Q1 2022 Palantir Technologies Inc Earnings Call

Whether you're new to the world of connected data, where a seasoned graph veteran Neil for Jay's graph databases book will help you gain a complete understanding of how to use graphs to analyze and model your data like never before.

Downloaded for free today.

[music].

Yes.

Yes.

Hello, everyone. My name is Youssef I'm afford deployed engineer a commentary and the tech lead of our foundry for builders program.

This video series, we're going to give you a detailed overview of the foundry platforms data integration capabilities and showcase just how foundry to accelerate your companies time to value.

But first what is foundry.

Well foundries your data operating system and Capsulate it into a single platform that provides.

Infrastructure, let's find the cross state integration.

The flexible analytics.

Visualizations.

Model building and dynamic applications.

All within one unified platform.

Were you interested in building operational workflows on top of your data foundry can provide you with the needed tooling to clean and transforming data into a semantic data asset, which we call. The ontology that you can build applications on top of it.

One of the inherent benefits of foundry is that this low isn't just linear and read only but a record of all your interactions and decisions you take on top of this data has persisted inside the platform, allowing you to enrich your users operational decisions into your data assets.

What you need is perhaps not just on the operational side foundry also allows you to run automated workflows on your data such as perhaps a payment settlement or order processing engine the.

The underlying infrastructure is the same.

And therein lies the value of foundry.

Having a fragmented data stack means wasting hundreds of valuable engineering hours on maintaining your data operations infrastructure instead of building your company's core value proposition with.

With collaboration built in as a core tenant of the platform foundry, let's you reuse the work we've already done to unlock new applications and insights with minimal effort.

We'll see examples of this in the series, but this idea is really powerful as it allows you to compound the value of your data assets, taking the time required to produce a new application from weeks to just a couple of hours.

Nothing else compares to how seamlessly foundry skills or data operations point.

While theres a lot to cover in terms of foundry capabilities. This series will focus on foundries data integration suite of tools.

Using notional data, we'll be exploring how we can connect our various data systems to foundry and transform our data into ontological datasets ready to unlock workflows and use cases.

With that let's get right into it to you and the next video.

[music].

And this video will be taking a look at the foundations of connecting your data systems and building pipelines in foundry.

[music] first let's.

Clarify some concepts as we take a look at our sample data pipeline that we might bill for fictional supply chain using foundries data lineage two.

The data lineage tool helps you navigate your data pipelines are showing a visual representation of what we see here from left to right is the journey from raw data sources through unified data interface and applications. Each note on the graph represents a dataset, which is foundries atomic container of data.

How do we handle both structured and unstructured data formats.

But we're dealing with structured data sets foundry natively interprets the schema and allows you to preview the data frame.

The areas between datasets, which are automatically generated and maintained by the platform represented data transformation between parent and child datasets. For example, say we wanted to consolidate all the different data formats and a column. We can do this using a transformation that does justice cleaning stuff. The result will be a new dataset with a date column clean just as we wanted.

All the way to the right we see the objects that makeup our ontology such as plants materials and customers that all represent real business objects relevant to our operations.

What you can further see is that these objects back numerous applications and workflows that do different things and therein lies the value of the oncology with a unified data asset the marginal effort of building a new workflow becomes minimal since all the groundwork has already been laid out.

All the way to the left we have a set of source systems that were pulling data that pertains to our company supply chain.

Foundries data connection suite offers a wide compatibility to connect data from wherever it's located including JDBC sources file systems cloud based storage systems rest Apis and many more.

In this case to build our plants, we have to consolidate data across several sources, namely Postgresql database and Azure blob store and a public rest API.

These data connection suite offers an incredibly intuitive interface to sync data into the platform.

For the post graphs table I can simply set up a new post growth source and added the host name and credentials.

With the source created I can set up a connection to a specific table in the post course database just using sequel to select a chunk of data that I'm interested in.

Once saved I can run the data sink and see it in front of me.

