![]() Splunk’s FY’20 revenue guidance was revised upward to $2.3 billion from $2.25 billion. Gross margin of 84.2% rose 200 basis points from the year-ago level, while operating margin improved to 9% from 2.9%.įor FQ3, Splunk’s revenue guidance of $600 million topped the consensus estimate of $590.5 million. In FQ2, Splunk closed 93 deals worth more than $1 million, up 52% year over year. On the FQ2 earnings call, Splunk CEO Doug Merritt said the company is on track this year to exceed 2,000 customer adds, which would get it to its goal of 20,000 total customers by the end of FY’20. Splunk stepped up the number of new customer additions, bringing on nearly 500 in FQ2 versus 400+ in the previous quarter. Remaining performance obligation (RPO)-made up of deferred revenue and backlog-rose 47% to $1.235 billion, with the short-term portion (60% of the total) gaining 32% and the long-term portion up 78%. Cloud annual recurring revenue (ARR) of $300.6 million gained 81%. Software revenue of $349.7 million (representing 68% of total revenue) was up 56%, with subscription revenue (the cloud component) advancing 80% to $70.5 million. Longer-term investors who can overlook the near-term timing issues related to cash flow can find plenty to like in Splunk’s latest report, as the numbers indicate customer demand remains robust. But Barclays points out that new CFO Jason Child may have wanted to do a hard reset right out of the gate, indicating a potential cash flow guidance trough. That level of downward revision was more than the market could bear. The net effect is Splunk now forecasts negative operating cash flow of $300 million for the current fiscal year, representing a reduction of $550 million compared to previous guidance. ![]() Also, Splunk is significantly reducing its upfront cash invoicing for term-based and cloud deals to about 33% in the second half of FY’20 from 58% in the first half. During this period, the company's shares have risen by 9.7%, outperforming the 5.2% gain of the S&P 500 index.With the virtual elimination of new perpetual license sales, the timing of cash flow collections is being negatively impacted. Over the past year, Splunk's stock has displayed some volatility but has shown an overall gain. While they maintained a neutral rating on the stock, they highlighted the financial services sector as one of Splunk's larger verticals, with a potential difference in exposure between bigger banks and smaller regional banks. ![]() In anticipation of Splunk's earnings release, JP Morgan analysts cautioned about macroeconomic factors, particularly the potential impact from recent banking turmoil. The company also implemented layoffs earlier this year, affecting more than 300 employees.įurthermore, Splunk faces uncertainties in the tech spending environment, particularly among its banking customers who have experienced a crisis in 2023 that has had repercussions for their preferred software providers, such as Tenable Holdings Inc. ![]() Splunk has undergone substantial changes in recent years, including a change in both its chief executive and chief financial officer amidst a growth slowdown. In a statement, Chief Executive Gary Steele expressed his satisfaction with Splunk's performance, stating, "Splunk delivered another solid quarter and once again delivered durable growth with increasing profitability and free cash flow." Analysts, on average, had expected an adjusted loss of 14 cents per share on sales of $723 million. After adjusting for stock compensation, restructuring costs, and other factors, the company reported earnings of 18 cents per share, a significant improvement from the adjusted loss of 32 cents per share reported a year ago. Analysts, on average, had anticipated second-quarter sales of $868 million, according to FactSet data.įor the fiscal first quarter, Splunk reported a loss of $196.4 million, equivalent to $1.19 per share, on sales of $419.4 million, marking an increase from $674 million in the previous year. Additionally, they adjusted their annual forecast to raise targets for adjusted operating margin and free cash flow. However, the focus of Wall Street was primarily on the executives' forecast after they provided disappointing annual guidance in March.ĭuring the announcement, Splunk's executives provided guidance for second-quarter revenue in the range of $880 million to $895 million. The software company released its results for the fiscal first quarter, which is typically a slower period for sales of their data-crunching software. witnessed a notable surge of over 7% in after-hours trading on Wednesday, following its impressive forecast that allayed concerns about the technology spending landscape.
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