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Share Name | Share Symbol | Market | Type |
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Splunk Inc | NASDAQ:SPLK | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 156.90 | 156.95 | 157.00 | 0 | 01:00:00 |
Total Revenues Grew 40%; Increases Full-Year Outlook
Splunk Inc. (NASDAQ: SPLK), provider of the leading software platform for real-time Operational Intelligence, today announced results for its fiscal third quarter ended October 31, 2016.
Third Quarter 2017 Financial Highlights
“Our market opportunity is tremendous,” said Doug Merritt, President and CEO. “Splunk provides the market leading platform that powers Operational Intelligence to enable customers to cost effectively get value from machine data. We want to make it easier to collect and analyze even larger volumes and varieties of data to help our customers gain more insights and value from Splunk solutions. Our passionate customers and their innovations with the Splunk platform are at the core of our success.”
Third Quarter 2017 and Recent Business Highlights:
Customers:
Products:
Corporate:
Strategic and Channel Partners:
Recognition:
Events:
Appointments:
Financial Outlook
The company is providing the following guidance for its fiscal fourth quarter 2017 (ending January 31, 2017):
The company is updating its previous guidance for its fiscal year 2017 (ending January 31, 2017):
All forward-looking non-GAAP financial measures contained in this section “Financial Outlook” exclude estimates for stock-based compensation expenses, employer payroll tax expense related to employee stock plans, amortization of acquired intangible assets, acquisition-related costs and adjustments related to a financing lease obligation.
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. For example, stock-based compensation expense is impacted by a number of factors, such as Splunk’s future hiring and retention, as well as the future fair market value of Splunk’s common stock, all of which are difficult to predict and subject to constant change. The company has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for its fiscal third quarter 2017 non-GAAP results included in this press release. The exclusion of these costs and expenses will have a significant impact on Splunk’s non-GAAP operating margin.
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.cfm. A replay of the call will be available through December 6, 2016 by dialing (855) 859-2056 and referencing Conference ID: 4131068.
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 fourth quarter and fiscal year 2017 in the paragraphs under “Financial Outlook” above and other statements regarding customer demand and return on investment, market opportunity, the rate of customer adoption and growth strategies. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: Splunk’s limited operating history and experience developing and introducing new products, including its cloud offerings; risks associated with Splunk’s rapid growth, Splunk’s limited experience with respect to predicting future customer demand and customer acceptance of the company’s products and services, in and outside of the United States; Splunk’s ability to rapidly and successfully integrate new employees into its workforce, particularly sales personnel; Splunk’s inability to realize value from its significant investments in its business, including product and service innovations; Splunk’s transition to a multi-product software and services business; Splunk’s inability to successfully integrate acquired businesses and technologies; and general market, political, economic and business 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 quarter ended July 31, 2016, which is on file with the U.S. Securities and Exchange Commission. 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) is the market-leading platform that powers Operational Intelligence. We pioneer innovative, disruptive solutions that make machine data accessible, usable and valuable to everyone. More than 12,000 customers in over 110 countries use Splunk software and cloud services to make business, government and education more efficient, secure and profitable. Join hundreds of thousands of passionate users by trying Splunk solutions for free: http://www.splunk.com/free-trials.
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Splunk, Splunk>, Listen to Your Data, The Engine for Machine Data, Hunk, Splunk Cloud, Splunk Light and SPL 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. © 2016 Splunk Inc. All rights reserved.
