We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Splunk's (SPLK) Q4 Earnings & Revenues Rise Year Over Year
Read MoreHide Full Article
Splunk reported fourth-quarter fiscal 2020 non-GAAP earnings of 96 cents per share, which matched the Zacks Consensus Estimate and increased 3.2% year over year.
Revenues rose 27.2% year over year to $791.2 million and beat the Zacks Consensus Estimate by 0.9%. The year-over-year upside was driven by greater utilization of Splunk’s products by existing customers and new customer wins.
Quarter in Details
License revenues (65.4% of revenues) were $517.5 million, up 25.9% year over year. Maintenance & service revenues (34.6% of revenues) rose 29.7% to $273.6 million.
Software revenues jumped 33% from the year-ago quarter to $617 million. Splunk stated that 99% of software bookings were either term or cloud.
Remaining performance obligation (RPO) was $1.8 billion, up 43.2% year over year. The company expects to recognize $1 billion (indicating a 23% year-over-year increase) of this RPO as revenues over the next 12 months.
RPO bookings grew 23% year over year to $1.14 billion.
Cloud revenues soared 86% from the year-ago quarter to $99 million on the back of increased utilization of cloud-based services. Management expects cloud’s contribution to grow 50% over the next few years. In the reported quarter, Cloud ARR was $442 million.
The company continues its successful transition to a subscription or renewable model, which is evident from the fact that Splunk met its 75% transition rate for fiscal 2020 in fiscal 2019 itself. However, this transition is a headwind for the perpetual business, which is declining rapidly. Elimination of perpetual licenses increased renewable mix to 99% in the fourth quarter.
Splunk added 450 new enterprise customers in the fourth quarter. The company had 221 orders worth more than $1 million in total contract value, up 23.4% from 179 in the year-ago period.
Splunk’s Data-to-Everything Platform including new products such as Data Fabric Search (DFS), Data Stream Processor (DSP) and Splunk Mission Control, launched in the third quarter, witnessed rapid adoption in the reported quarter.
Operating Details
Non-GAAP gross margin contracted 90 basis points (bps) from the year-ago quarter to 86.7% due to greater proportion of cloud revenue contribution. Splunk’s long-term cloud gross margin target is 70% or more.
Non-GAAP operating expenses, as a percentage of revenues, expanded 170 bps on a year-over-year basis to 62.6%. Research & development (R&D) expanded 270 bps, general and administrative (G&A) expanded 130 bps while sales & marketing (S&M) expenses decreased 230 bps year over year, respectively.
Non-GAAP operating profit was $190.9 million, up 14.7% from the year-ago quarter. Operating margin contracted 260 bps on a year-over-year basis to 24.1%.
Fourth Quarter Developments
Splunk announced the expansion of its footprint to 11 global innovation hubs in locations across Canada, Poland, Singapore, the United Kingdom and the United States.
Balance Sheet & Cash Flow
As of Jan 31, 2020, cash & cash equivalents, including investments, were $778.6 million compared with $873.5 million reported in the previous quarter.
Cash outflow from operations was $58.8 million due to rapid growth of the multi-year term and cloud contracts.
Guidance
For first-quarter fiscal 2021, Splunk expects revenues of $450 million. Non-GAAP operating margin is likely to be negative 25%.
For fiscal 2021, Splunk anticipates revenues of $2.6 billion. Non-GAAP operating margin is expected to be approximately breakeven.
The company expects ARR growth in the range of mid 40% for fiscal 2021.
Zacks Rank & Stocks to Consider
Currently, Splunk carries a Zacks Rank #5 (Strong Sell).
The long-term earnings growth rate for Applied Materials, Garmin and Microsoft is currently pegged at 9.9%, 7.4% and 13.2%, respectively.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
Image: Bigstock
Splunk's (SPLK) Q4 Earnings & Revenues Rise Year Over Year
Splunk reported fourth-quarter fiscal 2020 non-GAAP earnings of 96 cents per share, which matched the Zacks Consensus Estimate and increased 3.2% year over year.
Revenues rose 27.2% year over year to $791.2 million and beat the Zacks Consensus Estimate by 0.9%. The year-over-year upside was driven by greater utilization of Splunk’s products by existing customers and new customer wins.
Quarter in Details
License revenues (65.4% of revenues) were $517.5 million, up 25.9% year over year. Maintenance & service revenues (34.6% of revenues) rose 29.7% to $273.6 million.
Splunk Inc. Price, Consensus and EPS Surprise
Splunk Inc. price-consensus-eps-surprise-chart | Splunk Inc. Quote
Software revenues jumped 33% from the year-ago quarter to $617 million. Splunk stated that 99% of software bookings were either term or cloud.
Remaining performance obligation (RPO) was $1.8 billion, up 43.2% year over year. The company expects to recognize $1 billion (indicating a 23% year-over-year increase) of this RPO as revenues over the next 12 months.
RPO bookings grew 23% year over year to $1.14 billion.
Cloud revenues soared 86% from the year-ago quarter to $99 million on the back of increased utilization of cloud-based services. Management expects cloud’s contribution to grow 50% over the next few years. In the reported quarter, Cloud ARR was $442 million.
The company continues its successful transition to a subscription or renewable model, which is evident from the fact that Splunk met its 75% transition rate for fiscal 2020 in fiscal 2019 itself. However, this transition is a headwind for the perpetual business, which is declining rapidly. Elimination of perpetual licenses increased renewable mix to 99% in the fourth quarter.
Splunk added 450 new enterprise customers in the fourth quarter. The company had 221 orders worth more than $1 million in total contract value, up 23.4% from 179 in the year-ago period.
Splunk’s Data-to-Everything Platform including new products such as Data Fabric Search (DFS), Data Stream Processor (DSP) and Splunk Mission Control, launched in the third quarter, witnessed rapid adoption in the reported quarter.
Operating Details
Non-GAAP gross margin contracted 90 basis points (bps) from the year-ago quarter to 86.7% due to greater proportion of cloud revenue contribution. Splunk’s long-term cloud gross margin target is 70% or more.
Non-GAAP operating expenses, as a percentage of revenues, expanded 170 bps on a year-over-year basis to 62.6%. Research & development (R&D) expanded 270 bps, general and administrative (G&A) expanded 130 bps while sales & marketing (S&M) expenses decreased 230 bps year over year, respectively.
Non-GAAP operating profit was $190.9 million, up 14.7% from the year-ago quarter. Operating margin contracted 260 bps on a year-over-year basis to 24.1%.
Fourth Quarter Developments
Splunk announced the expansion of its footprint to 11 global innovation hubs in locations across Canada, Poland, Singapore, the United Kingdom and the United States.
Balance Sheet & Cash Flow
As of Jan 31, 2020, cash & cash equivalents, including investments, were $778.6 million compared with $873.5 million reported in the previous quarter.
Cash outflow from operations was $58.8 million due to rapid growth of the multi-year term and cloud contracts.
Guidance
For first-quarter fiscal 2021, Splunk expects revenues of $450 million. Non-GAAP operating margin is likely to be negative 25%.
For fiscal 2021, Splunk anticipates revenues of $2.6 billion. Non-GAAP operating margin is expected to be approximately breakeven.
The company expects ARR growth in the range of mid 40% for fiscal 2021.
Zacks Rank & Stocks to Consider
Currently, Splunk carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader computer and technology sector are Applied Materials, Inc. (AMAT - Free Report) , Garmin Ltd. (GRMN - Free Report) and Microsoft Corporation (MSFT - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Applied Materials, Garmin and Microsoft is currently pegged at 9.9%, 7.4% and 13.2%, respectively.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
See 5 Stocks Set to Double>>