Press Release

Splunk Announces Fiscal Third Quarter 2023 Financial Results

November 30, 2022

Total Revenues Grew 40%; Cloud Revenue up 54%

Company Increases Full Year Outlook

SAN FRANCISCO--(BUSINESS WIRE)--Nov. 30, 2022-- Splunk Inc. (NASDAQ: SPLK), the data platform leader for security and observability, today announced results for its fiscal third quarter ended October 31, 2022.

Third Quarter 2023 Financial Highlights

  • Total revenues grew 40% to $930 million year-over-year.
  • Cloud revenue grew 54% to $374 million year-over-year.
  • GAAP operating margin was (2.1%); Non-GAAP operating margin was 21.3%.
  • GAAP EPS was $(0.20); Non-GAAP EPS was $0.83.
  • Cloud Dollar-Based Net Retention Rate was 127%.
  • Customers with total ARR greater than $1 million grew 19% to 754 year-over-year.

“We delivered another solid quarter, with total revenues up 40 percent year-over-year,” said Gary Steele, President and CEO of Splunk. “Our results underscore the value our customers place in Splunk. The world’s largest and most innovative enterprises continue to invest in our platform and make their businesses more resilient through faster insights and action across security, IT and DevOps.”

“We remain focused on balancing long-term durable growth with profitability,” continued Steele. “In addition to our strong top line results, we also made good progress on our expense reduction during the quarter. As a result, we are increasing our full-year outlook for total revenues, profitability and free cash flow.”

Q3 2023 Business Highlights

  • Splunk Named a Leader for the Ninth Consecutive Time in 2022 Gartner® Magic Quadrant™ for Security Information and Event Management* (SIEM): Splunk has continued to innovate its flagship security solution, Splunk Enterprise Security, as well as the rest of the organization’s integrated security portfolio including Splunk Intelligence Management, Splunk SOAR Cloud, Splunk Enterprise 9.0 and Splunk Cloud Platform.
  • Splunk Among Top Cybersecurity Leaders Contributing to the Open Cybersecurity Schema Framework (OCSF) Project: Eighteen technology and cybersecurity leaders recently launched an open-source project that defines a common standard for cybersecurity data. The OCSF project will help organizations detect, investigate and stop cyberattacks faster and more effectively by removing time-consuming, up-front normalization tasks.
  • Splunk Wins Several Awards for Cybersecurity Innovation and Best Places to Work: Splunk won the 2022 SC Award for Best SIEM for Splunk Enterprise Security and six 'Best of' awards resulting from customer reviews on TrustRadius for Splunk Enterprise Security, Splunk IT Service Intelligence and Splunk SOAR. Splunk was also selected by Great Place to Work® as one of the 2022 Best Workplaces in Technology and as one of the 2022 Best Workplaces for Women.
  • Splunk and AWS Sign a New Five-Year Strategic Collaboration Agreement: The agreement underscores each organization’s commitment to enable joint customers to innovate with confidence, migrate and modernize existing environments with end-to-end cloud and hybrid visibility, and scale without limits. Together, Splunk and AWS elevate customer experiences with real-time, full-stack visibility into applications and AWS services while also providing data-driven SIEM and security automation to improve productivity and protect enterprises from security risks.
  • Bridging the Data Divide: Splunk continued to spotlight the data divide’s impacts and possible solutions across multiple events hosted by the United Nations and the Atlantic Council.
  • Splunk Names New Chief Information Security Officer, Chief People Officer and Platform General Manager: Splunk appointed Jason Lee as its Chief Information Security Officer (CISO), Sharyl Givens as Chief People Officer and Tom Casey as Senior Vice President and General Manager, Platform.
  • Splunk Board of Directors Appointments: Richard P. Wallace, President and CEO of KLA Corporation, and David Tunnell, Partner at Hellman & Friedman, were appointed to the Splunk Board of Directors. It was announced that Stephen G. Newberry will be stepping down from the Board, joining Sara Baack, as previously announced.

Financial Outlook

The company is providing the following guidance for its fiscal fourth quarter 2023 (ending January 31, 2023):

  • Total revenues are expected to be between $1.055 billion and $1.085 billion.
  • Non-GAAP operating margin is expected to be between 23% and 26%.

