Cloud ARR Up 72% Expects Total ARR of $3.1 Billion by Fiscal Year End

Splunk Inc. (NASDAQ: SPLK), provider of the Data-to-Everything Platform, today announced results for its fiscal second quarter ended July 31, 2021.

Second Quarter 2022 Financial Highlights

  • Cloud ARR was $976 million, up 72% year-over-year.
  • Total ARR was $2.63 billion, up 37% year-over-year.
  • Cloud revenue was $217 million, up 73% year-over-year.
  • Total revenues were $606 million, up 23% year-over-year.
  • 234 customers with Cloud ARR greater than $1 million, up 100% year-over-year.
  • 582 customers with Total ARR greater than $1 million, up 47% year-over-year.

“Our team delivered another strong quarter, validating the high strategic value we deliver to the world’s largest and most dynamic organizations,” said Doug Merritt, President and CEO of Splunk. “We doubled the number of customers with Cloud ARR of $1 million dollars or more as workloads and data continue to shift to cloud. Our second quarter execution was broad-based with each of our major geographic regions exceeding our own expectations as more and more customers around the world rely on Splunk and our market-leading data platform and cloud-based capabilities.”

“We delivered another quarter of high growth with Total ARR of $2.63 billion dollars, up 37% year-over-year,” said Jason Child, Chief Financial Officer, Splunk. “We outperformed in the first half of the year and are well-positioned heading into the second half. We expect $1.3 billion of Cloud ARR and Total ARR of well over $3 billion by fiscal year end as we help our customers accelerate their digital transformations.”

Business Highlights:

New and Expansion Customers Include: Arlo, Chartis Group LLC, Fujitsu, Hiscox Underwriting Group Services Limited, Intel Corporation, N-able Technologies, Inc., Norwegian Labour and Welfare Administration (NAV), and Rover Group, Inc.

  • New Cloud-based Platforms Help Customers Maximize the Value from their Data: Splunk launched the Splunk Observability Cloud, Splunk IT Cloud, and Splunk Security Cloud to help organizations safely conquer complexity and fast-track cloud transformation. In addition, Splunk completed the acquisition of TruSTAR, a cloud-native security company offering a data-centric intelligence platform.
  • Silver Lake Investment: Silver Lake Partners, a global leader in technology investing, made a $1 billion investment in Splunk senior notes to support the continued transformation of Splunk’s business and management of the company’s capital structure, including Splunk’s $1 billion share buyback program. Kenneth Hao, Chairman and Managing Partner of Silver Lake, was also appointed to Splunk’s Board of Directors.
  • Splunk Ranks First in Both IT and Security Market Share Reports By Gartner, Inc.: Splunk leads IT Operations Management (ITOM) Performance Analysis and Security Information and Event Management (SIEM) market share rankings for the second and third consecutive year in 2020 reports.*
  • Splunk Expands Executive Bench and Technical Leadership: Splunk welcomed Shawn Bice as president of Products and Technology and appointed executives to the positions of Chief Cloud Officer, Chief Marketing Officer, and Chief Product Officer.
  • Splunk Delivers State of Observability and Security Reports: Global research reveals that IT leaders’ early investments in observability lead to improvements in performance, customer experience and bottom line. As well, security strategy evolution is necessary to address the increasing complexity of hybrid, multicloud infrastructures as supply chain attacks and remote work continues.

Financial Outlook

The company is providing the following guidance for its fiscal third quarter 2022 (ending October 31, 2021):

  • Cloud ARR is expected to be between $1.10 billion and $1.11 billion.
  • Total ARR is expected to be between $2.8 billion and $2.825 billion.
  • Total revenues are expected to be between $625 million and $650 million.
  • Non-GAAP operating margin is expected to be between negative 15% and negative 20%.

The company is providing the following guidance for its fiscal year 2022 (ending January 31, 2022):

  • Cloud ARR is expected to be between $1.305 billion and $1.330 billion.
  • Total ARR is expected to be between $3.085 billion and $3.135 billion.
  • Total revenues are expected to be between $2.53 billion and $2.60 billion.
  • Non-GAAP operating margin is expected to be between negative 14% and negative 17%.
  • Operating Cash Flow is expected to be approximately $100 million.

