ARR Up 52% Year-Over-Year; Cloud Revenue
Grew 81%
Splunk Inc. (NASDAQ: SPLK), provider of the Data-to-Everything
Platform, today announced results for its fiscal first quarter
ended April 30, 2020.
First Quarter 2021 Financial
Highlights
- ARR was $1.775 billion, up 52% year-over-year.
- Cloud revenue was $112 million, up 81% year-over-year.
- Total revenues were $434 million, up 2% year-over-year.
- GAAP loss per share was $1.94; non-GAAP loss per share was
$0.56.
“COVID-19 has transformed the world into one that requires
rapidly accelerated digital transformation to keep organizations
moving - we are seeing some resilient customers complete
three-to-five year projects in just months. As customers continue
to adapt to this new normal, data matters more than ever, evidenced
by our continued strong momentum this quarter,” said Doug Merritt,
President and CEO, Splunk. “Data helps save lives. Data reimagines
business. I’m extremely proud of our team’s product vision and
tenacity as we help our customers bring data to COVID-19 response
and help get the world back to work.”
“Our shift to a SaaS model is accelerating with cloud driving
nearly half of total software bookings in the quarter with ARR
growing 52% year over year,” said Jason Child, chief financial
officer, Splunk. “We are also thrilled to have been recently added
to the Fortune 1000, which is monumental recognition for a software
company and a testament to the importance of data in today’s
world.”
Recent Business
Highlights:
New and Expansion Customers Include: Allied Irish Bank
(Ireland), Autodesk, Experian, Hitachi Capital (England), Kayak,
Mount Sinai Health System, Santander Bank (Spain), Shopify, State
of Illinois, Statkraft (Norway), Square Enix (Japan), Take-Two
Interactive Software, TD Ameritrade, Transurban (Australia),
Zoom
- Splunk Helps Bring Data to COVID-19 Response: Splunk is
focused on supporting its customers, partners, employees and
communities throughout COVID-19. To help address new challenges
facing every business, Splunk released a series of free,
downloadable resources including Splunk Remote Work Insights, which
helps organizations take action on data, gain real-time visibility
across disparate systems, and maintain workforce productivity and
high performance of critical business activities.
- Splunk & Coalition Launches COVID-19 Testing and Data
Response Platform: Splunk, along with Accenture, Adobe, Oracle,
NuHarbor Security, DataHouse, Globant, Whyline and the nonprofit
Alliance for Innovation, announced the release of the COVID-19
Testing and Data Response Platform. The free platform provides an
end-to-end COVID-19 test management process, including online
COVID-19 risk screening and critical symptom evaluation, test
scheduling, test site management and data analytics and
dashboarding for use by public health officials. The platform is
now in use in its pilot jurisdiction, Tarrant County, TX.
- New DevOps Solutions Help Customers Unlock Real-Time
Observability: Splunk continues to bring DevOps value to
customers, recently announcing the newest version of SignalFx
Microservices APM. The only application performance monitoring
solution that provides complete observability into modern,
cloud-native environments, SignalFx helps produce meaningful
business outcomes regardless of scale.
- Splunk & Google Cloud Turn Data Into Doing: Splunk’s
robust partner ecosystem continues to grow, with the company
announcing a new, strategic partnership with Google Cloud. The
partnership will bring Splunk Cloud to Google Cloud, allowing
customers to unlock the value of their data, drive actionable
insights and enable fast decisions across the enterprise.
- Splunk & AWS Help Customers Bring Data to
Everything: Splunk continues to strengthen its strategic
relationship with AWS, working across product, go-to-market and the
field. Recently, Splunk and AWS launched the Workload Migration
Program to help migrate on-premises legacy Splunk Enterprise
workloads to Splunk Cloud running on AWS. Splunk and AWS also
announced the newly launched AWS Service Ready program, Lambda
Ready, which recognizes Splunk’s proven solutions for customers to
build, manage and run serverless applications.
-
Splunk Achieves #1 Market Share According to Gartner:
Splunk earned the No. 1 market share for Performance Analysis in
the AIOps, ITIM and Other Monitoring Tools subsegment according to
Gartner’s Market Share: Enterprise Infrastructure Software,
Worldwide, 2019. According to the report, Splunk is ranked No. 1
with 16.5% market share. Gartner’s Market Share: Security Software,
Worldwide, 2019 report also recognized Splunk as the No. 1 market
share vendor for Security Software subsegment, Security Information
Event Management (SIEM). In the report, Splunk is ranked No. 1 with
26% market share. ** Gartner, Market Share: Enterprise
Infrastructure Software, Worldwide, 2019, April 2020
Financial Outlook
The company is providing the following guidance for its fiscal
second quarter 2021 (ending July 31, 2020):
- Total revenues are expected to be approximately $520
million.
