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    SPLK   US8486371045

SPLUNK INC.

(SPLK)
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Delayed Nasdaq  -  04:00 2022-06-24 pm EDT
97.86 USD   +5.95%
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SAN FRANCISCO – May 25, 2022 – Splunk Inc. (NASDAQ: SPLK), the data platform leader for security and observability, today announced results for its fiscal first quarter ended April 30, 2022 - Form 8-K

05/26/2022 | 12:18am EDT
SAN FRANCISCO - May 25, 2022 - Splunk Inc. (NASDAQ: SPLK), the data platform leader for security and observability, today announced results for its fiscal first quarter ended April 30, 2022.

First Quarter 2023 Financial Highlights
•Total revenues were $674 million, up 34% year-over-year.
•Cloud revenue was $323 million, up 66% year-over-year.
•Cloud Dollar-Based Net Retention Rate was 130%.
•329 customers with cloud ARR greater than $1 million, up 62% year-over-year.

"Our first quarter execution was solid, with the team delivering strong top-line growth as the world's largest organizations continued to place their trust in Splunk," said Gary Steele, President and CEO of Splunk. "In this complex and unpredictable world, Splunk has become foundational to keeping organizations secure and resilient so they can drive success and innovate at scale."

"Splunk is still very early in a massive market opportunity," Steele continued. "As our continued growth and strong customer retention demonstrate, we are the system-of-record for our customers and one that's deeply embedded within their organization's security and IT operations."

"We had a good start to the year with total revenues accelerating 34 percent to $674 million and cloud revenue up 66 percent over last year," said Jason Child, CFO of Splunk. "Based on our strong execution, we are raising our full year revenue and profitability outlook and reaffirm our operating cash flow expectation of at least $400 million."

Leadership Changes

In March 2022, Splunk appointed Gary Steele Chief Executive Officer and a member of the Board of Directors, effective April 11, 2022. In addition, Splunk announced today that Shawn Bice, President of Products & Technology, will be stepping down as of June 16, 2022.

Q1 2023 Business Highlights

•Splunk Recognized as Application Performance Monitoring Leader and Fast Mover: Industry analyst firm, GigaOm, recognized Splunk as a Leader and one of only two Fast Movers within its inaugural GigOm Radar for Application Performance Monitoring (APM) Report, 2021.*
•Splunk's 1000th Patent Awarded: The U.S. Patent and Trademark Office issued Splunk's 1000th patent, a remarkable milestone and testament to the organization's commitment to its customers to deliver powerful and leading-edge technology.
•Splunk Takes Center Stage at TED2022: James Hodge, Group Vice President and Chief Strategic Advisor for Splunk, was a featured TED2022 speaker and detailed customer McLaren Racing's data-driven approach to virtual and real-world racing.
•Marquee "Best Place to Work" Accolades: Splunk was named one of Fortune's 100 Best Companies to Work For in 2022 as well as recognized by the Human Rights Campaign Foundation's 2022 Corporate Equality Index as a best place to work for lesbian, gay, bisexual, transgender and queer (LGBTQ+) equality.

Financial Outlook

The company is providing the following guidance for its fiscal second quarter 2023 (ending July 31, 2022):

•Total revenues are expected to be between $735 million and $755 million.
•Non-GAAP operating margin is expected to be between negative 8% and negative 11%.

The company is updating the following guidance for its fiscal year 2023 (ending January 31, 2023):

•Total revenues are expected to be between $3.3 billion and $3.35 billion (was previously between $3.25 and $3.3 billion.)
•Non-GAAP operating margin is expected to be approximately 2% (was previously between 0% and 2%.)

Conference Call and Webcast

Splunk's executive management team will host a conference call beginning at 1:30 p.m. PT (4:30 p.m. ET) to discuss financial results and business highlights. Interested parties may access the call by dialing (866) 501-1535 in the U.S. or (216) 672-5582 from international locations. 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 June 1, 2022 by dialing (855) 859-2056 and referencing Conference ID 3122198.

