saying that Palantir’s rising unpaid bills suggest it operates more like a slow-paying consulting firm than a high-quality SaaS company, and the stock’s premium valuation may not match that reality.
Earlier this week, Burry predicted that PLTR will likely plummet to around $50 after the stock broke down from a head-and-shoulders reversal pattern. As of Friday’s close, PLTR is worth $131.41.
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