We also have some flexibility in processing entries, we've already seen before in some cases for example, it might not be wise to think all of the data every single time. So what we can do is configure these things to be in a pen type, but we only pulling the new data since the last time, we sync data in front of me or update which only connect new and modified entries.

Best of all despite originating from these different sources. One state has been synced into foundry, we don't need to worry about any sort of specific works. This because datasets on how any source ignostic, which means that you can spend your time building out value from your data rather than working around compatibility.

[music].

Now that we've connected foundry with our source systems will begin, creating some transformations to slowly build up our pipelines to you and the next video.

Mrs. Gingrich here for home title luck with a warning to homeowners the type of fraud, you really need to worry about this title front anybody who owns property gene worried at home titles.

There's no other price that is so easy salesman until lucrative your home your equity and your peace of mind can all be stolen in one fell swoop by home title fees like Matthew Cox Nobody thinks that I can take their house nobody thinks that believe it or not a single page document is all it takes to transfer proof of.

Ownership out of your name people think theres, a whole huge process, but the truth is.

It's a one page document, but it's still must get through one final barrier County clerk when someone comes in with fraudulent date, if it's notarized and all the spaces are fielding we by statute have two objectives, we cannot give it back to them and say we know this is fraudulent we're not going to pilot that's against the law, it's a false sense of secure.

Already on real bottom line is yes, it happens and we can stop it from happening Deborah thought she was protected from identity.

In a cluster.

In the end the fraudulent papers were honored in the police came in this quarter that's off the topic.

For pennies a day home tied a lot to monitor your titled Nonstop Alerting you to suspicious activity and even get a warning notice at this first depth has happened you can stop the rest meet Terry He signed it for home title locking was immediately alerted to fraudulent activity. So I received the report.

Sure Hey, I have a lane against my property that I didn't know about we got it fixed right away and if you call in the next 15 minutes and mentioned promo code Lockheed Youll receive your first 30 days absolutely free.

What would it do to your life. If you lost your pump for me.

Your home is a sacred place protected you'll be glad you did go online or call now one 890 869 97.

Ah you're drinking coffee wrong coffee is one of the healthiest things you can put in your body. In fact, some studies have found people, who drink coffee healthier hearts blood sugar and it can even help you lose weight. However, there's one thing that <unk>.

<unk> all the health benefit, adding cream you see coffee is so healthy because it is packed with polyphenol, which can help activate a host of benefits in your body, including weight loss and digested benefits. However, dairy can cancel out those effects. In fact, most humans are lactose intolerance. After instance, which means it can actually cause digestive issues. Unfortunately.

<unk> dairy alternatives are also not great for Ya Almond milk contains lectins, which can tear holes in your digestive lining of clause digestive issues. The same is true for oatmeal, which contains a protein that acts like gluten another type of electric over one premium green it can actually be very good for Ya coconut cocoanuts contain MCT oils, which can be a fantastic.

Booster Mct's actually help your body to burn fat and convert it to energy now coconut milk is healthy, but theres three other foods I suggest people have every morning actually blow this out of the water. We can help you achieve your weight loss kohl's reduce digestive issues and have actually been found to activate he ptosis without cutting any car its par.

Of how I lost 70 pounds and have kept the weight off for over 20 years and you don't cut any carves out of your diet you just add these things in this is a potato and if youre cutting carbohydrates. It's your enemy. There's just one problem study. After study shows these low carb diets do not improve weight loss in fact, many people who go on.

Keto or Adkins end up gaining back more weight than when they started how is this possible how can the most popular diets in America have it exactly wrong. While the answer lies in a recent discovery that may go down as one of the most mind blowing revelations in the history of weight management. It turns out the key to losing weight and keeping it off is.

Not in carbs or fat or even in probiotic rich foods no. The end game of having a healthy weight as well as more energy and a long healthy life comes down to a specific switch you can flip in your body to flush out unnecessary calories I call. It caloric bypass and by activating this specific process in <unk>.

