What's truly incredible is how much is spent on Sales/Marketing. It's not like they're marketing to millions of small businesses or hundreds of millions of consumers.

They have 125 customers. Even assuming everey single one of them came online last year, we're looking at millions of dollars each?

That's a lot of…bribes? Idk even know what could cost that much.

I read about some company recently (unsure whether it was Palantir - in fact Improbable is ringing more of a bell) that they put a huge amount of engineering effort into proofs-of-concept for many potential customers. Effectively half-solving every potential customer's problems could plausibly consume such a huge budget and could plausibly be labelled "sales and marketing".

The company I work at follows that queue. Engineering might not build anything custom for new clients, since it's a software platform product, but Sales Engineers invest heavily into building turn-key solutions to their clients' problems using our platform. I just finished a project allowing our own sales people to duplicate their efforts into the actual system once the customer is converted and they estimated that simple copy operation would save them 500 hours a quarter. That's a ton of investment for a company of my employer's size. If we're talking about a company like Plantir, whose primary engineering workforce is, "Implementations Consultants", then that absolutely makes sense. Especially since those are government contracts, which can attach strings to the proposal requiring proof the bidder is capable of doing what they promise.

Preparing a response to a DoD RFP costs a shitload.

[edit]

I heard from some friends that work there that over the last two years, they have been offering very large discounts on 5+ year deals if they were paid for upfront. One can assume that this is to shift revenue into the pre-IPO financial years so they can show this level of growth in their S-1

Minor nit: this would increase cash flow but not revenue, which has to be recognized when it is earned rather than when it is paid.

Thanks. For my understanding, what’s the standard definition of “when it is earned”? If it’s a 5 year contract must all revenue associated with that contract be spread across all 5 years?

There are rules around revenue recognition [1]. These rules provide guiding principles, and there's some human judgment involved in ironing out the details. Its almost certain that the revenue would be spread over the life of the contract, but it's possible that the contract has some growth baked in, so the latter years may be more heavily weighted than the early years.

You can see how much prepaid money is "waiting" to be recognized by looking at Deferred Revenue on the balance sheet. $263 million at the end of 2019.

[1] https://www.investopedia.com/terms/r/revenuerecognition.asp

paulgb.... just want to point out that accounting for long-term contracts is a standard way to manipulate earnings (and nearly everyone has been dinged for it at one point or another).

accrual accounting is the devil's work.

only?

I think they mean that bringing in $742M and losing $579M is a pretty terrible ratio. The raw numbers are large, but looking at dollars in vs. dollars out, you're damn far from making any money.