Late last week that , the pseudo-secretive intelligence unicorn that has been , is looking to raise a raft of new capital. Per the report, Palantir is looking to raise as much as $3 billion (and as little as $1 billion) at a valuation that could land “between $26 billion and $30 billion. ”

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If this all sounds familiar, it should. Late-stage Palantir has been in IPO limbo for as long as I can remember. That it needs to raise more capital, therefore, isn’t a surprise. Its targeted valuation, in contrast, feels like one.

Let’s remind ourselves of what we know and try to work out how much more sense Palantir makes at $30 billion today than it did last year at its old, floated $41 billion IPO valuation. That IPO is .

Revenue

In October of 2018, Palantir was expected to bring in around $750 million in revenue for the year, up from “roughly $600 million” in 2017 according to . That pace of growth, 25 percent, was light for a company supposedly targeting a public valuation of over $40 billion at its then-extant revenue scale.

Later, news broke that the firm’s year was going better than expected. Indeed, in early January of this year for the company’s 2018 revenues. Growth from $600 million to $1 billion ($1,000 million) in a year works out to 66 percent. That’s a far better figure for a company looking to nail down a valuation increase. (Palantir was worth just over $20 billion during .)

Later in Q1, however, , pegging Palantir’s 2018 revenue at $880 million.

Growth

With the new, reported figure, we can calculate that Palantir grew about 47 percent last year in revenue terms. That’s not bad for a company as old as the unicorn is (Palantir was born in 2004, ). But is that rate of expansion sufficient for a firm looking to target such a large, new valuation?

Perhaps. But as we’re considering its 2019 valuation, the firm will raise off its current-year results instead of what it got done last year. So, we’ll need numbers for this year.

For the sake of argument, let’s presume that Palantir’s growth rate does not slow this year. (This will set up a bullish case, something we’ll remind ourselves of at the end.) If the firm grows as much in 2019 as it did in 2018, Palantir would wind up revenue of $1.29 billion through this December.

However, when stacked next to a $30 billion valuation — the high-end figure that the firm is targeting in its new funding round — the revenue result feels low, especially as we’re not sure what percent of the company’s revenues come from services instead of software. At a valuation of $30 billion, $1.29 billion in revenue arrives at a revenue multiple of 23.2.

(What portion of Palantir’s top line comes from services instead of software isn’t clear to anyone. The question is one that asked whether the firm is “product of services company,” somewhat humorously.)

The greater the percent of Palantir’s revenue that comes from services instead of software, the per , a Yoda-esque figure in SaaS investing. As it is that Palantir has more services revenue in its total top-line mix than the average SaaS company, we can estimate that it should trade at an anti-premium to other SaaS companies of similar scale, and growth.

Let’s continue by way of analogy. To understand if a trailing revenue multiple of over 23 is fair for Palantir, let’s compare it to a firm that we understand more clearly.

Slack

Recall that we’ve examined Slack lately in light of its repricing by the public market. Slack is an attractive company from a financial perspective, with high gross margins, recurring revenue, and well-known branding. It is growing faster than Palantir in percentage terms and has higher revenue quality (per our discussion of revenue mix).

Slack currently trades at a trailing price-sales ratio of about 26.

Recall that in our example Palantir’s end of year implied trailing revenue multiple that we came up to is close to that result (23), and is predicated on the idea that Palantir’s percent-rate-of-growth doesn’t slow this year (a heroically bullish idea). Given that we set Palantir’s revenue high in our thought experiment, we lowered its revenue multiple at the same time. That our over-optimistic revenue guess puts Palantir’s multiple near Slack’s own, then, makes a $30 billion Palantir valuation seem quite high.

Slack also has a clearer revenue mix (using its gross margins as working proxy), faster growth in percentage terms, and a known loss profile. This makes the two having similar multiples all the odder.

Which brings us back to where we started, really. I don’t know how to value Palantir intelligently as the firm is private and doesn’t share its revenue mix. But working around the edges, the prices it hopes to command do feel high.

When Big Secret raises we’ll run the numbers one more time. For now, it’s fascinating to watch a firm pull back from an IPO while working to add so many billions to its private-market valuation.

Illustration: .

, a pseudo-stealthy big data unicorn is moving its value around. The company, perhaps best known for its , has been in the news for other reasons over the last year, including its , , and, of course, an impending IPO.

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That Palantir is valuable is agreed upon. How much Palantir is worth today, and what it may be worth if it were to go public each have less-clear answers.

Recent reporting further complicates already difficult answers to the value question. Palantir, , has reduced the price of employee stock options, lowering the value of the company by that metric to $11 billion.

Of course, $11 billion is nearly a dozen billion dollars so the firm is still quite valuable. But compared to the figure Palantir has flirted with regarding its future worth during an IPO, it’s paltry. Let’s quickly remember what we know about Palantir, and then sort the new data into the mix.

Revenue, Value

Palantir’s 2018 seemed to get better as it went along. When Palantir was considering an IPO in October of last year it was expected to report $750 million in full-year revenue, , up from $600 million the year before. Later, higher expectations were , indicating that Palantir would land closer to $1 billion in topline.

Against those figures was a $41 billion valuation floated by bankers. I was quite skeptical of that figure compared to the $750 million revenue figure. ItsÌýmultiples inched down when its revenue reportedly reached higher, but the math just didn’t seem to square; for Palantir to hope for a revenue multiple as high as a $41 billion value and a revenue result of no more than $1 billion, it would need to grow more than 50 percent or so from 2017 to 2018.

At least according to the current mathÌýthat the markets currently provide.