Your body I have seen thousands yes, thousands of people dramatically improve their health even at age 50 and beyond this includes losing weight getting tons more energy and returning to the good health they had in their youth once they simply addressed this one key to better help not only that this is actually associated with improved digestion.

Strong feeling joints and muscles smoother skin and even longevity, meaning it could be the key to a long and happy life. My name is Dr. Steven Gunby and you May know me from my 20 years as one of the top cardio thoracic Surgeons in America I perform more infant heart transplants than any other doctor in the world and if you or a loved one has ever had open heart.

Surgery, you were likely kept alive using medical devices I invented during my career, but despite my success is a doctor my own health was a mess I was 70 pounds overweight had arthritis migraine headaches high insulin and blood pressure levels and terrible digested problems, such as bloating constipation and a host of other unexplained issues.

Realizing these same issues were plaguing millions of Americans and causing the very hard issues. I'd spent my life fighting against my career took a turn as I dedicated myself to learning and overcoming the skyrocketing issues of weight gain digestive problems and other serious issues experienced by over half of Americans and soon the mystery was solved a lot.

Those 70 bounds and have kept the weight off for over 20 years and counting my digestive issues are gone my health is fantastic and I feel younger and healthier today than I did in my forties, even my skin my hair and my energy levels have improved since written seven best selling books on health I've spoken at major universities around the world and my online.

Video is on health and wellness had been watched by over 20 million people to date and yet the video you're watching right now is without a doubt my most important video ever because for years, while I've known how to help people overcome health issues. It turns out the reason why this works so amazingly well was partially unknown to the entire medical community even.

It's only in the last year that I've discovered the final crucial piece of this puzzle why is that important because it means we can now skip the middle steps and cut right to the one thing, which all held is tied to a specific part of your cells called mitochondria and in this video I will reveal exactly how to use <unk>.

These mitochondria to switch on extreme caloric bypass so that you can achieve your weight loss goals gain energy and feel younger and healthier than you have in years by the way. These specific midol booster techniques have been found to provide the benefits of the keto diet without cutting a single car I will tell you right now.

Two of these three midol boosters involve adding some very specific and powerful foods to your diet, which can dramatically change your life for the better but the other one is a simple method that has nothing to do with food, it's easy free and you can start using it to activate caloric bypass literally the second you're done watching this video.

However, I must warn you that next few minutes will contain a revelations that run completely against the grain of everything you've been told about health and nutrition, how can that be how can an entire industry of health experts doctors and nutritionists be wrong, well, let's ask a different question first when it comes to helping Americans lose weight and get healthy what exactly have.

These experts got right think about it today, there's more health news medical advancements and expert diets available than at any point in history not dimension, so called health food on every aisle and a gym on every corner. Meanwhile, over the last 30 years, the health of Americans as rapidly gone down digestive issues like bloating cramps and constipation.

At the highest levels ever recorded millions of a struggle with fatigue and low mood skin problems achy joints, allergies, and brain fog or something a majority of Americans deal with every single day worst of all wire, 66% of Americans overweight diabetic or pre diabetic and why is that number increasing every day.

With projections that in 10 years, 85% of all Americans will be overweight or obese. So forgive me if I don't automatically trust everything the medical industry tells me and in fact, why I'm quite suspicious of the theories they've been using all along and this isn't something I say casually believe me I come from their ranks I was <unk>.

Yale one of the top universities in the World I spent 16 years as a professor of surgery, and pediatrics and chairman of cardio thoracic surgery at the World famous Loma Linda University School of Medicine, I was one of the original 20 surgeons, who tested the worlds first artificial heart and one of the first to use robots in surgery. So no I don't have some grudge against conventional medicine.

Save thousands of lives. The problem is that most doctors my younger self included are only trained to fix problems when you're already just weeks or days away from death sure I knew how to transplant heart. There was about fail and I can operate on a cancerous tumor growing in your body, but what about the 20 years of problems that led up to these.