SPLUNK INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)(Unaudited) Three Months Ended Nine Months Ended October 31,2016 October 31,2015 October 31,2016 October 31,2015 Revenues License $ 139,725 $ 104,164 $ 356,412 $ 263,996 Maintenance and services 105,064 70,256 287,082 184,415 Total revenues 244,789 174,420 643,494 448,411 Cost of revenues License 2,883 3,136 8,713 6,110 Maintenance and services 45,791 27,455 124,077 72,606 Total cost of revenues 48,674 30,591 132,790 78,716 Gross profit 196,115 143,829 510,704 369,695 Operating expenses Research and development 85,659 56,186 220,254 149,192 Sales and marketing 167,330 130,131 462,709 343,906 General and administrative 34,079 29,857 100,464 85,489 Total operating expenses 287,068 216,174 783,427 578,587 Operating loss (90,953 ) (72,345 ) (272,723 ) (208,892 ) Interest and other income (expense), net Interest income (expense), net (823 ) 377 (2,023 ) 1,162 Other income (expense), net (348 ) (271 ) (2,536 ) (477 ) Total interest and other income (expense), net (1,171 ) 106 (4,559 ) 685 Loss before income taxes (92,124 ) (72,239 ) (277,282 ) (208,207 ) Income tax provision (benefit) 1,367 735 3,702 (8,758 ) Net loss $ (93,491 ) $ (72,974 ) $ (280,984 ) $ (199,449 ) Basic and diluted net loss per share $ (0.69 ) $ (0.57 ) $ (2.11 ) $ (1.58 )Weighted-average shares used in computing basic and diluted net loss per share
134,677 128,368 133,273 126,534 SPLUNK INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)(Unaudited) October 31,2016 January 31,2016 ASSETS Current assets Cash and cash equivalents $ 365,593 $ 424,541 Investments, current portion 661,406 584,498 Accounts receivable, net 172,489 181,665 Prepaid expenses and other current assets 29,743 26,565 Total current assets 1,229,231 1,217,269 Investments, non-current 5,000 1,500 Property and equipment, net 159,823 134,995 Intangible assets, net 40,423 49,482 Goodwill 124,642 123,318 Other assets 15,845 10,275 Total assets $ 1,574,964 $ 1,536,839 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 6,395 $ 4,868 Accrued payroll and compensation 83,360 95,898 Accrued expenses and other liabilities 78,873 49,879 Deferred revenue, current portion 385,519 347,121 Total current liabilities 554,147 497,766 Deferred revenue, non-current 113,636 102,382 Other liabilities, non-current 93,010 77,277 Total non-current liabilities 206,646 179,659 Total liabilities 760,793 677,425 Stockholders' equity Common stock 136 132 Accumulated other comprehensive loss (3,010 ) (3,770 ) Additional paid-in capital 1,763,624 1,528,647 Accumulated deficit (946,579 ) (665,595 ) Total stockholders' equity 814,171 859,414 Total liabilities and stockholders' equity $ 1,574,964 $ 1,536,839 SPLUNK INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited) Three Months Ended Nine Months Ended October 31,2016 October 31,2015 October 31,2016 October 31,2015 Cash Flows From Operating Activities Net loss $ (93,491 ) $ (72,974 ) $ (280,984 ) $ (199,449 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 8,279 5,691 22,914 13,467 Amortization of investment premiums 173 327 620 1,049 Stock-based compensation 105,014 74,164 285,247 203,882 Deferred income taxes 78 (111 ) (620 ) (11,416 ) Excess tax benefits from employee stock plans 476 (343 ) (551 ) (995 ) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable, net (41,227 ) (25,963 ) 9,176 2,756 Prepaid expenses, other current and non-current assets (4,951 ) 3,162 (8,128 ) 15,630 Accounts payable 1,265 484 1,530 384 Accrued payroll and compensation 18,447 21,039 (12,538 ) 12,341 Accrued expenses and other liabilities 19,413 3,246 32,992 (3,839 ) Deferred revenue 31,796 27,638 49,652 44,803 Net cash provided by operating activities 45,272 36,360 99,310 78,613 Cash Flow From Investing Activities Purchases of investments (207,255 ) - (523,783 ) (219,195 ) Maturities of investments 156,000 152,145 446,275 399,145 Acquisitions, net of cash acquired - - - (142,693 ) Purchases of property and equipment (12,969 ) (15,272 ) (27,219 ) (24,496 ) Other investment activities - - (3,500 ) (1,500 ) Net cash provided by (used in) investing activities (64,224 ) 136,873 (108,227 ) 11,261 Cash Flow From Financing Activities Proceeds from the exercise of stock options 1,752 