This Part of Palantir Used to Be "Backwater," Says Alex Karp. Now, It's Supercharging Growth.

Palantir Technologies (NASDAQ: PLTR) did it again. The company delivered yet another quarter of mind-boggling growth, with double-digit revenue gains, a record level of profit, and an outlook that suggests many more good days ahead.

Investors have accompanied Palantir along this journey, driving the stock up 1,700% over the past three years. It's been an amazing story for a company that actually isn't a young start-up, but instead, one that's been around for more than two decades.

In fact, Palantir used to be an unassuming tech player, mainly associated with government contracts. But in recent years, this company has stepped into the limelight. And what's driven growth and excitement is a business that was quite small just a few years ago. Palantir's chief, Alex Karp, even called it "backwater." Let's check out this part of Palantir that's supercharging growth.

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Putting data to work

First, a quick note on Palantir's business. The company develops software systems that aggregate a customer's data and help them make use of it in big ways -- from decision-making to developing new strategies. And a key product is Palantir's Artificial Intelligence Platform (AIP), which harnesses the power of AI to optimize the use of a customer's data.

As mentioned, Palantir in the past relied on government contracts for most of its revenue. Even as recently as five years ago, it only had 14 U.S. commercial customers. But over the past few years, demand for AIP has exploded higher -- and Palantir now has 571 U.S. commercial customers. Importantly, they're driving significant revenue gains. In the latest quarter, U.S. commercial revenue rose 137% to $507 million, and contract value has surged, too. The company closed a record $1.3 billion in U.S. commercial total contract value.

"Our U.S. commercial business, once a promising yet mostly theoretical backwater of our company, is now growing at an astonishing rate," Karp wrote in his latest letter to shareholders.

A business that's doubled in one year

The U.S. commercial business has more than doubled in just one year. Considering the demand for AI in the corporate world right now and moving forward, there's reason to be optimistic about this momentum continuing. AIP allows customers to quickly apply AI to their needs -- so they don't have to go out and build a solution themselves. This offers them immediate access to AI, saving them time and keeping costs down, too.

And the number of U.S. commercial customers today, though it's grown, still remains at a level that leaves plenty of room for growth. Finally, Palantir has seen an encouraging trend: Current customers have expanded their contracts, and new contracts are significant in size.

All of this suggests that the commercial business may continue to supercharge growth well into the future, and that's great news for Palantir shareholders.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.