Fatal issues wireless all that medical training and expertise focus on the very end stage of disease and so little on the underlying causes of these health issues. The truth is the biggest impact we can make on our health isn't finding some new heart transplant or cancer therapies, it's keeping yourself out of the hospital in the first place by making sure you are.

<unk> stronger and healthier right now and that means effectively managing your weight your oregon's and even your cognitive health on your own. So that you can be one of those fortunate healthy people, who seems to always look and feel fantastic. Even as you enter your 60 seventies eighties and beyond okay. So let's get right to it.

How do we achieve overall wellness and how do we achieve it easily so that we can sustain it for years and years to come the key starts in a fascinating discovery that was actually made over 100 years ago. During World War one for the year was 19 2014 and all of Europe was at war two of the country's locked in combat, where Germany, and France and both sides worked feverishly to.

Supply their troops with munitions, such as bullets bombs and explosives and insights some of these munitions factories something very strange was happening. It was noticed on both sides that in certain types of factories. The workers were experiencing a very strange change to their bodies. They were getting skinnier, believing the workers were simply underfed supervisor.

Began making sure they ate more their caloric intake was increased dramatically yet no matter how much the eight these workers could not gain weight well.

Before the medical community could fully explore the strange phenomenon the allied powers prevailed in the war came to an end most of these factories were slowed or shut down completely and so the mystery of the workers, who could not gain weight was forgotten that is until $19 33, and 1933, a doctor at Stanford University stumbled upon this research.

He was curious because of the side effects. The workers experienced were similar to those he suspected from a specific biological process that occurred deep inside ourselves in a part of your body I mentioned before the mitochondria I know that sounds like a strange science that term, but I can actually make you an expert in it in about one minute the mitochondria.

Are the power plants of yourselves. They are in charge of producing all the energy your body needs to survive. The energy you need to take a walk or do chores, but also the energy you need to digest food to keep your heart strong and even keep your skin looking young and healthy you're mitochondria do all this by taking the food you eat processing, it and turning it into energy vertical.

All right and if there's too much food yourselves can store the extra energy to use later that energy gets stored as fat now. This was very helpful for our ancestors because during the ice age food was scarce. So when there was extra calories available it made sense to put them in storage as fat for emergencies, when food was hard to find of course.

In the modern World, you and I have access to food all day, so the excess calories, just keep getting stored as fat again, and again and eventually we've got way too much fat and no real way to lose it which brings us back to our Skinny World War, one factory workers. When researchers went back to study the type of munitions.

These factories, we're making they realized all the factories, where people lost weight, we're using a specific type of gunpowder made with dinitrophenol or D. In peak DNP. It turns out is what we call a signaling molecule that means it tells mitochondria what to do and what exactly does dnb signal that tells yourselves.

To do something fascinating that says hey cells waste energy it sounds weird right why would it ever be helpful for ourselves to waste energy well, here's an analogy based on our classic TV episodes, you may have seen from I Love Lucy loosely in ethanol were working in a chocolate factory wrapping up chocolates on a conveyor belt.

First it's easy because the conveyor belt moves slow, but as it speeds up they can't handle all the chocolate it moves so fast they start shoving chocolates down their shirts and their hats, even in their mouth well in your body. The same thing happens when you eat food when youre mitochondria get too much food they can't handle it all and that's when the extra calories get stored as fat now back to <unk>.

I called DNP, a boss molecule because it acts like Lucien levels boss, So imagine Lucy's boss said, hey, guys instead of shoving the chocolate in your mouth, just take all the extras you can't wrap and throw them away now Lucy NFL can slow down and everything works better and yourselves. The exact same thing can happen when we.

Signal yourselves, Hey, mitochondria quit working so hard instead of turning those extra calories into fat just let them pass through unprocessed. So the calories get cost out of the cell and you don't keep the fab it sounds too good to be true right and yet it turns out this is exactly what DNP did to the World War.