1,960 7,355 12,696 Excess tax benefits from employee stock plans (476 ) 343 551 995 Proceeds from employee stock purchase plan - - 15,183 10,906 Taxes paid related to net share settlement of equity awards (26,533 ) - (73,355 ) - Net cash provided by (used in) financing activities (25,257 ) 2,303 (50,266 ) 24,597 Effect of exchange rate changes on cash and cash equivalents (147 ) (45 ) 235 (95 ) Net increase (decrease) in cash and cash equivalents (44,356 ) 175,491 (58,948 ) 114,376 Cash and cash equivalents at beginning of period 409,949 326,200 424,541 387,315 Cash and cash equivalents at end of period $ 365,593 $ 501,691 $ 365,593 $ 501,691SPLUNK INC.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 certain non-GAAP financial measures, including non-GAAP cost of revenues, non-GAAP gross margin, non-GAAP research and development expense, non-GAAP sales and marketing expense, non-GAAP general and administrative expense, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss) and non-GAAP net income (loss) per share (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): stock-based compensation expense, employer payroll tax expense related to employee stock plans, amortization of acquired intangible assets, acquisition-related costs, adjustments related to a financing lease obligation and the partial release of the valuation allowance due to acquisition. The adjustments for the financing lease obligation are to reflect the expense we would have recorded if our build-to-suit lease arrangement had been deemed an operating lease instead of a financing lease and is calculated as the net of actual ground lease expense, depreciation and interest expense over estimated straight-line rent expense. In addition, non-GAAP financial measures include free cash flow, which represents cash from operations less purchases of property and equipment. 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.
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. In particular, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718, Splunk believes that providing non-GAAP financial measures that exclude this expense 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, acquisition-related costs, the partial release of the valuation allowance due to acquisition and makes adjustments related to a financing lease obligation from its non-GAAP financial measures because these are considered by management to be outside of Splunk’s core operating results. Accordingly, Splunk believes that excluding these expenses provides investors and management with greater visibility to the underlying performance of its business operations, facilitates comparison of its results with other periods and may also facilitate comparison with the results of other companies in its industry. Splunk considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities, including investing in its business, making strategic acquisitions and strengthening its balance sheet.
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 non-GAAP financial measures are meant to supplement and be viewed in conjunction with GAAP financial measures.
The following tables reconcile Splunk’s non-GAAP results to Splunk’s 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 Nine Months Ended October 31,2016 October 31,2015 October 31,2016 October 31,2015 Net cash provided by operating activities $ 45,272 $ 36,360 $ 99,310 $ 78,613 Less purchases of property and equipment (12,969 ) (15,272 ) (27,219 ) (24,496 ) Free cash flow (Non-GAAP) $ 32,303 $ 21,088 $ 72,091 $ 54,117 Net cash provided by (used in) investing activities $ (64,224 ) $ 136,873 $ (108,227 ) $ 11,261 Net cash provided by (used in) financing activities $ (25,257 ) $ 2,303 $ (50,266 ) $ 24,597Reconciliation of GAAP to Non-GAAP Financial MeasuresThree Months Ended October 31, 2016
GAAPStock-basedcompensation
Employer payrolltax on employeestock plans
Amortization ofacquiredintangible assets
Adjustmentsrelated tofinancing leaseobligation
Non-GAAP
Cost of revenues $ 48,674 $ (7,610) $ (130) $ (2,814) $ 276 $ 38,396 Gross Margin 80.1% 3.1% 0.1% 1.1% (0.1)% 84.3% Research and development 85,659 (45,355) (534) (63) 559 40,266 Sales and marketing 167,330 (38,750) (712) (110) 1,124 128,882 General and administrative 34,079 (13,299) (504) - 236 20,512 Operating income (loss) (90,953) 105,014 1,880 2,987 (2,195) 16,733 Operating margin (37.2)% 42.9% 0.8% 1.2% (0.9)% 6.8% Net income (loss) $ (93,491) $ 105,014 $ 1,880 $ 2,987 $ (123)(2)