Safe Harbor Statement

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding Splunk's guidance for revenue and non-GAAP operating margin targets for the company's fiscal second quarter 2023 and revenue and non-GAAP operating margin for the company's fiscal year 2023; statements regarding our market opportunity, including trends in the pace of customer digital and cloud transformation; our global presence and trends in customer demand and engagement; 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 and trust, 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 and impact of new COVID-19 variants and related public health measures on our business and the business of our customers, as well as the impact of new variants 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 Annual Report on Form 10-K for the fiscal year ended January 31, 2022, 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) helps organizations around the world turn data into doing. Splunk technology is designed to investigate, monitor, analyze and act on data at any scale.

Splunk, Splunk>, Data-to-Everything, 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. © 2022 Splunk Inc. All rights reserved.

*GigaOm Radar for Application Performance Monitoring (APM), 2021, Ron Williams, December 2021

For more information, please contact:

Media Contact
Mara Mort
Splunk Inc.
press@splunk.com

Investor Contact
Ken Tinsley
Splunk Inc.
ir@splunk.com
Splunk Inc. | www.splunk.com



Splunk Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended April 30,
2022 2021
Revenues
Cloud services $ 322,929 $ 193,958
License 185,811 143,281
Maintenance and services 165,341 164,812
Total revenues 674,081 502,051
Cost of revenues
Cloud services 119,521 88,085
License 1,463 4,290
Maintenance and services 81,172 79,531
Total cost of revenues 202,156 171,906
Gross profit 471,925 330,145
Operating expenses
Research and development 255,691 247,198
Sales and marketing 395,213 356,108
General and administrative 112,708 162,186
Total operating expenses 763,612 765,492
Operating loss (291,687) (435,347)
Interest and other income (expense), net
Interest income 1,372 379
Interest expense (10,663) (33,590)
Other income (expense), net 10 (1,223)
Total interest and other income (expense), net (9,281) (34,434)
Loss before income taxes (300,968) (469,781)
Income tax provision 3,354 1,220
Net loss $ (304,322) $ (471,001)
Basic and diluted net loss per share $ (1.90) $ (2.89)
Weighted-average shares used in computing basic and diluted net loss per share 160,339 163,169

Splunk Inc. | www.splunk.com


Splunk Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
April 30, 2022 January 31, 2022
Assets
Current assets
Cash and cash equivalents $ 814,010 $ 1,428,691
Investments, current 633,888 286,337
Accounts receivable, net 725,652 1,306,666
Prepaid expenses and other current assets 176,364 152,871
Deferred commissions, current 103,528 102,322
Total current assets 2,453,442 3,276,887
Investments, non-current 382,933 46,431
Accounts receivable, non-current 180,758 242,689
Operating lease right-of-use assets 218,277 229,198
Property and equipment, net 123,296 124,900
Intangible assets, net 150,721 164,769
Goodwill 1,401,628 1,401,628
Deferred commissions, non-current 197,232 200,876
Other assets 101,690 103,497
Total assets $ 5,209,977 $ 5,790,875
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 19,719 $ 59,206
Accrued compensation 218,796 396,952
Accrued expenses and other liabilities 228,085 257,979
Deferred revenue, current 1,223,053 1,384,605
Total current liabilities 1,689,653 2,098,742
Convertible senior notes, net 3,866,179 3,137,731
Operating lease liabilities 214,245 225,556
Deferred revenue, non-current 82,657 86,584
Other liabilities, non-current 19,117 19,491
Total non-current liabilities 4,182,198 3,469,362
Total liabilities 5,871,851 5,568,104
Stockholders' equity
Common stock 168 167
Accumulated other comprehensive loss (3,913) (1,199)
Additional paid-in capital 4,155,066 5,032,351
Treasury stock (1,000,000) (1,000,000)
Accumulated deficit (3,813,195) (3,808,548)
Total stockholders' equity (661,874) 222,771
Total liabilities and stockholders' equity $ 5,209,977 $ 5,790,875