<unk> factory workers this chemical signaled to the Workers' selves, Hey, guys no matter, how many calories, we don't turn any into fab and it worked but workers could not gain weight no matter how much. They eight researchers sometimes refer to this as mitochondrial uncoupling I call. It caloric bypass because it literally <unk>.

<unk> yourselves bypass calories, resulting in lower body weight well back in the 19 thirties, when researchers discover dnp's effect for weight loss. They began prescribing it to patients and it became one of the most popular diet pills of the era. There was just one problem DNP is poison people lost weight, but <unk>.

Toxic in many ways signs of acute DNP poisoning include vomiting, flushed skin sweating, dizziness, headaches and irregular heartbeat. Some people who took DNP. Even died so in 1938. The FDA officially banned DNP is unsafe for human consumption and thank God. They did human being should not be taking dangerous chemicals.

To make explosives just to lose weight, but unfortunately, the dangers of DNP made it so researchers completely abandon any interest in caloric bypass for the next 70 years, but did we give up on this research too soon what if there were ways to activate caloric bypass without ingesting harmful chemicals in fact, what if there was a <unk>.

Way to waste calories that was not only safe it was something that dramatically boosted your overall wellness. It could mean, even easier weight management, because your body absorbs fewer calories not only that scientists universally agree that excess weight is correlated with heart disease diabetes and pre diabetes high blood.

Pressure insulin issues digestive problems achy joints fatigue, and a host of other health problems mitochondrial health has even been associated with smooth skin strong feeling body and most impressively longevity in other words, there is a great deal of positive benefits at stake here. If this process can be harnessed safely while over the past few years our debt.

<unk> My research to studying every type of boss molecule that activates caloric bypass, they're actually quite a few and many of them are healthy, but I kept coming back to three.

Compensation and related employer payroll taxes was $117 million, representing an adjusted operating margin of 26%.

Ahead of our prior guidance of 23%.

First quarter adjusted expenses were $329 million up 7% sequentially, we're spending to position the company and our customers to win in the current geopolitical environment. These investments in product and our customers will continue over the balance of 2022.

First quarter adjusted earnings per share were <unk>, which includes a negative two cent impact driven primarily by unrealized losses on marketable securities.

We generated $35 million in cash from operations and $30 million and adjusted free cash flow.

Cash flows vary quarter to quarter, but it's worth noting the six years $6 million increase in our accounts receivable balance at the end of Q1, we had a very strong war chest $2 3 billion in cash and no debt in March we expanded our revolving credit facility to $500 million up from $400 million previously and our credit facility remains entirely.

Undrawn, our balance sheet leaves us ideally positioned to take advantage of the opportunities that may arise from further deterioration of global conditions.

Turning to our outlook, we are guiding to a base case of $470 million in revenue for Q2, Theres a wide range of potential upside above our guidance, including those driven by our role in responding to developing geopolitical events.

We expect second quarter adjusted operating margin of 20% in the base case, as we accelerate investments to support our customers' mission in advance of anticipated contract awards and continue to expect full year adjusted operating margin of 27%.

We expect and are already seeing an acceleration of our U S government revenue, resulting from these investments.

Continuing to execute the guidance strategy set forth by our CEO , Alex Karp and our year end 2020 earnings call with regard to long term revenue guidance, we are providing and will continue to provide guidance of 30% or greater revenue growth for this year and the next three years at each earnings call with that I'll turn the call over to Rodney to open up the Q&A.

Thanks, Dave join me for Q&A are Sean Zhang car, Dave laser and Kevin Cal sake.

John This first question is for you Curtis P asks are there any new products you are looking to launch in the near future.

Thank you Carlos we have released so much new product pipeline builder has improved data integration productivity two to three <unk> at the NHS autonomous sales and operation planning and execution. The hospital operation sweep meta constellation edge, AI and edge stream and beyond new product, we're bringing to market 15 years of deep tech that.