All forward-looking non-GAAP financial measures contained in this “Financial Outlook” section exclude estimates for stock-based compensation and related employer payroll tax, acquisition-related adjustments, amortization of intangible assets, restructuring and facility exit charges and capitalized software development 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 second quarter 2022 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 September 1, 2021 by dialing (855) 859-2056 and referencing Conference ID 2160425.

Safe Harbor Statement

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding Splunk’s guidance for total ARR, cloud ARR, revenue and non-GAAP operating margin targets for the company’s fiscal third quarter and fiscal year 2022 and operating cash flow for the company’s fiscal year 2022 in the paragraphs under “Financial Outlook” above and elsewhere in this press release, statements regarding our market opportunity, including trends in the pace of customer digital and cloud transformation; our global presence and trends in customer demand, engagement and bookings; the growth of our cloud business; the market for data-related products and the importance of data and our ability to leverage these trends; our strategy, technology and product innovation; expectations for our industry, business and products, such as 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 the company’s business, including product and service innovations and through acquisitions; Splunk’s shift from sales of licenses to sales of cloud services which impacts the timing of revenue and margins; a shift from generally invoicing multi-year contracts upfront to invoicing on an annual basis, which impacts cash collections; 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 the company’s convertible notes; the emergence of new COVID-19 variants such as the Delta variant, the impact of new variants such as the Delta variant and related public health measures on our business, as well as the impact of new variants such as the Delta variant on the overall economic environment, including customer buying capacity, urgency and patterns; 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 Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2021, 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.

*Gartner, Inc., Market Share Analysis: ITOM, Performance Analysis Software, Worldwide, 2020; Laurie Wurster and Shailendra Upadhyay, June 11, 2021; Gartner, Inc., Market Share: All Software Markets, Worldwide 2020, Neha Gupta et al, April 14, 2021

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. © 2021 Splunk Inc. All rights reserved.

Splunk Inc. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited)    

Three Months Ended July 31,

 

Six Months Ended July 31,

2021

 

2020

 

2021

 

2020

Revenues Cloud services

$

217,422

 

$

125,870

 

$

411,380

 

$

238,022

 

License

 

219,600

 

 

176,814

 

 

362,881

 

 

325,199

 

Maintenance and services

 

168,721

 

 

188,974

 

 

333,533

 

 

362,514

 

Total revenues

 

605,743

 

 

491,658

 

 

1,107,794

 

 

925,735

 

Cost of revenues Cloud services

 

98,016

 

 

59,728

 

 

186,101

 

 

113,218

 

License

 

2,459

 

 

5,474

 

 

6,749

 

 

11,540

 

Maintenance and services

 

82,932

 

 

66,850

 

 

162,463

 

 

135,911

 

Total cost of revenues

 

183,407

 

 

132,052

 

 

355,313

 

 

260,669

 

Gross profit

 

422,336

 

 

359,606

 

 

752,481

 

 

665,066

 

Operating expenses Research and development

 

259,709

 

 

197,297

 

 

506,907

 

 

389,421

 

Sales and marketing

 

382,129

 

 

323,687

 

 

738,237

 

 

642,911

 

General and administrative

 

124,928

 

 

78,081

 

 

287,114

 

 

160,805

 

Total operating expenses

 

766,766

 

 

599,065

 

 

1,532,258

 

 

1,193,137

 

Operating loss

 

(344,430

)

 

(239,459

)

 

(779,777

)

 

(528,071

)

Interest and other income (expense), net Interest income

 

507

 

 

3,581

 

 

886

 

 

10,056

 

Interest expense

 

(39,013

)

 

(30,148

)

 

(72,603

)

 

(54,585

)

Other income (expense), net

 

1,146

 

 

5,917

 

 

(77

)

 

5,243

 

Total interest and other income (expense), net

 

(37,360

)

 

(20,650

)

 

(71,794

)

 

(39,286

)

Loss before income taxes

 

(381,790

)

 

(260,109

)

 

(851,571

)

 

(567,357

)

Income tax provision (benefit)

 

2,161

 

 

