(Reuters) – Palantir Technologies Inc (NYSE:) Inc projected second-quarter revenues below Wall Street’s expectations Monday. The forecast indicates slower sales growth. As the data analytics software company ramps up its salesforce in order to sign more contracts amid increasing competition, it expects that sales growth will slow down.

The company is well-known for its work with U.S. Army, Central Intelligence Agency and other U.S. military agencies, but it said that there was a wide range of upsides to its outlook driven by “developing geopolitical developments”, including the possibility that the Ukraine war will increase defense spending.

However, concerns were also raised by slowing revenue growth in the government division of the software manufacturer, which increased 16% during the first quarter.

Shyam Shankar, Chief Operating Officer, stated that nothing due to the conflict in Europe was reflected in quarter one. Palantir, however, has been anticipating award of contracts from governments, and anticipates a “marginal effect” in quarter two and further growth.

Analysts were concerned about Palantir’s dependency on government contracts. The company provides only its software to the United States, “its allies”. Since then, it has increased its focus on commercial clients and been increasing its sales force.

First quarter revenue was $446.4 Million, which is higher than the $443.4 million Refinitiv IBES estimate. This result was driven by strong U.S. Commercial business. It did predict lower margins due to increased marketing and sales spend.

According to the company, an adjusted operating margin will be 20% in this quarter, as compared to 31% for last year.

From $123.5million, which was 7 cents per shares a year ago, net loss fell to $101.4 million or 5 cents per sen.

Fourth-quarter revenues were $470 millions, which is just 25% growth year-over year. It was 49% higher than the previous year. The average analyst expected to see a $483.9million revenue.