We built the power Gotham and foundry Nexus peering or distributed detailed data fabric is going to power. The next decade of Vod programs Apollo is going to take our customers from continuous deployment to autonomous deployment and this is what we're focused on everything else Financial's performance. Those are the consequences of our execution on this focus.

We build software the world needs before the world knows it needs the prescience of our software arises from a deep love and respect for the institutions that are required for the world to function and a deep understanding of the macro and geopolitical shifts that.

Some might say are coming but we would say have already arrived in the practicality of our software arises from the deep love of our users to humans, who are at the coal face who do the hard work day in and day out from the factory floor is a detroit to the cold concrete floors that refugees or sleeping on in Warsaw.

We build software for the world as it is today to help our customers and their humans manage to get to the world that ought to be.

Thanks, Tom Davis next question's for you Daniel L asks what is Pearland youre doing to reduce share dilution.

Thank you Daniel.

This is actually something that is repeatedly misunderstood if you take a look at last year.

We only added four tenths of a percent and fully diluted shares outstanding in the entire year if.

If you flip to the first quarter of this year.

That fully diluted number actually declined for the quarter.

So you literally ended Q1 with fewer shares than when it started.

Thanks, Dave.

John . This next question is for you know a asks Alex Karp said bad times or good for <unk>, what is Pearland youre doing during this time of war inflation and hyper partisanship to backup carbs words.

Alice Pelletier solving the world's current greatest problems.

Thanks. Noah. This question is really important the answer to it is literally <unk>. It is the reason that we exist.

As Alex has mentioned many times, we've been building our company and our products for this world as our customers confront rapidly escalating conflict in eastern Europe , runaway inflation disrupted supply chains, and a new wave of refugees are products that become more essential than ever I've already talked about how we are helping governments respond to Russia's invasion and the resulting humanitarian.

Disaster for meta constellation and edge AI to powering refugee in relief operations.

But it's also important to understand that a chain of events has been set in motion a rube Goldberg like set of bangs Boeing's and ricocheted that extend in will continue to extend into every facet of the world food is short and prices are exploding the availability of fertilizer required to grow more food is disrupted commodity prices are skyrocketing neon gas.

C F 46, palladium all disrupted all crucial in the semiconductor supply chain.

Ukraine is a major regional center for clinical trials all of those trials and the lifesaving medicines behind them are now disrupted simple, but our central automotive components like wiring harnesses and seatbelts are disrupted.

All of this is coming on the back of a set of dynamic disturbances from Covid and the resulting supply and demand shocks people are still coming with and the emergent wave of shocks that will come from extended in severe lockdowns in China.

To solve these problems you cannot operate on software that was built to assume a stable world in the stable World you can make plans and new edited occasionally the plan is static the assumptions are fixed and immutable.

And the real World in this world you.

You only make a plan so you can change it.

We need all of your data ontologize into your digital twin flowing into dynamically delivered applications that connect to each other you need your AI to move faster than the rate of disruption when something goes wrong. It needs to tell the person at the coal face what to do next inflation flowing through your supply chain means you need an entirely different approach to managed suppliers logistics production in S. N O P.

I'll work with Tyson foods is delivering $10 million of value realization every week by moving them from legacy approaches like integrated business planning to autonomous sales and operations execution by moving from a static plan that was assumed to be right to autonomously planning, where you go turn by turn.

As they are dynamically updated to navigate around unforeseen obstacles.

Really every function of every business is breaking under the stress of these events events, where the aftershocks are strong and more profound in the initial earthquake and foundry was built for this.

Thanks, Sean Dave. The first question is for you Deepak C asks when is the company targeting to be GAAP profitable.

Thank you Deepak.

We had a negative 9% GAAP operating margin in Q1.

An improvement from negative 14% in Q4.

And from negative 33% in Q1, 2021 so we are making significant progress.

In Q1 was our strongest got quarter to date.