- Non-GAAP operating margin is expected to be between negative
10% and negative 15%.
The company is withdrawing its previous guidance for its fiscal
year 2021 (ending January 31, 2021).
All forward-looking non-GAAP financial measures contained in
this section “Financial Outlook” exclude estimates for stock-based
compensation and related employer payroll tax, acquisition-related
adjustments, amortization of acquired intangible assets and
capitalized software costs.
A reconciliation of non-GAAP guidance measures to corresponding
GAAP measures is not available on a forward-looking basis without
unreasonable effort due to the uncertainty regarding, and the
potential variability of, many of these costs and expenses that may
be incurred in the future. The company has provided a
reconciliation of GAAP to non-GAAP financial measures in the
financial statement tables for its fiscal first quarter 2021
non-GAAP results included in this press release.
Conference Call and
Webcast
Splunk’s executive management team will host a conference call
today beginning at 1:30 p.m. PT (4:30 p.m. ET) to discuss the
company’s financial results and business highlights. Interested
parties may access the call by dialing (866) 501-1535.
International parties may access the call by dialing (216)
672-5582. A live audio webcast of the conference call will be
available through Splunk’s Investor Relations website at
http://investors.splunk.com/events-presentations. A replay of the
call will be available through May 28, 2020 by dialing (855)
859-2056 and referencing Conference ID 5894108.
Safe Harbor Statement
This press release contains forward-looking statements that
involve risks and uncertainties, including statements regarding
Splunk’s revenue and non-GAAP operating margin targets for the
company’s fiscal second quarter in the paragraphs under “Financial
Outlook” above and other statements regarding our market
opportunity, including the impact of COVID-19 on the business
environment, including the pace of customer digital transformation
and the growing importance of data, the market for data-related
products and trends in this market, future growth and related
targets, including trends in our cloud software business mix,
momentum, strategy, technology and product innovation, expectations
for our industry and business, including our business model,
customer demand, our partner relationships, customer success and
feedback, expanding use of Splunk by customers, and expected
benefits and scale of our products. There are a significant number
of factors that could cause actual results to differ materially
from statements made in this press release, including: risks
associated with Splunk’s rapid growth, particularly outside of the
United States; Splunk’s inability to realize value from its
significant investments in its business, including product and
service innovations and through acquisitions; Splunk’s shift from
sales of perpetual licenses in favor of sales of term licenses and
subscription agreements for our cloud services which impact the
timing of revenue, cash collections and margins; Splunk’s
transition to a multi-product software and services business;
Splunk’s inability to successfully integrate acquired businesses
and technologies; Splunk’s inability to service its debt
obligations or other adverse effects related to our convertible
notes; the impact of COVID-19 and the responses of government and
private industry thereto, as well as the impact of COVID-19 on the
overall economic environment; and general market, political,
economic, business and competitive market conditions.
Additional information on potential factors that could affect
Splunk’s financial results is included in the company’s Annual
Report on Form 10-K for the fiscal year ended January 31, 2020,
which is on file with the U.S. Securities and Exchange Commission
(“SEC”) and Splunk’s other filings with the SEC. Splunk does not
assume any obligation to update the forward-looking statements
provided to reflect events that occur or circumstances that exist
after the date on which they were made.
About Splunk Inc.
Splunk Inc. (NASDAQ: SPLK) turns data into doing with the
Data-to-Everything Platform. Splunk technology is designed to
investigate, monitor, analyze and act on data at any scale.
