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Aug 24, 2022

Splunk Announces Fiscal Second Quarter 2023 Financial Results

Total Revenues Grow 32%; Cloud Revenue up 59%

Increases Full Year Revenue, Profitability and Cash Flow Outlook

SAN FRANCISCO--(BUSINESS WIRE)--Aug. 24, 2022-- Splunk Inc. (NASDAQ: SPLK), the data platform leader for security and observability, today announced results for its fiscal second quarter ended July 31, 2022.

Second Quarter 2023 Financial Highlights

  • Total revenues were $799 million, up 32% year-over-year.
  • Cloud revenue was $346 million, up 59% year-over-year.
  • Cloud Dollar-Based Net Retention Rate was 129%.
  • 723 customers with total ARR greater than $1 million, up 24% year-over-year.

“The value we bring customers is evident in our Q2 results, with total revenues growing 32 percent. We also delivered substantially higher non-GAAP operating margin for the quarter, driven by our laser focus on balancing growth with profitability,” said Gary Steele, President and CEO of Splunk. “Splunk is well-positioned to deliver long-term, durable growth and profitability as we help the world’s largest and most innovative enterprises improve their cybersecurity and business resilience. These customers appreciate the unique and unmatched level of visibility we provide into their data and consider Splunk their partner of choice to secure and strengthen their mission critical operations.”

“In the face of some headwinds, we had solid execution in Q2, including $346 million in cloud revenue, a 59 percent increase over last year,” said Jason Child, CFO of Splunk. “Given the continued normalization of our revenue model, plus good progress on our expense optimization efforts, we substantially outperformed on the top and bottom lines for the quarter, and we’re increasing our revenue, operating profit and cash flow outlook for the second half.”

Q2 2023 Business Highlights

  • Splunk Delivers Advancements Across its Products and Partner Community at .conf22: Over 12,500 attendees, including thousands of partners, came together during Splunk’s annual user conference to discuss how organizations are overcoming the barriers between data and action. Key product announcements included:
    • The Splunk Platform, including Splunk Cloud Platform and Splunk Enterprise 9.0, allows customers to access more data sources easily, find and operationalize insights even faster, secure and scale deployments, build cloud-ready custom applications, and streamline administration to turn data insights into business outcomes.
    • Data Manager for Splunk Cloud Platform delivers a scalable data onboarding experience across Amazon Web Services and Microsoft Azure, with Google Cloud Platform support available later this summer, providing an easy-to-manage hybrid cloud control plane of data flowing into Splunk within minutes.
    • Splunk Log Observer Connect allows customers to visualize all their data in one place. By combining the power of Splunk Cloud Platform and Splunk Observability, site reliability engineers and DevOps engineers can access their metrics, traces, and Splunk Cloud logs in a single interface for faster, in-context debugging.
  • Splunk Ranks First in Both IT Operations and Security Markets in Gartner® Market Share Report: Splunk leads in market share for IT Operations for Health and Performance Analysis (HPA) segment and in the Security Information and Event Management (SIEM) segment, worldwide in the Gartner Market Share: All Software Markets, Worldwide, 2021 report*. In the report, Splunk once again maintained its highest position in both IT and security operations markets.
  • Splunk Names New Chief Customer Officer and EMEA General Manager: Splunk appointed Katie Bianchi as its Chief Customer Officer and Petra Jenner as Senior Vice President and General Manager for Europe, Middle East and Africa (EMEA).

Financial Outlook

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

  • Total revenues are expected to be between $835 million and $855 million.
  • Non-GAAP operating margin is expected to be between 6% and 8%.

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

  • Total revenues are expected to be between $3.35 billion and $3.4 billion (was previously between $3.30 billion and $3.35 billion).
  • Non-GAAP operating margin is expected to be approximately 8% (was previously 2%).
  • Total ARR is expected to be approximately $3.65 billion; Cloud ARR is expected to be approximately $1.8 billion (was previously $3.9 billion and $2.0 billion respectively).
  • Operating cash flow is expected to be at least $420 million (was previously $400 million).
  • Free Cash flow is expected to be at least $400 million.

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 can register for the conference call through the following link: https://register.vevent.com/register/BIbf790aaaf90848e587b036c45117a877. Registered participants will receive an email containing conference call details with dial-in options. A live audio webcast of the conference call will also be available through Splunk’s Investor Relations website at http://investors.splunk.com/events-presentations. A webcast replay of the call will be available for the next 12 months.