Splunk Inc. | www.splunk.com


Splunk Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

Three Months Ended April 30,
2022 2021
Cash flows from operating activities
Net loss $ (304,322) $ (471,001)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 23,321 25,796
Amortization of deferred commissions 26,989 42,314
Amortization of investment premiums (accretion of discounts), net 282 50
Gain on strategic investments, net (91) -
Amortization of debt discount and issuance costs 1,513 26,558
Loss on lease termination - 52,524
Non-cash operating lease costs (1,833) 2,136
Stock-based compensation 213,665 182,417
Deferred income taxes (648) (1,129)
Changes in operating assets and liabilities:
Accounts receivable, net 642,945 494,346
Prepaid expenses and other assets (21,019) (98,169)
Deferred commissions (24,551) (29,565)
Accounts payable (39,487) 22,838
Accrued compensation (178,156) (54,077)
Accrued expenses and other liabilities (29,782) 6,422
Deferred revenue (165,479) (130,800)
Net cash provided by operating activities 143,347 70,660
Cash flows from investing activities
Purchases of property and equipment (3,192) (853)
Capitalized software development costs (2,428) (3,066)
Purchases of marketable securities (780,755) (20,221)
Maturities of marketable securities 99,090 87,766
Purchases of strategic investments (5,799) -
Other investment activities 500 125
Net cash (used in) provided by investing activities (692,584) 63,751
Cash flows from financing activities
Proceeds from the exercise of stock options 950 538
Taxes paid related to net share settlement of equity awards (66,394) (60,815)
Net cash used in financing activities (65,444) (60,277)
Net (decrease) increase in cash and cash equivalents (614,681) 74,134
Cash and cash equivalents at beginning of period 1,428,691 1,771,064
Cash and cash equivalents at end of period $ 814,010 $ 1,845,198
Splunk Inc. | www.splunk.com


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, adjustments related to facility exits, capitalized software development costs, non-cash interest expense related to convertible senior notes and a gain on strategic investments. The non-GAAP financial measures are also adjusted for Splunk's current and deferred tax rate on non-GAAP income (loss). Splunk uses a long-term projected non-GAAP tax rate to provide consistency across interim reporting periods. We base our rate on non-GAAP financial projections. In determining our tax rate, we exclude the impact of nonrecurring items, and we make assumptions including those about tax legislation and our tax positions. We applied a 20% non-GAAP tax rate to the three months ended April 30, 2022 and 2021. In addition, non-GAAP financial measures include free cash flow, which represents operating cash flow less purchases of property and equipment and capitalized software development costs. 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, adjustments related to facility exits, capitalized software development costs, non-cash interest expense related to convertible senior notes and a gain on strategic investments from the applicable non-GAAP financial measures because these adjustments are considered by management to be outside of Splunk's core operating results. A reconciliation of non-GAAP guidance measures to corresponding GAAP guidance measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, expenses that may be incurred in the future. Stock-based compensation-related charges, including related employer payroll tax-related items, are impacted by the timing of employee stock transactions, the future fair market value of our common stock, and our future hiring and retention needs, all of which are difficult to predict and subject to constant change. We have provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for our historical non-GAAP financial results included in this release.

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. | www.splunk.com


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,
2022 2021
Net cash provided by operating activities $ 143,347 $ 70,660
Less purchases of property and equipment (3,192) (853)
Less capitalized software development costs (2,428) (3,066)
Free cash flow (non-GAAP) $ 137,727 $ 66,741
Net cash (used in) provided by investing activities $ (692,584) $ 63,751
Net cash used in financing activities $ (65,444) $ (60,277)