1,213

 

 

3,381

 

 

(456

)

Net loss

$

(383,951

)

$

(261,322

)

$

(854,952

)

$

(566,901

)

  Basic and diluted net loss per share

$

(2.34

)

$

(1.64

)

$

(5.23

)

$

(3.58

)

  Weighted-average shares used in computing basic and diluted net loss per share

 

164,018

 

 

158,952

 

 

163,615

 

 

158,241

 

Splunk Inc. Condensed Consolidated Balance Sheets (In thousands) (Unaudited)   July 31, 2021 January 31, 2021 Assets Current assets Cash and cash equivalents

$

2,231,165

 

$

1,771,064

 

Investments, current

 

267,035

 

 

87,847

 

Accounts receivable, net

 

882,436

 

 

1,114,199

 

Prepaid expenses and other current assets

 

171,261

 

 

162,939

 

Deferred commissions, current

 

100,774

 

 

136,331

 

Total current assets

 

3,652,671

 

 

3,272,380

 

Investments, non-current

 

36,889

 

 

13,728

 

Accounts receivable, non-current

 

194,630

 

 

347,202

 

Operating lease right-of-use assets

 

239,066

 

 

356,296

 

Property and equipment, net

 

132,841

 

 

182,780

 

Intangible assets, net

 

192,904

 

 

206,153

 

Goodwill

 

1,401,628

 

 

1,334,888

 

Deferred commissions, non-current

 

104,284

 

 

69,637

 

Other assets

 

91,411

 

 

85,422

 

Total assets

$

6,046,324

 

$

5,868,486

 

Liabilities and Stockholders' Equity Current liabilities Accounts payable

$

45,789

 

$

9,319

 

Accrued compensation

 

302,156

 

 

281,986

 

Accrued expenses and other liabilities

 

240,994

 

 

202,959

 

Deferred revenue, current

 

954,070

 

 

1,030,484

 

Total current liabilities

 

1,543,009

 

 

1,524,748

 

Convertible senior notes, net

 

3,054,463

 

 

2,302,635

 

Operating lease liabilities

 

219,242

 

 

330,970

 

Deferred revenue, non-current

 

80,539

 

 

110,418

 

Other liabilities, non-current

 

14,406

 

 

5,710

 

Total non-current liabilities

 

3,368,650

 

 

2,749,733

 

Total liabilities

 

4,911,659

 

 

4,274,481

 

Stockholders' equity Common stock

 

165

 

 

163

 

Accumulated other comprehensive loss

 

(864

)

 

(592

)

Additional paid-in capital

 

4,689,282

 

 

4,063,885

 

Treasury stock

 

(229,515

)

 

-

 

Accumulated deficit

 

(3,324,403

)

 

(2,469,451

)

Total stockholders' equity

 

1,134,665

 

 

1,594,005

 

Total liabilities and stockholders' equity

$

6,046,324

 

$

5,868,486

 

Splunk Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)   Three Months Ended July 31, Six Months Ended July 31,

2021

2020

2021

2020

  Cash flows from operating activities Net loss

$

(383,951

)

$

(261,322

)

$

(854,952

)

$

(566,901

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization

 

24,829

 

 

22,191

 

 

50,625

 

 

42,685

 

Amortization of deferred commissions

 

35,669

 

 

34,242

 

 

77,983

 

 

61,120

 

Amortization of investment premiums (accretion of discounts), net

 

382

 

 

(252

)

 

432

 

 

(944

)

Amortization of debt discount and issuance costs

 

31,226

 

 

24,322

 

 

57,784

 

 

44,738

 

Gain on extinguishment of convertible senior notes

 

-

 

 

(6,952

)

 

-

 

 

(6,952

)

Repurchase of convertible senior notes attributable to the accreted interest related to debt discount

 

-

 

 

(22,149

)

 

-

 

 

(22,149

)

Loss on lease termination

 

-

 

 

-

 

 

52,524

 

 

-

 

Non-cash operating lease costs

 

(1,565

)

 

5,228

 

 

571

 

 

15,759

 

Stock-based compensation

 

204,780

 

 

154,873

 

 

387,197

 

 

313,691

 