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

  • Total revenues are expected to be between $3.455 billion and $3.485 billion (was previously between $3.35 billion and $3.4 billion).
  • Non-GAAP operating margin is expected to be between 12% and 13% (was previously 8%).
  • Total ARR is expected to be approximately $3.65 billion; Cloud ARR is expected to be between $1.775 billion and $1.8 billion (was previously $1.8 billion).
  • Free Cash flow is expected to be at least $420 million (was previously $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) today to discuss financial results and business highlights. Interested parties may access the call by dialing (800) 715-9871 in the U.S. or (646) 307-1963 from international locations and referencing conference ID 5441433. 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. An audio 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 Splunk’s guidance for total revenues and non-GAAP operating margin targets for the company’s fiscal fourth quarter 2023 and total revenues, non-GAAP operating margin, Total ARR, Cloud ARR, and free cash flow for the company’s fiscal year 2023; our global presence and trends in customer demand and engagement; statements regarding our operating expenses, growth and profitability; statements regarding our collaboration agreement with AWS and its benefits to us and our customers; statements regarding our products, projects, technology and ongoing product development; statements regarding our market opportunity; the market for data-related products and the importance of data and our ability to leverage these trends; 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: the macroeconomic environment, including inflationary pressures, economic uncertainty and impacts on information technology spending; risks associated with Splunk’s 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; 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 July 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.

*Gartner, Inc., 2022 Gartner Magic Quadrant for Security Information and Event Management, Pete Shoard, Andrew Davies, Mitchell Schneider, October 10, 2022.

Gartner and Magic Quadrant are registered trademarks and service marks of Gartner, Inc. and/or its affiliates in the U.S. and internationally and are used herein with permission. All rights reserved.

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 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.

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 October 31, Nine Months Ended October 31,

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 
Revenues
Cloud services

$

374,027

 

$

243,042

 

$

1,043,361

 

$

654,422

 

License

 

383,584

 

 

249,021

 

 

851,111

 

 

611,902

 

Maintenance and services

 

172,158

 

 

172,688

 

 

508,131

 

 

506,221

 

Total revenues

 

929,769

 

 

664,751

 

 

2,402,603

 

 

1,772,545

 

Cost of revenues
Cloud services

 

119,558

 

 

100,210

 

 

361,939

 

 

286,311

 

License

 

1,259

 

 

1,229

 

 

4,059

 

 

7,978

 

Maintenance and services

 

80,948

 

 

86,851

 

 

244,714

 

 

249,314

 

Total cost of revenues

 

201,765

 

 

188,290

 

 

610,712

 

 

543,603

 

Gross profit

 

728,004

 

 

476,461

 

 

1,791,891

 

 

1,228,942

 

Operating expenses
Research and development

 

241,395

 

 

265,145

 

 

754,143

 

 

772,052

 

Sales and marketing

 

388,094

 

 

386,932

 

 

1,193,929

 

 

1,125,169

 

General and administrative

 

118,307

 

 

112,750

 

 

345,396

 

 

399,864

 

Total operating expenses

 

747,796

 

 

764,827

 

 

2,293,468

 

 

2,297,085

 

Operating loss

 

(19,792

)

 

(288,366

)

 

(501,577

)

 

(1,068,143

)

Interest and other income (expense), net
Interest income

 

6,700

 

 

888

 

 

12,919

 

 

1,774

 

Interest expense

 

(11,228

)

 

(50,723

)

 

(34,796

)

 

(123,326

)

Other income (expense), net

 

(3,945

)

 

411

 

 

(7,548

)

 

334

 

Total interest and other income (expense), net

 

(8,473

)

 

(49,424

)

 

(29,425

)

 

(121,218

)

Loss before income taxes

 

(28,265

)

 

(337,790

)

 

(531,002

)

 

(1,189,361

)

Income tax provision (benefit)

 

4,355

 

 

5,532

 

 

15,652

 

 

8,913

 

Net loss

$

(32,620

)

$

(343,322

)

$

(546,654

)

$

(1,198,274

)

 
Basic and diluted net loss per share

$

(0.20

)

$

(2.14

)

$

(3.38

)

$

(7.38

)

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

 

163,044

 

 

160,202

 

 

161,738

 

 

162,474

 

Splunk Inc.
Condensed Consolidated Balance Sheets
(In thousands)

(Unaudited)

 
October 31, 2022 January 31, 2022
Assets
 
Current assets
Cash and cash equivalents

$

832,929

 

$

1,428,691

 

Investments, current

 

924,296

 

 

286,337

 

Accounts receivable, net

 

976,580

 

 

1,306,666

 

Prepaid expenses and other current assets

 

115,238

 

 

152,871

 

Deferred commissions, current

 

111,414

 

 

102,322

 

Total current assets

 

2,960,457

 

 

3,276,887

 

Investments, non-current

 

41,325

 

 

46,431

 

Accounts receivable, non-current

 

164,792

 

 

242,689

 

Operating lease right-of-use assets

 

188,877

 

 

229,198

 

Property and equipment, net

 

112,976

 

 

124,900

 

Intangible assets, net

 

122,734

 

 

164,769

 

Goodwill

 

1,401,628

 

 

1,401,628

 

Deferred commissions, non-current

 

212,741

 

 

200,876

 

Other assets

 

45,815

 

 

103,497

 

Total assets

$

5,251,345

 