Safe Harbor Statement

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding Splunk’s long-term prospects, including growth and profitability, Splunk’s guidance for revenue and non-GAAP operating margin targets for the company’s fiscal third quarter 2023 and Total ARR, Cloud ARR, revenue, non-GAAP operating margin, operating cash flow and free cash flow 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; our products and technologies, including the unique and unmatched level of visibility they provide; 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 macroeconomic environment, including inflationary pressures and economic uncertainty; COVID-19 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 Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 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.

*Gartner, Inc., Market Share: All Software Markets, Worldwide 2021, Neha Gupta et al, April 12, 2022

Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s Research & Advisory organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.

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.

Splunk Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
 
 
Three Months Ended July 31, Six Months Ended July 31,

2022

2021

2022

2021

 
Revenues
Cloud services

$

346,405

 

$

217,422

 

$

669,334

 

$

411,380

 

License

 

281,716

 

 

219,600

 

 

467,527

 

 

362,881

 

Maintenance and services

 

170,632

 

 

168,721

 

 

335,973

 

 

333,533

 

Total revenues

 

798,753

 

 

605,743

 

 

1,472,834

 

 

1,107,794

 

Cost of revenues
Cloud services

 

122,860

 

 

98,016

 

 

242,381

 

 

186,101

 

License

 

1,337

 

 

2,459

 

 

2,800

 

 

6,749

 

Maintenance and services

 

82,594

 

 

82,932

 

 

163,766

 

 

162,463

 

Total cost of revenues

 

206,791

 

 

183,407

 

 

408,947

 

 

355,313

 

Gross profit

 

591,962

 

 

422,336

 

 

1,063,887

 

 

752,481

 

Operating expenses
Research and development

 

257,057

 

 

259,709

 

 

512,748

 

 

506,907

 

Sales and marketing

 

410,622

 

 

382,129

 

 

805,835

 

 

738,237

 

General and administrative

 

114,381

 

 

124,928

 

 

227,089

 

 

287,114

 

Total operating expenses

 

782,060

 

 

766,766

 

 

1,545,672

 

 

1,532,258

 

Operating loss

 

(190,098

)

 

(344,430

)

 

(481,785

)

 

(779,777

)

Interest and other income (expense), net
Interest income

 

4,847

 

 

507

 

 

6,219

 

 

886

 

Interest expense

 

(12,905

)

 

(39,013

)

 

(23,568

)

 

(72,603

)

Other income (expense), net

 

(3,613

)

 

1,146

 

 

(3,603

)

 

(77

)

Total interest and other income (expense), net

 

(11,671

)

 

(37,360

)

 

(20,952

)

 

(71,794

)

Loss before income taxes

 

(201,769

)

 

(381,790

)

 

(502,737

)

 

(851,571

)

Income tax provision

 

7,943

 

 

2,161

 

 

11,297

 

 

3,381

 

Net loss

$

(209,712

)

$

(383,951

)

$

(514,034

)

$

(854,952

)

 
Basic and diluted net loss per share

$

(1.30

)

$

(2.34

)

$

(3.19

)

$

(5.23

)

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

 

161,787

 

 

164,018

 

 

161,070

 

 

163,615

 

Splunk Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 
July 31, 2022 January 31, 2022
 
Assets
Current assets
Cash and cash equivalents

$

747,883

 

$

1,428,691

 

Investments, current

 

995,510

 

 

286,337

 

Accounts receivable, net

 

820,115

 

 

1,306,666

 

Prepaid expenses and other current assets

 

157,458

 

 

152,871

 

Deferred commissions, current

 

109,487

 

 

102,322

 

Total current assets

 

2,830,453

 

 

3,276,887

 

Investments, non-current

 

50,060

 

 

46,431

 

Accounts receivable, non-current

 

176,134

 

 

242,689

 

Operating lease right-of-use assets

 

206,639

 

 

229,198

 

Property and equipment, net

 

122,189

 

 

124,900

 

Intangible assets, net

 

136,672

 

 

164,769

 

Goodwill

 

1,401,628

 

 

1,401,628

 

Deferred commissions, non-current

 

202,891

 

 

200,876

 

Other assets

 

82,890

 

 

103,497

 

Total assets

$

5,209,556

 

$

5,790,875

 

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable

$

82,835

 

$

59,206

 

Accrued compensation

 

258,654

 

 

396,952

 

Accrued expenses and other liabilities

 