Splunk, Splunk>, Data-to-Everything, D2E and Turn Data Into
Doing are trademarks and registered trademarks of Splunk Inc. in
the United States and other countries. All other brand names,
product names, or trademarks belong to their respective owners. ©
2020 Splunk Inc. All rights reserved.
Splunk Inc. Condensed Consolidated Statements of
Operations (In thousands, except per share amounts)
(Unaudited) Three Months Ended April
30,
2020
2019
Revenues License
$
148,385
$
202,862
Cloud services
112,152
62,055
Maintenance and services
173,540
159,933
Total revenues
434,077
424,850
Cost of revenues License
6,066
5,682
Cloud services
53,490
32,326
Maintenance and services
69,061
57,815
Total cost of revenues
128,617
95,823
Gross profit
305,460
329,027
Operating expenses Research and development
192,124
129,290
Sales and marketing
319,224
278,961
General and administrative
82,724
65,762
Total operating expenses
594,072
474,013
Operating loss
(288,612
)
(144,986
)
Interest and other income (expense), net Interest income
6,475
16,346
Interest expense
(24,437
)
(23,017
)
Other income (expense), net
(674
)
(539
)
Total interest and other income (expense), net
(18,636
)
(7,210
)
Loss before income taxes
(307,248
)
(152,196
)
Income tax provision (benefit)
(1,669
)
3,233
Net loss
$
(305,579
)
$
(155,429
)
Basic and diluted net loss per share
$
(1.94
)
$
(1.04
)
Weighted-average shares used in computing basic and diluted
net loss per share
157,534
149,060
Splunk Inc. Condensed Consolidated Balance Sheets
(In thousands) (Unaudited)
April 30, 2020
January 31, 2020
Assets Current assets Cash and cash equivalents
$
922,507
$
778,653
Investments, current
834,067
976,508
Accounts receivable, net
645,151
838,743
Prepaid expenses and other current assets
127,443
129,839
Deferred commissions, current
100,013
99,072
Total current assets
2,629,181
2,822,815
Investments, non-current
17,142
35,370
Accounts receivable, non-current
335,427
468,934
Operating lease right-of-use assets
398,652
267,086
Property and equipment, net
168,221
156,928
Intangible assets, net
223,684
238,415
Goodwill
1,292,840
1,292,840
Deferred commissions, non-current
83,386
88,990
Other assets
75,735
68,093
Total assets
$
5,224,268
$
5,439,471
Liabilities and Stockholders' Equity Current
liabilities Accounts payable
$
24,874
$
18,938
Accrued compensation
186,558
286,159
Accrued expenses and other liabilities
179,568
177,822
Deferred revenue, current
769,044
829,377
Total current liabilities
1,160,044
1,312,296
Convertible senior notes, net
1,735,046
1,714,630
Operating lease liabilities
364,837
235,631
Deferred revenue, non-current
153,141
176,832
Other liabilities, non-current
1,145
653
Total non-current liabilities
2,254,169
2,127,746
Total liabilities
3,414,213
3,440,042
Stockholders' equity Common stock
158
157
Accumulated other comprehensive loss
(1,948
)
(5,312
)
Additional paid-in capital
3,678,895
3,566,055
Accumulated deficit
(1,867,050
)
(1,561,471
)
Total stockholders' equity
1,810,055
1,999,429
Total liabilities and stockholders' equity
$
5,224,268
$
5,439,471
Splunk Inc. Condensed Consolidated Statements of Cash
Flows (In thousands) (Unaudited)
Three Months Ended April 30,
2020
2019
Cash flows from operating activities Net loss
$
(305,579
)
$
(155,429
)
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation and amortization
20,494
13,415
Amortization of deferred commissions
26,878
30,032
Amortization of investment premiums (accretion of discounts)
(692
)
(2,859
)
Amortization of debt discount and issuance costs
20,416
19,005
Non-cash operating lease costs
10,531
4,549
Stock-based compensation
158,818
123,063
Disposal of property and equipment
505
-
Deferred income taxes
(901
)
(20
)
Changes in operating assets and liabilities: Accounts receivable
327,099
184,358
Prepaid expenses and other assets
(4,846
)
(17,900
)
Deferred commissions
(22,215
)
(23,452
)
Accounts payable
7,336
2,925
Accrued compensation
(97,709
)
(62,777
)
Accrued expenses and other liabilities
(10,067
)
(7,665
)
Deferred revenue
(84,024
)
(72,216
)
Net cash provided by operating activities
46,044
35,029
Cash flows from investing activities Purchases of
investments
(87,135
)
(289,425
)
Maturities of investments
254,823
298,425
Purchases of property and equipment
(14,756
)
(14,900
)
Capitalized software development costs
(3,548
)
-
Other investment activities
(2,375
)
(375
)
Net cash provided by (used in) investing activities
147,009
(6,275
)
Cash flows from financing activities Proceeds from
the exercise of stock options
1,418
360
Taxes paid related to net share settlement of equity awards
(49,228
)
(69,007
)
Net cash used in financing activities
(47,810
)
(68,647
)
Effect of exchange rate changes on cash and cash equivalents
(1,389
)
(1,043
)
Net increase (decrease) in cash and cash equivalents
143,854
(40,936
)
Cash and cash equivalents at beginning of period
778,653
1,876,165
Cash and cash equivalents at end of period
$
922,507
$
1,835,229
Splunk Inc. Operating Metrics
Total Annual Recurring Revenue (“ARR”) represents the annualized
revenue run-rate of active subscription, term license, and
maintenance contracts at the end of a reporting period. Contracts
are annualized by dividing the total contract value by the number
of days in the contract term and then multiplying by 365.