And not to mention last year for the full year.

We posted $424 million and adjusted free cash flow with a 31% adjusted operating margin and we're already off to a strong start this year.

But with that said, we're preparing for a world that has the highest chance of nuclear war in my lifetime, let alone since my parents are kids.

And as Alex discussed the quality of our government revenue as you through growth.

Performance durability and resilience is unique to <unk>.

Think this uniqueness will be incredibly important in the quarters to come.

Thanks, Dave.

Kevin This last question's for you Jackson K asks can you comment on the spec partnership strategy and its impact on the financials.

Sure. Thanks Jackson.

Revenue from these contracts has peaked in Q1 at around $39 million.

And we will not have additional new customers from this program as we've wound the program down.

Going forward expect about $30 million of revenue per quarter from these customers.

Revenue in Q1 is higher as a result of some catch up of about $9 million recognized in the quarter, reflecting work we started last year.

We also saw roughly a negative <unk> <unk> impact on earnings per share from the marketable securities.

When you look at this by geography, Youll see continued strength and growth in the U S business ex packs growing at 65% year over year, and 9% sequentially quarter over quarter.

We had our strongest quarter for winning new commercial customers overall commercial customer count up 25% sequentially and up 207% from a year ago and.

And in the United States commercial customer count grew 368%.

We expect continued growth in commercial customer acquisition and as Alec mentioned, Alex mentioned, we see a path to double our U S commercial revenue again.

Great. Thanks, Kevin Shawn one more for you before we open up the call Michael P asks in the FY 2021 business update there was a reference to ops pi as a foundry capability or perhaps module could you elaborate on the problem to solve and what value it delivers to foundry users.

Thanks, Michael when you think about foundry there are really three high level massively differentiated capabilities. The first is that foundry makes the marginal cost of data integration approach zero with software defined data integration with pipeline builder with all of this data integration technology. We have software that writes its own data pipelines for Ya. This gets you to the star.

Being aligned quickly. It helps you answered the question how am I going to bring all my data together, how long is that going to take and how I deal with the fact that this new types of data created every single day.

The second capability that Valerie makes the marginal cost of application development approach zero No code WYSIWYG application builders for robust interconnected applications. Importantly, these are not dashboards. These are applications that read and write to your existing enterprise transactional systems like your ERP or general Ledger Your warehouse management system.

And third foundry is native modeling and simulation capability that lets you interact digital twin of your enterprise. So yes, you can compute something like an optimized production plan, but even much more importantly, you can respond to real world surprises in real time, the best analogy I have or this is it current technology is like most people are using.

Something like map Quest, where you put in a destination and then you pronounce the map.

Foundries like ways, where yes, you put in the destination, but we are dynamically computing the best way to get there all the time turn by turn based on the ever changing facts on the ground traffic construction accidents road closures, while the competition is stuck in the traffic Jam your racing across the finish line.

So all of this is possible biggest foundry is a digital twin of your business and that is powered by foundries ontology. So with our ontology. We're modeling not just announce but also the verbs of your business. The actions that you can take so that means you cannot only realize that there's a problem with your production plan based on real time data, but also compute the correct.

Answer the correct plan and push that transaction to your ERP system and all of that amazing capability has historically only been available for applications built inside of foundry.

The OPI they change all of that the power of the ontology can now be used by any application in the enterprise, whether it's first party apps developed by our third party apps developed by suppliers and independent software vendors. The OPI is our clean syntactically sugary sets of Restful Apis.

Like to think about it as server list enterprise orchestration, it's lambda, but for your enterprise simple abstractions that make the authentic complexity of the real world business is manageable and programmable.

Thanks, Sean Our next question comes from Brent Thill with Jefferies, Brent you'll receive a prompt on mute your line and ask your question.

Regarding the government business can you talk to the acceleration that youre seeing in the business and I think you called out the United States is where youre seeing the Reacceleration can you also speak to the rest of the world and what Youre seeing there.