235,683

 

 

257,979

 

Deferred revenue, current

 

1,155,928

 

 

1,384,605

 

Total current liabilities

 

1,733,100

 

 

2,098,742

 

Convertible senior notes, net

 

3,870,150

 

 

3,137,731

 

Operating lease liabilities

 

205,371

 

 

225,556

 

Deferred revenue, non-current

 

62,454

 

 

86,584

 

Other liabilities, non-current

 

22,455

 

 

19,491

 

Total non-current liabilities

 

4,160,430

 

 

3,469,362

 

Total liabilities

 

5,893,530

 

 

5,568,104

 

Stockholders' equity
Common stock

 

170

 

 

167

 

Accumulated other comprehensive loss

 

(7,740

)

 

(1,199

)

Additional paid-in capital

 

4,346,503

 

 

5,032,351

 

Treasury stock

 

(1,000,000

)

 

(1,000,000

)

Accumulated deficit

 

(4,022,907

)

 

(3,808,548

)

Total stockholders' equity

 

(683,974

)

 

222,771

 

Total liabilities and stockholders' equity

$

5,209,556

 

$

5,790,875

 

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

2022

2021

2022

2021

 
Cash flows from operating activities
Net loss

$

(209,712

)

$

(383,951

)

$

(514,034

)

$

(854,952

)

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

 

24,631

 

 

24,829

 

 

47,952

 

 

50,625

 

Amortization of deferred commissions

 

26,585

 

 

35,669

 

 

53,574

 

 

77,983

 

Amortization of investment premiums (accretion of discounts), net

 

(764

)

 

382

 

 

(482

)

 

432

 

Amortization of debt discount and issuance costs

 

3,971

 

 

31,226

 

 

5,484

 

 

57,784

 

Loss on lease termination

 

-

 

 

-

 

 

-

 

 

52,524

 

Non-cash operating lease costs

 

(972

)

 

(1,565

)

 

(2,805

)

 

571

 

Stock-based compensation

 

199,476

 

 

204,780

 

 

413,141

 

 

387,197

 

Deferred income taxes

 

(372

)

 

835

 

 

(1,020

)

 

(294

)

Other

 

188

 

 

33

 

 

97

 

 

33

 

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

 

(89,839

)

 

(109,548

)

 

553,106

 

 

384,798

 

Prepaid expenses and other assets

 

38,097

 

 

83,327

 

 

17,078

 

 

(14,842

)

Deferred commissions

 

(38,203

)

 

(47,508

)

 

(62,754

)

 

(77,073

)

Accounts payable

 

63,116

 

 

(3,140

)

 

23,629

 

 

19,698

 

Accrued compensation

 

39,858

 

 

74,247

 

 

(138,298

)

 

20,170

 

Accrued expenses and other liabilities

 

12,640

 

 

11,395

 

 

(17,142

)

 

17,817

 

Deferred revenue

 

(87,328

)

 

23,069

 

 

(252,807

)

 

(107,731

)

Net cash (used in) provided by operating activities

 

(18,628

)

 

(55,920

)

 

124,719

 

 

14,740

 

Cash flows from investing activities
Purchases of property and equipment

 

(3,458

)

 

(3,510

)

 

(6,650

)

 

(4,363

)

Capitalized software development costs

 

(2,562

)

 

(2,082

)

 

(4,990

)

 

(5,148

)

Purchases of marketable securities

 

(143,007

)

 

(269,352

)

 

(923,762

)

 

(289,573

)

Maturities of marketable securities

 

110,334

 

 

-

 

 

209,424

 

 

87,766

 

Purchases of strategic investments

 

(300

)

 

-

 

 

(6,099

)

 

-

 

Acquisition, net of cash acquired

 

-

 

 

(80,333

)

 

-

 

 

(80,333

)

Other investment activities

 

936

 

 

(1,293

)

 

1,436

 

 

(1,168

)

Net cash used in investing activities

 

(38,057

)

 

(356,570

)

 

(730,641

)

 

(292,819

)

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

 

182

 

 

636

 

 

1,132

 

 

1,174

 

Proceeds from employee stock purchase plan

 

48,596

 

 

48,246

 

 

48,596

 

 

48,246

 

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

 

-

 

 

982,749

 

 

-

 

 

982,749

 

Repurchases of common stock

 

-

 

 

(192,208

)

 

-

 

 

(192,208

)

Taxes paid related to net share settlement of equity awards

 

