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Splunk (SPLK) to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research
Updated

Splunk Inc. SPLK is set to report fourth-quarter fiscal 2018 results on Mar 1.

Last quarter, the company posted a positive earnings surprise of 21.43%. In the trailing four quarters, Splunk delivered an average positive earnings surprise of 44.92%.

Earnings of 17 cents increased 112.5% sequentially and 72.6% on a year-over-year basis.

Revenues surged 17.4% sequentially and 34.3% year over year to $328.7 million. The top-line growth was driven by strong product portfolio and growing clientele.

For fourth-quarter fiscal 2018, Splunk expects revenues between $388 million and $390 million.

Let’s see how things are shaping up for this announcement.

Expanding Product Portfolio

In November 2018, the company teamed up with Amazon Web Services (“AWS”) for new product integrations. The deal provided users easier access to AWS data and convert the same to answers on Splunk’s platform.

Late third-quarter fiscal 2018, Splunk completed the acquisitions of SignalSense and Rocana’s technology and intellectual properties. These acquisitions expands the company's offerings related to machine learning.

Further, partnerships with Booz Allen Hamilton and Accenture are helping the company to launch products and improvise its existing product line. We believe that portfolio strength is likely to expand clientele in the soon-to-be reported quarter.

Growing Clientele

Splunk’s client base continues to benefit from the automation of traditional analytical process with innovative machine learning methods due to growing volume of machine data.

In fourth-quarter fiscal 2018, Vodafone Australia and Recursion Pharmaceuticals started using Splunk software.

Further, with the rise of cyber threats, the need for analyzing event data is increasing significantly, which bodes well for increasing adoption of Splunk’s security solutions. Notably, the market research firm Gartner declared Splunk as a leader in 2017 Magic Quadrant for Security Information and Event Management for the fifth straight year.

In November 2017, Heartland Jiffy Lube opted for the company’s Enterprise Security (“ES”) and User Behavior Analytics (“UBA”). Along with this, there are two other organizations — Aflac and TransAlta — are using ES.

In January 2018, Daimler became a new client for the company’s security solutions.

Splunk Inc. Price and EPS Surprise

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

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What Our Model Suggests

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Splunk has a Zacks Rank #4 and its Earnings ESP is +4.48%. Therefore, our proven model does not conclusively shows an earnings beat for the company this quarter.

Stocks That Warrant a Look

Here are a few stocks worth considering as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases.

Micron Technology MU has an Earnings ESP of +1.12% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Autodesk ADSK has an Earnings ESP of +17.98% and a Zacks Rank #3.

Broadcom AVGO has an Earnings ESP of +1.08% and a Zacks Rank #3.

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Splunk Inc. (SPLK) : Free Stock Analysis Report
 
Autodesk, Inc. (ADSK) : Free Stock Analysis Report
 
Broadcom Limited (AVGO) : Free Stock Analysis Report
 
Micron Technology, Inc. (MU) : Free Stock Analysis Report
 
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Zacks Investment Research