Disposal of property and equipment

 

33

 

 

476

 

 

33

 

 

981

 

Deferred income taxes

 

835

 

 

257

 

 

(294

)

 

(644

)

Changes in operating assets and liabilities, net of acquisition: Accounts receivable, net

 

(109,548

)

 

(142,838

)

 

384,798

 

 

184,261

 

Prepaid expenses and other assets

 

83,327

 

 

17,339

 

 

(14,842

)

 

12,493

 

Deferred commissions

 

(47,508

)

 

(37,939

)

 

(77,073

)

 

(60,154

)

Accounts payable

 

(3,140

)

 

15,627

 

 

19,698

 

 

22,963

 

Accrued compensation

 

74,247

 

 

36,331

 

 

20,170

 

 

(61,378

)

Accrued expenses and other liabilities

 

11,395

 

 

8,773

 

 

17,817

 

 

(1,294

)

Deferred revenue

 

23,069

 

 

(18,283

)

 

(107,731

)

 

(102,307

)

Net cash provided by (used in) operating activities

 

(55,920

)

 

(170,076

)

 

14,740

 

 

(124,032

)

Cash flows from investing activities Purchases of investments

 

(269,352

)

 

-

 

 

(289,573

)

 

(87,135

)

Maturities of investments

 

-

 

 

242,902

 

 

87,766

 

 

497,725

 

Acquisition, net of cash acquired

 

(80,333

)

 

-

 

 

(80,333

)

 

-

 

Purchases of property and equipment

 

(3,510

)

 

(11,060

)

 

(4,363

)

 

(25,816

)

Capitalized software development costs

 

(2,082

)

 

(3,585

)

 

(5,148

)

 

(7,133

)

Other investment activities

 

(1,293

)

 

(511

)

 

(1,168

)

 

(2,886

)

Net cash provided by (used in) investing activities

 

(356,570

)

 

227,746

 

 

(292,819

)

 

374,755

 

Cash flows from financing activities Proceeds from the exercise of stock options

 

636

 

 

1,253

 

 

1,174

 

 

2,671

 

Proceeds from employee stock purchase plan

 

48,246

 

 

44,214

 

 

48,246

 

 

44,214

 

Proceeds from the issuance of convertible senior notes, net of issuance costs

 

982,749

 

 

1,246,544

 

 

982,749

 

 

1,246,544

 

Purchase of capped calls

 

-

 

 

(137,379

)

 

-

 

 

(137,379

)

Partial repurchase of convertible senior notes

 

-

 

 

(668,929

)

 

-

 

 

(668,929

)

Repurchases of common stock

 

(192,208

)

 

-

 

 

(192,208

)

 

-

 

Taxes paid related to net share settlement of equity awards

 

(40,966

)

 

-

 

 

(101,781

)

 

(49,228

)

Net cash provided by financing activities

 

798,457

 

 

485,703

 

 

738,180

 

 

437,893

 

Effect of exchange rate changes on cash and cash equivalents

 

-

 

 

2,015

 

 

-

 

 

626

 

Net increase in cash and cash equivalents

 

385,967

 

 

545,388

 

 

460,101

 

 

689,242

 

Cash and cash equivalents at beginning of period

 

1,845,198

 

 

922,507

 

 

1,771,064

 

 

778,653

 

Cash and cash equivalents at end of period

$

2,231,165

 

$

1,467,895

 

$

2,231,165

 

$

1,467,895

 

Splunk Inc. Operating Metrics

Total Annual Recurring Revenue (“Total ARR”) represents the annualized revenue run-rate of active cloud services, term license and maintenance contracts at the end of a reporting period. Cloud Annual Recurring Revenue (“Cloud ARR”) represents the annualized revenue run-rate of active cloud services contracts at the end of a reporting period. Each contract is annualized by dividing the 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: cloud services cost of revenues, cloud services gross margin, cost of revenues, 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 intangible assets, acquisition-related adjustments, restructuring and facility exit charges, capitalized software development costs and non-cash interest expense related to convertible senior notes. The non-GAAP financial measures are also adjusted for Splunk's estimated tax rate on non-GAAP income (loss). To determine the estimated non-GAAP tax rate, Splunk evaluates financial projections based on its non-GAAP results and the tax effect of those projections. The estimated non-GAAP tax rate takes into account many factors including our operating structure and tax positions. The non-GAAP tax rate applied to the three and six months ended July 31, 2021 was 20%. The applicable fiscal 2021 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 intangible assets, acquisition-related adjustments, restructuring and facility exit charges, capitalized software development costs and non-cash interest expense related to convertible senior notes from the applicable non-GAAP financial measures because these adjustments 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 (Used In) Operating Activities to Free Cash Flow  

