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Splunk's (SPLK) Q2 Loss Wider Than Expected, Revenues Decline
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Splunk reported second-quarter fiscal 2021 non-GAAP loss of 33 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 32 cents. The company had reported non-GAAP earnings of 30 cents per share in the year-ago quarter.
Revenues decreased 4.8% year over year to $491.7 million and missed the Zacks Consensus Estimate by 6.3%.
License revenues (36% of revenues) were $176.8 million, down 36.7% year over year.
Cloud services revenues (25.6% of revenues) increased 78.7% year over year to $125.9 million on the back of increased utilization of cloud-based services. Maintenance & service revenues (38.4% of revenues) rose 13.3% to $189 million.
Notably, Cloud represented 53% of total software bookings for second-quarter fiscal 2021.
Remaining performance obligation (RPO) was $1.75 billion, up 42% year over year. The company expects to recognize $1 billion (indicating a 37% year-over-year increase) of this RPO as revenues over the next 12 months.
Splunk ended the period with total annual recurring revenues (ARR) of $1.93 billion, up 50% year over year, comprising $568 million from cloud and $1.36 billion from term license and maintenance contracts.
Splunk added new enterprise customers in the second quarter. Yale New Haven Health System became a new Splunk customer after a trial of its Remote Work Insights offering.
Additionally, California Polytechnic State University expanded the use of Splunk Cloud and Splunk Enterprise Security to better address increased phishing activity brought on by coronavirus outbreak.
Moreover, Chicago Public School, the third largest school district in the United States, further expanded on Splunk Cloud to help support its shift to remote learning.
The company ended the fiscal second quarter with 396 customers with ARR greater than $1 million, which compared with 274 in the second quarter of last year.
Splunk’s Data-to-Everything Platform including new products such as Data Fabric Search (DFS), Data Stream Processor (DSP), and Splunk Mission Control witnessed rapid adoption in the reported quarter.
Operating Details
Non-GAAP gross margin contracted 590 basis points (bps) from the year-ago quarter to 78.4% due to greater proportion of cloud revenue contribution. Splunk’s non-GAAP cloud gross margin expanded 790 bps from the year-ago quarter to 15.1%
Non-GAAP operating expenses, as a percentage of revenues, expanded to 91.2% from 75.2% in the year-ago quarter. Research & development (R&D) expanded 850 bps, general and administrative (G&A) expanded 140 bps while sales & marketing (S&M) expenses expanded 610 bps year over year, respectively.
Non-GAAP operating loss was $63 million against an operating income of $46.6 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jul 31, 2020, cash & cash equivalents, including investments, were $1.4 billion compared with $922.5 million reported in the previous quarter.
Guidance
For third-quarter fiscal 2021, Splunk expects revenues in the range of $600 million to $630 million. Non-GAAP operating margin is likely to be between 2% and 5%.
The company withdrew its previous guidance for fiscal 2021 due to coronavirus-related uncertainties.
The long-term earnings growth rate for Apple, Lam Research and Synaptics is currently pegged at 10.6%, 15.4%, and 10%, respectively.
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Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Splunk's (SPLK) Q2 Loss Wider Than Expected, Revenues Decline
Splunk reported second-quarter fiscal 2021 non-GAAP loss of 33 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 32 cents. The company had reported non-GAAP earnings of 30 cents per share in the year-ago quarter.
Revenues decreased 4.8% year over year to $491.7 million and missed the Zacks Consensus Estimate by 6.3%.
Splunk Inc. Price, Consensus and EPS Surprise
Splunk Inc. price-consensus-eps-surprise-chart | Splunk Inc. Quote
Quarter in Details
License revenues (36% of revenues) were $176.8 million, down 36.7% year over year.
Cloud services revenues (25.6% of revenues) increased 78.7% year over year to $125.9 million on the back of increased utilization of cloud-based services. Maintenance & service revenues (38.4% of revenues) rose 13.3% to $189 million.
Notably, Cloud represented 53% of total software bookings for second-quarter fiscal 2021.
Remaining performance obligation (RPO) was $1.75 billion, up 42% year over year. The company expects to recognize $1 billion (indicating a 37% year-over-year increase) of this RPO as revenues over the next 12 months.
Splunk ended the period with total annual recurring revenues (ARR) of $1.93 billion, up 50% year over year, comprising $568 million from cloud and $1.36 billion from term license and maintenance contracts.
Splunk added new enterprise customers in the second quarter. Yale New Haven Health System became a new Splunk customer after a trial of its Remote Work Insights offering.
Additionally, California Polytechnic State University expanded the use of Splunk Cloud and Splunk Enterprise Security to better address increased phishing activity brought on by coronavirus outbreak.
Moreover, Chicago Public School, the third largest school district in the United States, further expanded on Splunk Cloud to help support its shift to remote learning.
The company ended the fiscal second quarter with 396 customers with ARR greater than $1 million, which compared with 274 in the second quarter of last year.
Splunk’s Data-to-Everything Platform including new products such as Data Fabric Search (DFS), Data Stream Processor (DSP), and Splunk Mission Control witnessed rapid adoption in the reported quarter.
Operating Details
Non-GAAP gross margin contracted 590 basis points (bps) from the year-ago quarter to 78.4% due to greater proportion of cloud revenue contribution. Splunk’s non-GAAP cloud gross margin expanded 790 bps from the year-ago quarter to 15.1%
Non-GAAP operating expenses, as a percentage of revenues, expanded to 91.2% from 75.2% in the year-ago quarter. Research & development (R&D) expanded 850 bps, general and administrative (G&A) expanded 140 bps while sales & marketing (S&M) expenses expanded 610 bps year over year, respectively.
Non-GAAP operating loss was $63 million against an operating income of $46.6 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jul 31, 2020, cash & cash equivalents, including investments, were $1.4 billion compared with $922.5 million reported in the previous quarter.
Guidance
For third-quarter fiscal 2021, Splunk expects revenues in the range of $600 million to $630 million. Non-GAAP operating margin is likely to be between 2% and 5%.
The company withdrew its previous guidance for fiscal 2021 due to coronavirus-related uncertainties.
Zacks Rank and Key Picks
Currently, Splunk carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector include Apple (AAPL - Free Report) , Lam Research Corporation (LRCX - Free Report) and Synaptics (SYNA - Free Report) , all sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Apple, Lam Research and Synaptics is currently pegged at 10.6%, 15.4%, and 10%, respectively.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>