Non-GAAP Financial Measures and
Reconciliations
To supplement Splunk’s condensed consolidated financial
statements, which are prepared and presented in accordance with
generally accepted accounting principles in the United States
(“GAAP”), Splunk provides investors with the following non-GAAP
financial measures: cost of revenues, cloud services gross profit,
gross margin, research and development expense, sales and marketing
expense, general and administrative expense, operating income
(loss), operating margin, income tax provision (benefit), net
income (loss), net income (loss) per share and free cash flow
(collectively the “non-GAAP financial measures”). These non-GAAP
financial measures exclude all or a combination of the following
(as reflected in the following reconciliation tables): expenses
related to stock-based compensation and related employer payroll
tax, amortization of acquired intangible assets,
acquisition-related adjustments, including the partial release of
the valuation allowance due to acquisitions, capitalized software
development costs and non-cash interest expense related to
convertible senior notes that were issued in the third quarter of
fiscal 2019. The non-GAAP financial measures are also adjusted for
Splunk's estimated tax rate on non-GAAP income (loss). To determine
the annual non-GAAP tax rate, Splunk evaluates a financial
projection based on its non-GAAP results. The annual non-GAAP tax
rate takes into account other factors including Splunk's current
operating structure, its existing tax positions in various
jurisdictions and key legislation in major jurisdictions where
Splunk operates. The non-GAAP tax rate applied to the three months
ended April 30, 2020 was 20%. Splunk provides updates to this rate
on an annual basis, or more frequently if material changes occur.
The applicable fiscal 2020 tax rates are noted in the
reconciliations. In addition, non-GAAP financial measures include
free cash flow, which represents operating cash flow less purchases
of property and equipment. Splunk considers free cash flow to be a
liquidity measure that provides useful information to management
and investors about the amount of cash generated or used by the
business.
Splunk excludes stock-based compensation expense because it is
non-cash in nature and excluding this expense provides meaningful
supplemental information regarding Splunk’s operational performance
and allows investors the ability to make more meaningful
comparisons between Splunk’s operating results and those of other
companies. Splunk excludes employer payroll tax expense related to
employee stock plans in order for investors to see the full effect
that excluding that stock-based compensation expense had on
Splunk’s operating results. These expenses are tied to the exercise
or vesting of underlying equity awards and the price of Splunk’s
common stock at the time of vesting or exercise, which may vary
from period to period independent of the operating performance of
Splunk’s business. Splunk also excludes amortization of acquired
intangible assets, adjustments related to a financing lease
obligation, acquisition-related adjustments, including the partial
release of the valuation allowance due to acquisitions, adjustments
related to restructuring charges and facility exits, capitalized
software development costs, a legal settlement charge and non-cash
interest expense related to convertible senior notes from the
applicable non-GAAP financial measures because these expenses are
considered by management to be outside of Splunk’s core operating
results.
There are limitations in using non-GAAP financial measures
because the non-GAAP financial measures are not prepared in
accordance with GAAP, may be different from non-GAAP financial
measures used by Splunk’s competitors and exclude expenses that may
have a material impact upon Splunk’s reported financial results.
Further, stock-based compensation expense has been and will
continue to be, for the foreseeable future, a significant recurring
expense in Splunk’s business and an important part of the
compensation provided to Splunk’s employees. The presentation of
the non-GAAP financial measures is not intended to be considered in
isolation or as a substitute for, or superior to, the financial
information prepared and presented in accordance with GAAP. Splunk
uses these non-GAAP financial measures for financial and
operational decision-making purposes and as a means to evaluate
period-to-period comparisons. Splunk believes that these non-GAAP
financial measures provide useful information about Splunk’s
operating results, enhance the overall understanding of past
financial performance and future prospects and allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision making. In addition, these
non-GAAP financial measures facilitate comparisons to competitors’
operating results. The non-GAAP financial measures are meant to
supplement and be viewed in conjunction with GAAP financial
measures.
The following tables reconcile Splunk’s GAAP results to Splunk’s
non-GAAP results included in this press release.