Three Months Ended July 31,

Six Months Ended July 31,

2021

2020

2021

2020

Net cash provided by (used in) operating activities

$

(55,920

)

$

(170,076

)

$

14,740

 

$

(124,032

)

Less purchases of property and equipment

 

(3,510

)

 

(11,060

)

 

(4,363

)

 

(25,816

)

Free cash flow (non-GAAP)

$

(59,430

)

$

(181,136

)

$

10,377

 

$

(149,848

)

Net cash provided by (used in) investing activities

$

(356,570

)

$

227,746

 

$

(292,819

)

$

374,755

 

Net cash provided by financing activities

$

798,457

 

$

485,703

 

$

738,180

 

$

437,893

 

Reconciliation of GAAP to Non-GAAP Financial Measures Three Months Ended July 31, 2021 GAAP Stock-basedcompensation andrelated employerpayroll tax Amortization ofintangible assets Acquisition-relatedadjustments Restructuring andfacility exitcharges Capitalizedsoftwaredevelopmentcosts Non-cash interestexpense related toconvertible seniornotes Income taxadjustment (2) Non-GAAP Cloud services cost of revenues

$

98,016

 

$

(4,698

)

$

(7,299

)

$

-

 

$

-

 

$

(594

)

$

-

 

$

-

 

$

85,425

 

Cloud services gross margin

 

54.9

%

 

2.2

%

 

3.4

%

 

-

%

 

-

%

 

0.2

%

 

-

%

 

-

%

 

60.7

%

Cost of revenues

 

183,407

 

 

(22,295

)

 

(9,758

)

 

-

 

 

-

 

 

(594

)

 

-

 

 

-

 

 

150,760

 

Gross margin

 

69.7

%

 

3.7

%

 

1.6

%

 

-

%

 

-

%

 

0.1

%

 

-

%

 

-

%

 

75.1

%

Research and development

 

259,709

 

 

(82,191

)

 

-

 

 

-

 

 

-

 

 

2,081

 

 

-

 

 

-

 

 

179,599

 

Sales and marketing

 

382,129

 

 

(65,613

)

 

(5,101

)

 

-

 

 

(613

)

 

-

 

 

-

 

 

-

 

 

310,802

 

General and administrative

 

124,928

 

 

(38,099

)

 

-

 

 

(957

)

 

6

 

 

(533

)

 

-

 

 

-

 

 

85,345

 

Operating loss

 

(344,430

)

 

208,198

 

 

14,859

 

 

957

 

 

607

 

 

(954

)

 

-

 

 

-

 

 

(120,763

)

Operating margin

 

(56.9

)%

 

34.4

%

 

2.5

%

 

0.2

%

 

0.1

%

 

(0.2

)%

 

-

%

 

-

%

 

(19.9

)%

Income tax provision (benefit)

 

2,161

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(27,540

)

 

(25,379

)

Net loss

$

(383,951

)

$

208,198

 

$

14,859

 

$

957

 

$

607

 

$

(954

)

$

31,227

 

$

27,540

 

$

(101,517

)

Net loss per share (1)

$

(2.34

)

$

1.27

 

$

0.09

 

$

0.01

 

$

-

 

$

(0.01

)

$

0.19

 

$

0.17

 

$

(0.62

)

  (1) Calculated based on 164,018 weighted-average shares of common stock. (2) Represents the income tax adjustment using our estimated non-GAAP tax rate of 20%. Reconciliation of GAAP to Non-GAAP Financial Measures Three Months Ended July 31, 2020 GAAP Stock-basedcompensation andrelated employerpayroll tax Amortization ofintangible assets Restructuring andfacility exit charges Capitalizedsoftwaredevelopmentcosts Non-cash interestexpense related toconvertible seniornotes Income taxadjustment (2) Non-GAAP   Cloud services cost of revenues