(58,220

)

 

(40,966

)

 

(124,614

)

 

(101,781

)

Net cash (used in) provided by financing activities

 

(9,442

)

 

798,457

 

 

(74,886

)

 

738,180

 

Net (decrease) increase in cash and cash equivalents

 

(66,127

)

 

385,967

 

 

(680,808

)

 

460,101

 

Cash and cash equivalents at beginning of period

 

814,010

 

 

1,845,198

 

 

1,428,691

 

 

1,771,064

 

Cash and cash equivalents at end of period

$

747,883

 

$

2,231,165

 

$

747,883

 

$

2,231,165

 

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. We calculate cloud dollar-based net retention rate (“Cloud DBNRR”) by dividing the Cloud ARR at the end of a period (“Cloud Current Period ARR”) by the Cloud ARR of the same group of customers at the beginning of that 12-month period. Cloud Current Period ARR includes existing customer renewals and expansion, is net of existing customer contraction and churn, and excludes new customers. For the trailing 12-month Cloud DBNRR, we take the dollar-weighted average of the Cloud DBNRR over the trailing 12 months.

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, non-cash interest expense related to convertible senior notes and a net loss 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 and six months ended July 31, 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, acquisition-related adjustments, restructuring and facility exit charges, capitalized software development costs, non-cash interest expense related to convertible senior notes and a net loss 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. For example, 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.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
 
 
 
Reconciliation of Cash (Used In) Provided By Operating Activities to Free Cash Flow
 
Three Months Ended July 31, Six Months Ended July 31,

2022

2021

2022

2021

Net cash (used in) provided by operating activities

$

(18,628

)

$

(55,920

)

$

124,719

 

$

14,740

 

Less purchases of property and equipment

 

(3,458

)

 

(3,510

)

 

(6,650

)

 

(4,363

)

Less capitalized software development costs

 

(2,562

)

 

(2,082

)

 

(4,990

)

 

(5,148

)

Free cash flow (non-GAAP)

$

(24,648

)

$

(61,512

)

$

113,079

 

$

5,229

 

Net cash used in investing activities

$

(38,057

)

$

(356,570

)

$

(730,641

)

$

(292,819

)

Net cash (used in) provided by financing activities

$

(9,442

)

$

798,457

 

$

(74,886

)

$

738,180

 

Reconciliation of GAAP to Non-GAAP Financial Measures
Three Months Ended July 31, 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
Loss on strategic
investments, net
Income tax
adjustment (2)
Non-GAAP
   
Cloud services cost of revenues  

 $

              122,860

 

 $

                (6,025

)

 $

                (7,579

)

 $

                (2,991

)

 $

                           -

 

 $

                           -

 

 $

                           -

 

 $

              106,265

 

Cloud services gross margin  

 

64.5

%

 

1.7

%

 

2.2

%

 

0.9

%

 

-

%

 

-

%

 

-

%

 

69.3

%

Cost of revenues  

 

                 206,791

 

 

                 (23,563

)

 

                   (8,807

)

 

                   (2,991

)

 

                              -

 

 

                              -

 

 

                              -

 

 

                 171,430

 

Gross margin  

 

74.1

%

 

2.9

%

 

1.1

%

 

0.4

%

 

-

%

 

-

%

 

-

%

 

78.5

%

Research and development  

 

                 257,057

 

 

                 (88,445

)

 

                              -

 

 

                     2,562

 

 

                              -

 

 

                              -

 

 

                              -

 

 

                 171,174

 

Sales and marketing  

 

                 410,622

 

 

                 (59,712

)

 

                   (5,242

)

 

                              -

 

 

                              -

 

 

                              -

 

 

                              -

 

 

                 345,668

 

General and administrative  

 

                 114,381

 

 

                 (32,524

)

 

                              -

 

 

                              -

 

 

                              -

 

 

                              -

 

 

                              -

 

 

                   81,857

 

Operating income (loss)  

 

               (190,098

)

 

                 204,244

 

 

                   14,049

 

 

                         429

 

 

                              -

 

 

                              -

 

 

                              -

 

 

                   28,624

 

Operating margin  

 

(23.8

)%

 

25.5

%

 

1.8

%

 

0.1

%

 

-

%

 

-

%

 

-

%

 

3.6

%

Income tax provision (benefit)  

 

                     7,943

 

 

                              -

 

 

                              -

 

 

                              -

 

 

                              -

 

 

                              -

 