SPLUNK INC. Reconciliation of GAAP to Non-GAAP Financial
Measures (In thousands, except per share data)
(Unaudited) Reconciliation
of Cash Provided by Operating Activities to Free Cash
Flow Three Months Ended April 30,
2020
2019
Net cash provided by operating activities
$
46,044
$
35,029
Less purchases of property and equipment
(14,756
)
(14,900
)
Free cash flow (non-GAAP)
$
31,288
$
20,129
Net cash provided by (used in) investing activities
$
147,009
$
(6,275
)
Net cash used in financing activities
$
(47,810
)
$
(68,647
)
Reconciliation of GAAP to
Non-GAAP Financial Measures Three Months Ended April 30, 2020 GAAP
Stock-basedcompensation andrelated employerpayroll tax
Amortization ofacquiredintangible assets
Capitalizedsoftwaredevelopment costs Non-cash
interestexpense related toconvertible seniornotes Income tax
effectsrelated to non-GAAPadjustments (2) Non-GAAP
Cost of revenues
$
128,617
$
(13,982
)
$
(10,373
)
$
-
$
-
$
-
$
104,262
Gross margin
70.4
%
3.2
%
2.4
%
-%
-%
-%
76.0
%
Research and development
192,124
(71,265
)
(25
)
3,548
-
-
124,382
Sales and marketing
319,224
(59,422
)
(4,333
)
-
-
-
255,469
General and administrative
82,724
(21,645
)
-
-
-
-
61,079
Operating loss
(288,612
)
166,314
14,731
(3,548
)
-
-
(111,115
)
Operating margin
(66.5
)%
38.3
%
3.4
%
(0.8
)%
-%
-%
(25.6
)%
Income tax benefit
(1,669
)
-
-
-
-
(20,198
)
(21,867
)
Net loss
$
(305,579
)
$
166,314
$
14,731
$
(3,548
)
$
20,416
$
20,198
$
(87,468
)
Net loss per share (1)
$
(1.94
)
$
1.05
$
0.09
$
(0.02
)
$
0.13
$
0.13
$
(0.56
)
(1) Calculated based on 157,534 weighted-average shares of
common stock. (2) Represents the tax effect of the non-GAAP
adjustments based on the estimated annual effective tax rate of
20%.
Reconciliation of GAAP to
Non-GAAP Financial Measures Three Months Ended April 30, 2019 GAAP
Stock-basedcompensation andrelated employerpayroll tax
Amortization ofacquiredintangible assets Non-cash
interestexpense relatedto convertiblesenior notes Income tax
effectsrelated to non-GAAPadjustments (2) Non-GAAP
Cost of revenues
$
95,823
$
(11,674
)
$
(5,922
)
$
-
$
-
$
78,227
Gross margin
77.4
%
2.8
%
1.4
%
-%
-%
81.6
%
Research and development
129,290
(43,445
)
(249
)
-
-
85,596
Sales and marketing
278,961
(53,403
)
(955
)
-
-
224,603
General and administrative
65,762
(21,546
)
-
-
-
44,216
Operating loss
(144,986
)
130,068
7,126
-
-
(7,792
)
Operating margin
(34.1
)%
30.6
%
1.7
%
-%
-%
(1.8
)%
Income tax provision
3,233
-
-
-
(2,432
)
801
Net income (loss)
$
(155,429
)
$
130,068
$
7,126
$
19,005
$
2,432
$
3,202
Net income (loss) per share (1)
$
(1.04
)
$
0.02
(1) GAAP net loss per share
calculated based on 149,060 weighted-average shares of common
stock. Non-GAAP net income per share calculated based on 155,427
diluted weighted-average shares of common stock, which includes
6,367 potentially dilutive shares related to employee stock awards.
GAAP to non-GAAP net income (loss) per share is not reconciled due
to the difference in the number of shares used to calculate basic
and diluted weighted-average shares of common stock.
(2) Represents the tax effect of
the non-GAAP adjustments based on the estimated annual effective
tax rate of 20%.
Reconciliation of GAAP to Non-GAAP Cloud
Services Gross Profit Three Months Ended
April 30, 2019 July 31, 2019 October 31, 2019
January 31, 2020 April 30, 2020 GAAP Cloud services
gross profit
$
29,729
$
35,296
$
39,395
$
46,428
$
58,662
Stock-based compensation and related employer payroll tax
1,533
1,634
1,543
2,756
2,390
Amortization of acquired intangible assets
418
417
2,497
4,488
5,006
Non-GAAP Cloud services gross profit
$
31,680
$
37,347
$
43,435
$
53,672
$
66,058
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200521005626/en/
Media Contact Richard Brewer-Hay Splunk Inc.
press@splunk.com
Investor Contact Ken Tinsley Splunk Inc.
IR@splunk.com
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