$

5,790,875

 

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable

$

18,433

 

$

59,206

 

Accrued compensation

 

248,158

 

 

396,952

 

Accrued expenses and other liabilities

 

204,736

 

 

257,979

 

Deferred revenue, current

 

1,187,969

 

 

1,384,605

 

Debt, current

 

775,233

 

 

-

 

Total current liabilities

 

2,434,529

 

 

2,098,742

 

Debt, non-current

 

3,097,311

 

 

3,137,731

 

Operating lease liabilities

 

199,118

 

 

225,556

 

Deferred revenue, non-current

 

68,982

 

 

86,584

 

Other liabilities, non-current

 

21,053

 

 

19,491

 

Total non-current liabilities

 

3,386,464

 

 

3,469,362

 

Total liabilities

 

5,820,993

 

 

5,568,104

 

Stockholders' equity
Common stock

 

170

 

 

167

 

Accumulated other comprehensive loss

 

(11,226

)

 

(1,199

)

Additional paid-in capital

 

4,496,935

 

 

5,032,351

 

Treasury stock, at cost

 

(1,000,000

)

 

(1,000,000

)

Accumulated deficit

 

(4,055,527

)

 

(3,808,548

)

Total stockholders' equity

 

(569,648

)

 

222,771

 

Total liabilities and stockholders' equity

$

5,251,345

 

$

5,790,875

 

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

(Unaudited)

 
Three Months Ended October 31, Nine Months Ended October 31,

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Cash flows from operating activities
Net loss

$

(32,620

)

$

(343,322

)

$

(546,654

)

$

(1,198,274

)

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

 

25,494

 

 

24,000

 

 

73,446

 

 

74,625

 

Amortization of deferred commissions

 

27,835

 

 

32,122

 

 

81,409

 

 

110,105

 

Amortization of investment premiums (accretion of discounts), net

 

(1,580

)

 

656

 

 

(2,062

)

 

1,088

 

Amortization of debt discount and issuance costs

 

2,394

 

 

41,174

 

 

7,878

 

 

98,958

 

Losses on facility exits

 

10,000

 

 

-

 

 

10,000

 

 

52,524

 

Non-cash operating lease costs

 

(274

)

 

(826

)

 

(3,079

)

 

(255

)

Stock-based compensation

 

188,604

 

 

203,760

 

 

601,745

 

 

590,957

 

Deferred income taxes

 

(414

)

 

(1,374

)

 

(1,434

)

 

(1,668

)

Other

 

-

 

 

-

 

 

97

 

 

33

 

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

 

(145,123

)

 

40,937

 

 

407,983

 

 

425,735

 

Prepaid expenses and other assets

 

79,630

 

 

31,782

 

 

96,708

 

 

16,940

 

Deferred commissions

 

(39,612

)

 

(59,774

)

 

(102,366

)

 

(136,847

)

Accounts payable

 

(64,402

)

 

(10,172

)

 

(40,773

)

 

9,526

 

Accrued compensation

 

(10,496

)

 

(4,423

)

 

(148,794

)

 

15,747

 

Accrued expenses and other liabilities

 

(29,082

)

 

47,067

 

 

(46,224

)

 

64,884

 

Deferred revenue

 

38,569

 

 

(20,988

)

 

(214,238

)

 

(128,719

)

Net cash provided by (used in) operating activities

 

48,923

 

 

(19,381

)

 

173,642

 

 

(4,641

)

Cash flows from investing activities
Purchases of property and equipment

 

(2,579

)

 

(5,467

)

 

(9,229

)

 

(9,830

)

Capitalized software development costs

 

(816

)

 

(695

)

 

(5,806

)

 

(5,843

)

Purchases of marketable securities

 

(65,142

)

 

(69,176

)

 

(988,904

)

 

(358,749

)

Maturities of marketable securities

 

143,440

 

 

36,688

 

 

352,864

 

 

124,454

 

Purchases of strategic investments

 

(260

)

 

(15,450

)

 

(6,359

)

 

(15,450

)

Acquisitions, net of cash acquired

 

-

 

 

-

 

 

-

 

 

(80,333

)

Other investment activities

 

98

 

 

2,115

 

 

1,534

 

 

947

 

Net cash provided by (used in) investing activities

 

74,741

 

 

(51,985

)

 

(655,900

)

 

(344,804

)

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

 

266

 

 

692

 

 

1,398

 

 

1,866

 

Proceeds from employee stock purchase plan

 

-

 

 

-

 

 

48,596

 

 

48,246

 

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

 

-

 

 

(539

)

 

-

 

 

982,210

 

Repurchases of common stock

 

-

 

 

(807,792

)

 

-

 

 

(1,000,000

)

Taxes paid related to net share settlement of equity awards

 

(38,884

)

 

(47,779

)

 

(163,498

)