 

                   (3,721

)

 

                     4,222

 

Net income (loss)  

 $

            (209,712

)

 $

              204,244

 

 $

                14,049

 

 $

                     429

 

 $

                  3,971

 

 $

                     188

 

 $

                  3,721

 

 $

                16,890

 

Basic net income (loss) per share (1)  

 $

                  (1.30

)

 $

                    1.27

 

 $

                    0.09

 

 $

                         -

 

 $

                    0.02

 

 $

                         -

 

 $

                    0.02

 

 $

                    0.10

 

Diluted net income (loss) per share (1)  

 $

                  (1.30

)

 $

                    0.09

 

______________

(1)

  GAAP basic and diluted net loss per share and non-GAAP basic net loss per share calculated based on 161,787 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 184,571 diluted weighted-average shares of common stock, which includes 22,784 potentially dilutive shares related to convertible notes and employee stock awards. GAAP to non-GAAP diluted net income (loss) per share is not reconciled due to the difference in the number of weighted-average shares used to calculate GAAP and non-GAAP diluted net income (loss) per share. 

(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, 2021
  GAAP Stock-based
compensation and
related employer
payroll tax
 Amortization of
intangible assets
Acquisition-
related
adjustments
Restructuring
and facility exit
charges
Capitalized
software
development costs
Non-cash interest
expense related
to convertible
senior notes
Income tax
adjustment (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

)

Basic and diluted 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
Six Months Ended July 31, 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
Loss on strategic
investments, net
Income tax adjustment (2) Non-GAAP
   
Cloud services cost of revenues  

 $

              242,381

 

 $

              (11,035

)

 $

              (15,157

)

 $

                (5,433

)

 $

                           -

 

 $

                           -

 

 $

                           -

 

 $

              210,756

 

Cloud services gross margin  

 

63.8

%

 

1.6

%

 

2.3

%

 

0.8

%

 

-

%

 

-

%

 

-

%

 

68.5

%

Cost of revenues  

 

                 408,947

 

 

                 (43,991

)

 

                 (17,614

)

 

                   (5,433

)

 

                              -

 

 

                              -

 

 

                              -

 

 

                 341,909

 

Gross margin  

 

72.2

%

 

3.0

%

 

1.2

%

 

0.4

%

 

-

%

 

-

%

 

-

%

 

76.8

%

Research and development   

 

                 512,748

 

 

               (175,949

)

 

                            -

 

 

                     4,990

 

 

                              -

 

 

                              -

 

 

                              -

 

 

                 341,789

 

Sales and marketing   

 

                 805,835

 

 

               (134,759

)

 

                 (10,484

)

 

                              -

 

 

                              -

 

 

                              -

 

 

                              -

 

 

                 660,592

 

General and administrative  

 

                 227,089

 

 

                 (69,919

)

 

                              -

 

 

                              -

 

 

                              -

 

 

                              -

 

 

                              -

 

 

                 157,170

 

Operating loss  

 

               (481,785

)

 

                 424,618

 

 

                   28,098

 

 

                         443

 

 

                              -

 

 

                              -

 

 

                              -

 

 

                 (28,626

)

Operating margin  

 

(32.7

)%

 

28.9

%

 

1.9

%

 

-

%

 

-

%

 

-

%

 

-

%

 

(1.9

)%

Income tax provision (benefit)  

 

                   11,297

 

 

                              -

 

 

                              -

 

 

                              -

 

 

                              -

 

 

                            -

 

 

                 (20,095

)

 

                   (8,798

)

Net loss  

 $

            (514,034

)

 $

              424,618

 

 $

                28,098

 

 $

                     443

 

 $

                  5,484

 

 $

                        97

 

 $

                20,095

 

 $

              (35,199

)

Basic and diluted net loss per share (1)  

 $

                  (3.19

)

 $

                    2.65

 

 $

                    0.17

 

 $

                           -

 

 $

                    0.03

 

 $

                           -

 

 $

                    0.12

 

 $

                  (0.22

)

 
______________
 (1) Calculated based on 161,070 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, 2021
  GAAP Stock-based
compensation and
related employer
payroll tax
 Amortization of
intangible assets
Acquisition-
related
adjustments
Restructuring and
facility exit
charges
Capitalized software
development costs
Non-cash interest
expense related
to convertible
senior notes
Income tax
adjustment (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

)

Basic and diluted 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%. 

 

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

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

Source: Splunk Inc.