$

59,728

 

$

(2,812

)

$

(5,290

)

$

(229

)

$

-

 

$

-

 

$

-

 

$

51,397

 

Cloud services gross margin

 

52.5

%

 

2.2

%

 

4.3

%

 

0.2

%

 

-

%

 

-

%

 

-

%

 

59.2

%

Cost of revenues

 

132,052

 

 

(14,653

)

 

(10,511

)

 

(497

)

 

-

 

 

-

 

 

-

 

 

106,391

 

Gross margin

 

73.1

%

 

3.1

%

 

2.1

%

 

0.1

%

 

-

%

 

-

%

 

-

%

 

78.4

%

Research and development

 

197,297

 

 

(68,102

)

 

-

 

 

(2,884

)

 

3,585

 

 

-

 

 

-

 

 

129,896

 

Sales and marketing

 

323,687

 

 

(52,865

)

 

(4,333

)

 

(1,168

)

 

-

 

 

-

 

 

-

 

 

265,321

 

General and administrative

 

78,081

 

 

(24,553

)

 

-

 

 

(518

)

 

-

 

 

-

 

 

-

 

 

53,010

 

Operating loss

 

(239,459

)

 

160,173

 

 

14,844

 

 

5,067

 

 

(3,585

)

 

-

 

 

-

 

 

(62,960

)

Operating margin

 

(48.7

)%

 

32.6

%

 

3.0

%

 

1.0

%

 

(0.7

)%

 

-

%

 

-

%

 

(12.8

)%

Income tax provision (benefit)

 

1,213

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(14,366

)

 

(13,153

)

Net loss

$

(261,322

)

$

160,173

 

$

14,844

 

$

5,543

 

(3)

$

(3,585

)

$

17,369

 

(4)

$

14,366

 

$

(52,612

)

Net loss per share (1)

$

(1.64

)

$

1.01

 

$

0.09

 

$

0.03

 

$

(0.02

)

$

0.11

 

$

0.09

 

$

(0.33

)

  (1) Calculated based on 158,952 weighted-average shares of common stock. (2) Represents the income tax adjustment using our estimated non-GAAP tax rate of 20%. (3) Includes a $0.5 million loss on disposal of property, plant and equipment. (4) Includes non-cash interest expense of $24.3 million and a $7.0 million non-recurring gain on extinguishment of convertible senior notes. Reconciliation of GAAP to Non-GAAP Financial Measures Six Months Ended July 31, 2021 GAAP Stock-basedcompensation andrelated employerpayroll tax Amortization ofintangible assets Acquisition-relatedadjustments Restructuring andfacility exitcharges Capitalizedsoftwaredevelopmentcosts Non-cash interestexpense related toconvertible seniornotes Income taxadjustment (2) Non-GAAP   Cloud services cost of revenues

$

186,101

 

$

(8,368

)

$

(14,040

)

$

-

 

$

-

 

$

(1,188

)

$

-

 

$

-

 

$

162,505

 

Cloud services gross margin

 

54.8

%

 

2.0

%

 

3.4

%

 

-

%

 

-

%

 

0.3

%

 

-

%

 

-

%

 

60.5

%

Cost of revenues

 

355,313

 

 

(40,617

)

 

(19,826

)

 

-

 

 

-

 

 

(1,188

)

 

-

 

 

-

 

 

293,682

 

Gross margin

 

67.9

%

 

3.7

%

 

1.8

%

 

-

%

 

-

%

 

0.1

%

 

-

%

 

-

%

 

73.5

%

Research and development

 

506,907

 

 

(162,465

)

 

(26

)

 

-

 

 

-

 

 

5,149

 

 

-

 

 

-

 

 

349,565

 

Sales and marketing

 

738,237

 

 

(123,331

)

 

(9,847

)

 

-

 

 

(613

)

 

-

 

 

-

 

 

-

 

 

604,446

 

General and administrative

 

