Palantir Technologies (PLTR  ) Chief Executive Alex Karp believes the data analytics firm is on track to make money this year after the company reported its first-ever profitable quarter in the fourth-quarter.

Palantir's quarterly net income of $31 million on $509 million in revenue for the fourth-quarter topped analyst estimates. For the three months ended December 31, the company's revenue grew 18% year-over-year and its U.S. commercial revenue grew 12%. It's that commercial revenue that Karp believes will help the company turn a profit this year.

Founded in 2003 by PayPal (PYPL  ) co-founder and investment titan Peter Thiel alongside Karp and computer scientist Stephen Cohen, Palantir provides data analytics and other softwares primarily to U.S. government agencies. The company's federal clients include the Central Intelligence Agency (CIA), the Federal Bureau of Investigation (FBI), the National Security Agency (NSA), and the Securities and Exchange Commission (SEC).

The firm sells service contracts to agencies ranging between $2 million and $50 million, with about half of its revenue coming from large contracts, according to the earnings report. It has since expanded its footprint to include commercial customers as well, with its private sector business growing 79% year-over-year in the fourth-quarter, increasing from 80 customers to 143.

In a letter to shareholders, Karp said a substantial U.S. commercial business has emerged at Palantir over the past two years, growing revenues of $38 million in 2018 to $335 million in 2022.

"When we were just starting out, many doubted our ability to evolve beyond anything more than a specialty provider of software to a handful of government customers, let alone generate meaningful revenue from the government sector as a whole," Karp wrote. "They were wrong."

Karp called commercial interest in Palantir's data products "unrelenting" in his letter. On an earnings call with investors, Karp said much of the company's success is due to investments in artificial intelligence to improve its software offerings.

"There has been a lot of talk about recent events in consumer internet and OpenAI and the incredible technologies that have been brought to bear," Karp said when asked how Palantar's products differ from other AI offerings from tech giants like Microsoft (MSFT  ) and Alphabet (GOOGL  ). "We had a lot of thought going into this and spent the last five years building the core infrastructure that you would need to power and train AI algorithms."

Palantir expects to report between $503 million and $507 million in revenue during its first-quarter, and between 2.18 billion and 2.23 billion for the full year, which would make 2023 its first-ever profitable year.