This brings us back to the latest Palantir that Palantir is reducing the valuation at which its employees can buy stock in their company. Here’s the key bit:

“[I]n recent months, the data-analysis company took the unusual step of slashing the price of employee stock options to about $6 a share, which would value the business at about $11 billion,Ìýsaid people with knowledge of the matter.Ìý

Unicorn valuations are tricky. Small pieces of companies are often sold, theoretically changing the value of the whole firm. Stripe’s at a valuation of more than $22 billion is a good example of the effect. That sale was for 0.4 percent of the company. How fair it is to reprice the whole firm off of such a small sale, I leave to you.

Palantir reducing its valuation for workers to $11 billion does seem material, in contrast. I cannot find any way to harmonize the $11 billion figure and the $41 billion figure; they are simply too far apart, and only one makes sense when compared to the revenue base that Palantir sports.

It’s unclear when Palantir will go public, but the company has to not provide a material exit. We’ll see.

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When we last checked in on , the big data and analytics company was expected to generate around $750 million in revenue during 2018. That figure was expected to represent double-digit growth from a reported $600 million result set in 2017.

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The two revenue figures, while large, paled in comparison to a purported $41 billion price tag as a possible IPO valuation for the company. We found the gap between the companies revenue and theoretical price staggering, especially given the modest 25 percent growth rate that Palantir was expected to post last year.

The company did a bit better than that, however, so it’s time to revisit our math.

According , Palantir disclosed that it “generated almost $1 billion in revenue last year.” At $900 million in 2018 revenue, for example, Palantir’s 2018 growth rate rises to 50 percent, a doubling of its previously expected pace.

I don’t think it’s enough to get Palantir to a $41 billion valuation, but certainly enough of a change to make Palantir worth more than before.

Indeed, with $900 million in 2018 revenue, Palantir would sport a 45.6x revenue multiple, using an estimate of its last-year revenue and discussedÌýIPO valuation of $41 billion. That’s steep before the market took a spill in December, possibly harming sentiment surrounding tech shares and technology flotations. Now it seems simply excessive.

But perhaps Palantir won’t pursue such a lofty valuation. The acceleration of its growth rate this far into scaling is impressive, and should grant the company access to either private or public capital, provided it’s willing to take a market price.

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Ridesharing companiesÌýmade headlines recently when media reports indicated that bankers think could be valued at $120 billion in an IPO next year, and thatÌýÌýcould command a $15 billion pricetag in its own 2019 debut. Uber’s figure is a dramatic boost from its ; Lyft’s is more a defense of its .

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Both figures indicate that bankers expect public-market investors to pay high-ish software multiples for ridehailing companies that have lower gross margins than the technology companies they are trying to financially ape. So, there may be some mismatch at play.

But nothing as apples-to-pigs as what’s going on with big data companyÌý. Another noted that bankers are projecting that Palantir could possibly command $41 billion in a late 2019 IPO. The Wall Street Journal

“Anything close to $41 billion would be a lofty valuation for a company of Palantir’s current size. The company has told investors it expects around $750 million in revenue this year, up from roughly $600 million a year earlier. That would equate to an IPO value of 55 times 2018 revenue.

The $41 billion Palantir valuation guess seems bonkers.

To understand why, here are a few reasons why certain companies are worth more than others on a revenue multiple basis:

• Higher-margin companies are generally given higher revenue multiples than lower margin companies;
• Quicker-growing companies are generally given higher revenue multiples than slower-growing companies.
• More profitable companies are generally given higher revenue multiples than less profitable companies;
• Companies with recurring revenue are generally given higher revenue multiples than discrete-sales companies.

The more of those situations that Palantir can claim, the more its revenue is likely worth. And, the more its revenue is worth, the higher the revenue multiple it will be able to command when going public.

So, let’s see how the firm does against each bullet point:

• Margins: There’s scant evidence that Palantir’s business is super high-margin, indeed 1 indicates that Palantir’s services revenue as part of its top line mix leads to lower gross margins than more purely-software companies.
• Growth: Palantir isn’t growingÌýtoo quickly. Growing 25 percent year-over-year is good growth for most companies, but not a firm hoping for a 55x revenue multiple. Okta and Atlassian are two of the most richly valued companies in SaaS, the space that Palantir likely wants to slap on its chest due to its rich present-day valuations. However, Okta 57 percent year-over-year in its last quarter (from a smaller revenue base), and Atlassian 39.8 percent from a higher revenue base. And Okta’s current trailing revenue multiple is 19.9x. Not 55x.
• Profits: I can’t find indication that Palantir is profitable. This notes a history of unprofitability, in fact. Losing money as a quickly-growing startup is fine. But Palantir has thousands of employees, a 14-year history, and a $20 billion valuation. It’s not a startup. It’s just a large tech company that loses money.
• Recurring: Palantir generates recurring revenue but in a slightly unique way. : “Still, the gulf between cash received and bookings — contracts that often include lower-paying trial periods or complex performance bonuses — raises questions about Palantir’s ability to convert those deals into revenue.” That’s less good than some SaaS products that command high multiples like, say, Slack (which is growing more quickly and has a far lower revenue multiple than what Palantir is being sold by bankers), which enjoys lots of self-serve high-margin recurring top line.

Perhaps Palantir’s gross margins are better than we expect, but it’s growth pace, lack of profits, and seemingly expensive and lengthy customer acquisition setup do not support the argument that it’s worth $41 billion.

Indeed, just kicking the tires as we have this morning, I’m not sure I could summon a particularly good argument as to why Palantir would be worth $20 billion () next year.

Why do we care? Because this is the third time in about 47 minutes that we’ve heard bankers kicking around large numbers as potential valuations for technology giants that likely want to catch the current IPO window. But if they need to be coaxed with unrealistic expectations (Lyft being the potential exception) to go public, once they begin the process, they may not like the response their debuts receive.