Palantir Technologies Inc (Palantir (PLTR)) reported first-quarter earnings after Monday's close that left analysts and investors smiling. The AI software company posted revenue of $1.63 billion, well above the $1.54 billion consensus estimate, and adjusted earnings of $0.33 per share, beating the $0.28 expected.

Total revenue jumped 85% year-over-year, driven by a 104% surge in U.S. revenue to $1.28 billion. U.S. Commercial revenue was particularly impressive, up 133% to $595 million, while U.S. Government revenue rose 84% to $687 million. The company also highlighted its Rule of 40 score — a metric that combines revenue growth and profit margins to measure efficiency — which hit a staggering 145%.

“Palantir's Rule of 40 score has soared to 145%. We have shattered the metric, a feat matched only by other fellow AI infrastructure companies: NVIDIA, Micron and SK hynix,” said Alex Karp, co-founder and CEO of Palantir. For context, the Rule of 40 is typically used to evaluate SaaS companies, and the goal is simply to get above 40%. Palantir is more than three times that threshold.

The quarter was also marked by deal-making: Palantir closed 206 deals worth over $1 million, 72 deals worth at least $5 million, and 47 deals worth at least $10 million. Cash generation was robust, with $899 million from operations and $925 million in adjusted free cash flow. The company ended the quarter with about $8 billion in cash, cash equivalents, and short-term Treasuries.

Looking ahead, Palantir expects second-quarter revenue between $1.797 billion and $1.801 billion, above the $1.679 billion analysts were looking for. The company also raised its full-year 2026 revenue guidance to a range of $7.65 billion to $7.66 billion, up from $7.18 billion to $7.20 billion and ahead of the $7.27 billion consensus. U.S. Commercial revenue growth is now expected to be at least 120%, up from prior guidance of at least 115%, and adjusted free cash flow is projected at $4.2 billion to $4.4 billion, up from $3.93 billion to $4.13 billion.

“Our financial results now demonstrate a level of strength that dwarfs the performance of essentially every software company in history at this scale,” Karp said. Palantir executives will discuss the quarter further on an earnings call scheduled for 5 p.m. ET.

Shares of Palantir were up 1.5% in after-hours trading, changing hands at $147.50 at the time of publication.