Splunk (SPLK) Q1 Loss Wider Than Expected, Revenues Beat

Splunk Inc. SPLK reported first-quarter fiscal 2019 non-GAAP loss of 7 cents per share, couple of cents wider than the Zacks Consensus Estimate as well as the year-ago quarter figure.

Revenues surged 37.4% year over year to $311.6 million and surpassed the Zacks Consensus Estimate of $298 million.

Software revenues climbed 43% from the year-ago quarter to $172.5 million. Cloud revenues soared 89% from the year-ago quarter to $34 million.

Education and professional services represented 10% of total revenues. International operations represented 27% of total revenues.
 

Splunk Inc. Price, Consensus and EPS Surprise

Splunk Inc. Price, Consensus and EPS Surprise | Splunk Inc. Quote

 

Splunk added more than 460 new customers in the quarter. The company had 43 orders of $1 million or more as compared with 35 in the year-ago quarter.

Product Update

During the quarter, the company released Splunk Enterprise and Splunk Cloud 7.1, which delivers artificial intelligence (AI) powered by machine learning to help customers monitor, search and alert on information required to accelerate business.

Splunk also announced the limited availability release of Splunk Industrial Asset Intelligence, the company’s first Internet of Things (IoT) solution, which helps organizations in manufacturing, oil and gas, transportation, energy and utilities better monitor and analyze industrial IoT data in real time.

Moreover, the company announced the general availability of Splunk Insights for Infrastructure, a new version of Splunk IT Service Intelligence (“ITSI”), a new Splunk UBA Content Update and a new version of the Splunk Machine Learning Toolkit.

Operating Details

Non-GAAP gross margin expanded 10 basis points (bps) from the year-ago quarter to 79.3%.

Operating expenses, as percentage of revenues, declined 310 bps to 84%. Research & development (R&D) expenses and sales & marketing (S&M) expenses declined 60 bps and 270 bps, respectively. General & administrative (G&A) expenses increased 20 bps on a year-over-year basis.

Non-GAAP operating loss was $14.5 million narrower than a loss of $18 million in the year-ago quarter.

Balance Sheet & Cash Flow

Splunk exited the quarter with cash & cash equivalents including investments of $959.9 million.

Cash flow from operations was $76.5 million, while free cash flow totaled $74 million at the end of the quarter.

Guidance

For second-quarter fiscal 2018, Splunk expects revenues between $356 million and $358 million. Non-GAAP operating margin is likely to be around 2%.

For fiscal 2019, Splunk anticipates revenues of almost $1.645 billion, up from previous guidance of $1.625 billion. The company maintains its non-GAAP operating margin target of 11.5%.

Management reiterated fiscal 2020 revenue target of $2 billion.

Zacks Rank & Stocks to Consider

Splunk carries a Zacks Rank #3 (Hold).

Stocks worth considering in the same sector are Twitter TWTR, Upland Software UPLD and Workday WDAY. All the three stocks sport Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Twitter, Upland Software and Workday are currently pegged at 23.10%, 20% and 29.76%, respectively.

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