Absolutely. Thanks, Brent we've been working with the U S government for 15 years and over the last decade, we have seen a 30% CAGR and that covers times of peace in times of conflict and I've already talked about our involvement with current events and the role that we're playing there and you can you can kind of see the reacceleration starting to happen with the wins.

That the work that we're doing with <unk> <unk>, two which was literally built for a land war in Europe . The expansion of the work that we have with the UK Royal Navy. The framework agreement that we have in Germany with the with the state and local police covering Bavaria, North Rhine Westphalia Hasher. The work that we're doing in space with U S based Commonwealth core, but really the knock on opportunities at <unk>.

For us with allies as they approach space and said that the end result of this is that in Q2, we've started to see the U S government business Reaccelerate.

We're doing a substantial amount of work right now where we are investing in our customers and we expect that work to have the short term, but also longer term payoffs. We're doing work now that that matters and will likely be contracted but we're also doing work that is defining the requirements for defense procurements over the decades to come here.

Thanks, Sean Our next question comes from Brad Zelnick with Deutsche Bank, Brad you will receive a prompt Amit your line and ask your question.

I'm, hoping that you can I think you guys might have come out cut out on me, but I wanted to double click on a range of upside that you referred to in your Q2 guidance how much of that variability is coming from commercial versus government and how should we think about the variability and what it means for your 30% revenue in 'twenty.

7% margin guide for the full year.

Thank you so.

In this macro environment, we feel very well positioned for the full year and beyond.

Our U S government revenue represented 42% of our Q1 revenue and a significant amount of this is in the defense space commercial business has been outpacing the government business accelerating in each of the last five quarters to a 54% growth rate in Q1 and as John just mentioned in Q2, we've already seen.

Some reacceleration.

U S government business, which we think is a long term trend and expect acceleration of the overall government segment this quarter or shortly after.

Great. Thanks, Kevin Our next question comes from Mark cash with Morningstar.

Mark you'll receive a prompt on mute your line and ask your question.

Mark you can go ahead.

Yeah.

Our next question comes from Rishi jewelry with RBC Richy you can on mute your line and ask your question.

Yeah.

I really appreciate it maybe I just wanted to go a little bit more into understanding the range of outcomes and in Q2, you talked about maybe where you can get a little bit more outside.

Can you walk us through maybe a full set of assumptions there and more importantly, when theres a base case and you're hinting at a bull case, what what is the potential bear case that you would be thinking about in Q2, just given everything that you're seeing going on from a macro perspective. Thank you.

But the base case is really establishing how we're thinking about.

The the visibility that we have the upside is is quite large I mean, a lot of this comes down to contract timing and the acceleration of events. There is a fair amount of work. That's in flight here are the way that we engage with customers is we're not going to deprive you of help in your moments of greatest need when you're at war because paperwork is in India.

And so we think we have visibility into the upside where I'm going to comment on the specifics of it but it is meaningful.

But it's also hard to predict and what we need to be focused on right. Now is just delivering not only because of what implies for this quarter. The next quarter in this full year, but what it implies for the long term growth of the business and the relevance we have to solving the most important problems in the world.

Great. Thanks, Sean that concludes Q&A on today's call I'll turn the call back over to Sean <unk> for closing remarks.

Thank you Rodney.

We feed our culture every day through the direct exposure that we have to our mission from the factory floors of European manufacturers to the cold concrete floors at so many refugees or sleeping on in Q1. Many of our people had the chance to go to Poland, Romania, and Lithuania to stand up the software infrastructure to power refugee operations processing nearly 100.

People a day and we are involved in supporting the military as they execute their sacred duty much.

Much as we positioned the entire company around Covid and delivered outsized impact the global health agencies and health delivery oriented organizations as we stabilize production and supply chain and now we will throw our entire company behind the most significant set of geopolitical and macroeconomic situations and generations.

Our company was built for this our software was built for this.

Back to work.