287,114

 

 

(71,787

)

 

-

 

 

(957

)

 

(55,228

)

 

(709

)

 

-

 

 

-

 

 

158,433

 

Operating loss

 

(779,777

)

 

398,200

 

 

29,699

 

 

957

 

 

55,841

 

 

(3,252

)

 

-

 

 

-

 

 

(298,332

)

Operating margin

 

(70.4

)%

 

35.9

%

 

2.7

%

 

0.1

%

 

5.0

%

 

(0.2

)%

 

-

%

 

-

%

 

(26.9

)%

Income tax provision (benefit)

 

3,381

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(65,849

)

 

(62,468

)

Net loss

$

(854,952

)

$

398,200

 

$

29,699

 

$

957

 

$

55,841

 

$

(3,252

)

$

57,786

 

$

65,849

 

$

(249,872

)

Net loss per share (1)

$

(5.23

)

$

2.44

 

$

0.18

 

$

0.01

 

$

0.34

 

$

(0.02

)

$

0.35

 

$

0.40

 

$

(1.53

)

  (1) Calculated based on 163,615 weighted-average shares of common stock. (2) Represents the income tax adjustment using our estimated non-GAAP tax rate of 20%. Reconciliation of GAAP to Non-GAAP Financial Measures Six Months Ended July 31, 2020 GAAP Stock-basedcompensation andrelated employerpayroll tax Amortization ofintangible assets Restructuring andfacility exit charges Capitalizedsoftwaredevelopmentcosts Non-cash interestexpense related toconvertible seniornotes Income taxadjustment (2) Non-GAAP   Cloud services cost of revenues

$

113,218

 

$

(5,202

)

$

(10,296

)

$

(229

)

$

-

 

$

-

 

$

-

 

$

97,491

 

Cloud services gross margin

 

52.4

%

 

2.2

%

 

4.3

%

 

0.1

%

 

-

%

 

-

%

 

-

%

 

59.0

%

Cost of revenues

 

260,669

 

 

(28,635

)

 

(20,884

)

 

(497

)

 

-

 

 

-

 

 

-

 

 

210,653

 

Gross margin

 

71.8

%

 

3.0

%

 

2.3

%

 

0.1

%

 

-

%

 

-

%

 

-

%

 

77.2

%

Research and development

 

389,421

 

 

(139,367

)

 

(25

)

 

(2,884

)

 

7,133

 

 

-

 

 

-

 

 

254,278

 

Sales and marketing

 

642,911

 

 

(112,287

)

 

(8,666

)

 

(1,168

)

 

-

 

 

-

 

 

-

 

 

520,790

 

General and administrative

 

160,805

 

 

(46,198

)

 

-

 

 

(518

)

 

-

 

 

-

 

 

-

 

 

114,089

 

Operating loss

 

(528,071

)

 

326,487

 

 

29,575

 

 

5,067

 

 

(7,133

)

 

-

 

 

-

 

 

(174,075

)

Operating margin

 

(57.0

)%

 

35.3

%

 

3.2

%

 

0.5

%

 

(0.8

)%

 

-

%

 

-

%

 

(18.8

)%

Income tax benefit

 

(456

)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(34,564

)

 

(35,020

)

Net loss

$

(566,901

)

$

326,487

 

$

29,575

 

$

5,543

 

(3)

$

(7,133

)

$

37,785

 

(4)

$

34,564

 

$

(140,080

)

Net loss per share (1)

$

(3.58

)

$

2.05

 

$

0.19

 

$

0.04

 

$

(0.05

)

$

0.24

 

$

0.22

 

$

(0.89

)

  (1) Calculated based on 158,241 weighted-average shares of common stock. (2) Represents the income tax adjustment using our estimated non-GAAP tax rate of 20%. (3) Includes a $0.5 million loss on disposal of property, plant and equipment. (4) Includes non-cash interest expense of $44.7 million and a $7.0 million non-recurring gain on extinguishment of convertible senior notes.

 

For more information, please contact: Media Contact Patricia Hogan Splunk Inc. press@splunk.com

Investor Contact Ken Tinsley Splunk Inc. IR@splunk.com

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