Reconciliation of GAAP to Non-GAAP Financial Measures
Three Months Ended April 30, 2022
GAAP Stock-based compensation and related employer payroll tax Amortization of intangible assets Capitalized software development costs Non-cash interest expense related to convertible senior notes Gain on strategic investments, net
Income tax adjustment (2)
Non-GAAP
Cloud services cost of revenues $ 119,521 $ (5,010) $ (7,578) $ (2,442) $ - $ - $ - $ 104,491
Cloud services gross margin 63.0 % 1.6 % 2.2 % 0.8 % - % - % - % 67.6 %
Cost of revenues 202,156 (20,428) (8,807) (2,442) - - - 170,479
Gross margin 70.0 % 3.0 % 1.3 % 0.4 % - % - % - % 74.7 %
Research and development 255,691 (87,504) - 2,428 - - - 170,615
Sales and marketing 395,213 (75,047) (5,242) - - - - 314,924
General and administrative 112,708 (37,395) - - - - - 75,313
Operating loss (291,687) 220,374 14,049 14 - - - (57,250)
Operating margin (43.3) % 32.7 % 2.1 % - % - % - % - % (8.5) %
Income tax provision (benefit) 3,354 - - - - - (16,376) (13,022)
Net loss $ (304,322) $ 220,374 $ 14,049 $ 14 $ 1,513 $ (91) $ 16,376 $ (52,087)
Basic and diluted net loss per share (1)
$ (1.90) $ 1.37 $ 0.10 $ - $ 0.01 $ - $ 0.10 $ (0.32)
_________________________
(1)Calculated based on 160,339 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 April 30, 2021
GAAP Stock-based compensation and related employer payroll tax Amortization of intangible assets Adjustments related to facility exits Capitalized software development costs Non-cash interest expense related to convertible senior notes
Income tax adjustment (2)
Non-GAAP
Cloud services cost of revenues $ 88,085 $ (3,670) $ (6,741) $ - $ (594) $ - $ - $ 77,080
Cloud services gross margin 54.6 % 1.9 % 3.5 % - % 0.3 % - % - % 60.3 %
Cost of revenues 171,906 (18,322) (10,067) - (594) - - 142,923
Gross margin 65.8 % 3.6 % 2.0 % - % 0.1 % - % - % 71.5 %
Research and development 247,198 (80,274) (26) - 3,067 - - 169,965
Sales and marketing 356,108 (57,718) (4,746) - - - - 293,644
General and administrative 162,186 (33,688) - (55,234) (177) - - 73,087
Operating loss (435,347) 190,002 14,839 55,234 (2,296) - - (177,568)
Operating margin (86.7) % 37.8 % 3.0 % 11.0 % (0.5) % - % - % (35.4) %
Income tax provision (benefit) 1,220 - - - - - (38,309) (37,089)
Net loss $ (471,001) $ 190,002 $ 14,839 $ 55,234 $ (2,296) $ 26,558 $ 38,309 $ (148,355)
Basic and diluted net loss per share (1)
$ (2.89) $ 1.17 $ 0.09 $ 0.34 $ (0.01) $ 0.16 $ 0.23 $ (0.91)
_________________________
(1)Calculated based on 163,169 weighted-average shares of common stock.
(2)Represents the income tax adjustment using our estimated non-GAAP tax rate of 20%.

Splunk Inc. | www.splunk.com

Disclaimer

Splunk Inc. published this content on 25 May 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 May 2022 04:15:20 UTC.


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Financials (USD)
Sales 2023 3 331 M - -
Net income 2023 -995 M - -
Net Debt 2023 2 295 M - -
P/E ratio 2023 -17,1x
Yield 2023 -
Capitalization 15 749 M 15 749 M -
EV / Sales 2023 5,42x
EV / Sales 2024 4,26x
Nbr of Employees 7 000
Free-Float 95,3%
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Number of Analysts 38
Last Close Price 97,86 $
Average target price 135,69 $
Spread / Average Target 38,7%
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Managers and Directors
Gary Leigh Steele President, Chief Executive Officer & Director
Jason E. Child Chief Financial Officer & Senior Vice President
Graham Vivian Smith Independent Chairman
Jeremy D. Rishel Senior Vice President-Engineering
Stephen G. Newberry Lead Independent Director
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