A former Palantir Technologies Inc. employee offers a brief primer on the company’s products, pricing, and prospects over the next few years, particularly in defense and AI.

What Happened: On Monday, AlphaSense, a market intelligence platform that helps analysts and researchers connect with industry experts, shared the transcript of one such interaction between an analyst and an ex-Palantir employee, who served as the expert.

The expert, who remains anonymous, offered several key insights during the nearly hour-long conversation, starting with the platform’s churn and retention rates.

The biggest cause of churn for Palantir is a change in leadership on the client’s side, if the new leadership wants to head in a new direction, they say, “The big competition for Palantir is always in-house development.”

According to the expert, Palantir’s Foundry platform is not as “sticky” or deeply entrenched as SAP SE, but it is better than Salesforce Inc.. This is attributed to its horizontal and vertical integration across an organization, such as finance and engineering departments working with the same underlying data structures.

Foundry can be replaced if the organization is committed to doing so, but it will be a “slow, costly, and complex process,” they warn.

Coming to competitive dynamics, they add that in a “typical case,” the company goes head-to-head with a combination of different tools that are “stitched together in-house.” This involves Snowflake Inc., DataBricks Inc., and Microsoft Corp.’s Power BI solution, among others, all coming together.

The former employee says that Microsoft is currently the only company that is trying to provide an end-to-end platform similar to Foundry, and is therefore the only legacy player that Palantir is going against.

On pricing, the expert says that Palantir offers a bespoke approach, with no transparent pricing information for products and services. “There’s always a negotiation,” they say, while adding that a consumption-based pricing model is not suitable, considering the high implementation costs involved.

They then highlight Palantir’s growing moats in the defense space, pointing to its FedRAMP app store, which they say is “very hard to replicate.” This means that other cloud service providers can sell to the U.S. Government by coming under Palantir’s umbrella.

The classified workflows that have to go through the platform result in a huge cut for the company, thus becoming a major moat, according to the expert.

When asked if Palantir can retain its functionality gap and leading position in this segment, the expert answers that if they stop innovating now, they still risk being replaced by cheaper and more capable alternatives.

Why It Matters: Recently, Palantir received the backing of Ark Invest CEO Cathie Wood, who believes the company will dominate enterprise AI, disrupting Microsoft’s lead in the process. However, Wood sold $9.1 million worth of Palantir shares on Monday.

The stock has been soaring in recent weeks, after the company inked a string of defense deals with leading contractors, positioning it as a defense technology leader, and not just a data analytics company, in the lead up to its quarterly earnings, the coming month.

The battlefield, too, is tilting in favor of Palantir, which plans to roll out an AI-powered combat vehicle, while Microsoft remains on the back foot in defense, ploughing ahead with its “castles in the cloud” strategy.

Price Action: Palantir’s stock is up 1.71% on Monday, and down 0.22% in after-hours trade. The stock is up 52.5% year-to-date, despite a sell-off in the broader markets.