$ 16,267 Net income (loss) per share(1) $ (0.69) $ 0.12 (1) GAAP net loss per share calculated based on 134,677 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 138,401 diluted weighted-average shares of common stock, which includes 3,724 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) Includes $2.1 million of interest expense related to the financing lease obligation.Reconciliation of GAAP to Non-GAAP Financial MeasuresThree Months Ended October 31, 2015
GAAPStock-basedcompensation
Employer payrolltax on employeestock plans
Amortization ofacquiredintangible assets
Adjustmentsrelated tofinancing leaseobligation
Non-GAAP Cost of revenues $ 30,591 $ (6,384) $ (145) $ (2,896) $ - $ 21,166 Gross Margin 82.5% 3.6% 0.1% 1.7% 0.0% 87.9% Research and development 56,186 (22,534) (510) (86) - 33,056 Sales and marketing 130,131 (33,247) (501) (164) - 96,219 General and administrative 29,857 (11,999) (283) - (222) 17,353 Operating income (loss) (72,345) 74,164 1,439 3,146 222 6,626 Operating margin (41.5)% 42.5% 0.8% 1.9% 0.1% 3.8% Net income (loss) $ (72,974) $ 74,164 $ 1,439 $ 3,146 $ 222 $ 5,997 Net income (loss) per share(1) $ (0.57) $ 0.05 (1) GAAP net loss per share calculated based on 128,368 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 132,675 diluted weighted-average shares of common stock, which includes 4,307 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.Reconciliation of GAAP to Non-GAAP Financial MeasuresNine Months Ended October 31, 2016
GAAPStock-basedcompensation
Employerpayroll tax onemployee stockplans
Amortizationof acquiredintangibleassets
Adjustmentsrelated tofinancing leaseobligation
Non-GAAP Cost of revenues $ 132,790 $ (22,475) $ (600) $ (8,612) $ 561 $ 101,664 Gross Margin 79.4% 3.5% 0.1% 1.3% (0.1)% 84.2% Research and development 220,254 (102,303) (1,966) (193) 1,172 116,964 Sales and marketing 462,709 (118,354) (2,529) (412) 2,373 343,787 General and administrative 100,464 (42,115) (1,333) - 513 57,529 Operating income (loss) (272,723) 285,247 6,428 9,217 (4,619) 23,550 Operating margin (42.4)% 44.4% 1.0% 1.4% (0.7)% 3.7% Net income (loss) $ (280,984) $ 285,247 $ 6,428 $ 9,217$
994
(2)
$ 20,902 Net income (loss) per share(1) $ (2.11) $ 0.15 (1) GAAP net loss per share calculated based on 133,273 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 136,690 diluted weighted-average shares of common stock, which includes 3,417 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) Includes $5.6 million of interest expense related to the financing lease obligation.Reconciliation of GAAP to Non-GAAP Financial MeasuresNine Months Ended October 31, 2015
GAAPStock-basedcompensation
Employerpayroll tax onemployee stockplans
Amortizationof acquiredintangibleassets
Acquisition-related costsand income taxeffects
Adjustmentsrelated tofinancing leaseobligation
Non-GAAP Cost of revenues $ 78,716 $ (18,578) $ (806) $ (5,379) $ - $ - $ 53,953 Gross Margin 82.4% 4.2% 0.2% 1.2% 0.0% 0.0% 88.0% Research and development 149,192 (61,910) (2,145) (234) - - 84,903 Sales and marketing 343,906 (91,067) (2,562) (469) - - 249,808 General and administrative 85,489 (32,327) (1,465) - (1,993) (666) 49,038 Operating income (loss) (208,892) 203,882 6,978 6,082 1,993 666 10,709 Operating margin (46.6)% 45.5% 1.6% 1.4% 0.4% 0.1% 2.4% Net income (loss) $ (199,449) $ 203,882 $ 6,978 $ 6,082 $ (8,931)(2)
$ 666 $ 9,228 Net income (loss) per share(1) $ (1.58) $ 0.07 (1) GAAP net loss per share calculated based on 126,534 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 131,693 diluted weighted-average shares of common stock, which includes 5,159 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) Includes $10.9 million related to the partial release of the valuation allowance due to acquisition.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161129006213/en/
Splunk Inc.Sherry Lowe, 415-852-5529slowe@splunk.comorInvestor ContactSplunk Inc.Ken Tinsley, 415-848-8476ktinsley@splunk.com
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