Despite efforts to land more commercial customers, Palantir earned $345.5 million from its work with government agencies in 2019 and $397 million from commercial entities, the documents said. It had 125 customers in the first half of 2020, but did not name them in descriptions of its work.
Mr. Karp had been vocal in the past about his aversion to going public, citing the secret work of Palantir’s customers. An initial public offering “is corrosive to our culture, corrosive to our outcomes,” he said in 2014.
The documents describe Palantir’s plan to go public via a direct listing, in which no new shares are issued and no new funds are raised. This nontraditional method of going public has become more popular among large, high-profile tech companies in recent years, because they can easily raise money from private investors. The direct listings of Slack, the work collaboration software company, and Spotify, the music streaming company, helped popularize the strategy.
In most direct listings, shareholders are not bound by a traditional lockup period before they can sell their stock. But Palantir has imposed a 180-day lockup period. It will allow shareholders to sell 20 percent of their common stock immediately, but they must wait for the lockup to expire to sell more.
The company submitted its confidential filing to go public via direct listing on July 6.
Palantir has arranged a structure to ensure that its founders retain power. They have a special class of shares, Class F, that will have a variable number of votes to ensure the founders control 49.999999 percent of the company’s voting power, even if they sell some of their shares. The company argued to its investors that this structure would allow it to stay “Founder-led” after it went public.
In the documents, Palantir made the case that its strong ties to government contractors were an opportunity, citing the “systemic failures of government institutions to provide for the public.”
“We believe that the underperformance and loss of legitimacy of many of these institutions will only increase the speed with which they are required to change,” the document said.
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