 

(149,560

)

Net cash used in financing activities

 

(38,618

)

 

(855,418

)

 

(113,504

)

 

(117,238

)

Net increase (decrease) in cash and cash equivalents

 

85,046

 

 

(926,784

)

 

(595,762

)

 

(466,683

)

Cash and cash equivalents at beginning of period

 

747,883

 

 

2,231,165

 

 

1,428,691

 

 

1,771,064

 

Cash and cash equivalents at end of period

$

832,929

 

$

1,304,381

 

$

832,929

 

$

1,304,381

 

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 nine months ended October 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 Provided By (Used In) Operating Activities to Free Cash Flow
 
Three Months Ended October 31, Nine Months Ended October 31,

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net cash provided by (used in) operating activities

$

48,923

 

$

(19,381

)

$

173,642

 

$

(4,641

)

Less purchases of property and equipment

 

(2,579

)

 

(5,467

)

 

(9,229

)

 

(9,830

)

Less capitalized software development costs

 

(816

)

 

(695

)

 

(5,806

)

 

(5,843

)

Free cash flow (non-GAAP)

$

45,528

 

$

(25,543

)

$

158,607

 

$

(20,314

)

Net cash provided by (used in) investing activities

$

74,741

 

$

(51,985

)

$

(655,900

)

$

(344,804

)

Net cash used in financing activities

$

(38,618

)

$

(855,418

)

$

(113,504

)

$

(117,238

)

Reconciliation of GAAP to Non-GAAP Financial Measures
Three Months Ended October 31, 2022
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

$

119,558

 

$

(5,821

)

$

(7,577

)

$

-

 

$

-

 

$

(3,556

)

$

-

 

$

-

 

$

102,604

 

Cloud services gross
margin

 

68.0

%

 

1.6

%

 

2.0

%

 

-

%

 

-

%

 

1.0

%

 

-

%

 

-

%

 

72.6

%

Cost of revenues

 

201,765

 

 

(22,071

)

 

(8,807

)

 

-

 

 

-

 

 

(3,556

)

 

-

 

 

-

 

 

167,331

 

Gross margin

 

78.3

%

 

2.4

%

 

0.9

%

 

-

%

 

-

%

 

0.4

%

 

-

%

 

-

%

 

82.0

%

Research and development

 

241,395

 

 

(80,989

)

 

-

 

 

-

 

 

-

 

 

816

 

 

-

 

 

-

 

 

161,222

 

Sales and marketing

 

388,094

 

 

(56,503

)

 

(5,130

)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

326,461

 

General and administrative

 

118,307

 

 

(31,297

)

 

(0

)

 

(692

)

 

(10,000

)

 

-

 

 

-

 

 

-

 

 

76,318

 

Operating income (loss)

 

(19,792

)

 

190,860

 

 

13,937

 

 

692

 

 

10,000

 

 

2,740

 

 

-

 

 

-

 

 

198,437

 

Operating margin

 

(2.1

)%

 

20.4

%

 

1.5

%

 

0.1

%

 

1.1

%

 

0.3

%

 

-

%

 

-

%

 

21.3

%

Income tax provision

 

4,355

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

34,117

 

 

38,472

 

Net income (loss)

$

(32,620

)

$

190,860

 

$

13,937

 

$

692

 

$

10,000

 

$

2,740

 

$

2,394

 

$

(34,117

)

$

153,886

 

Basic net income (loss)
per share (1)

$

(0.20

)

$

1.17

 

$

0.09

 

$

-

 

$

0.06

 

$

0.02

 

$

0.01

 

$

(0.21

)

$

0.94

 

Diluted net income (loss)
per share (1)

$

(0.20

)

$

0.83

 

 

(1)

GAAP basic and diluted net loss per share and non-GAAP basic net loss per share is calculated based on 163,044 weighted-average shares of common stock. Non-GAAP net income per share is calculated based on 185,731 diluted weighted-average shares of common stock, which includes 22,687 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 October 31, 2021
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
Income tax
adjustment (2)
Non-GAAP
Cloud services cost of revenues

$

100,210

 

$

(4,447

)

$

(7,579

)

$

(2,497

)

$

-

 

$

-

 

$

85,687

 

Cloud services gross margin

 

58.8

%

 

1.8

%

 

3.1

%

 

1.0

%

 

-

%

 

-

%

 

64.7

%

Cost of revenues

 

188,290

 

 

(21,718

)

 

(8,806

)

 

(2,497

)

 

-

 

 

-

 

 

155,269

 

Gross margin

 

71.7

%

 

3.3

%

 

1.2

%

 

0.4

%

 

-

%

 

-

%

 

76.6

%

Research and development

 

265,145

 

 

(85,896

)

 

-

 

 

693

 

 

-

 

 

-

 

 

179,942

 

Sales and marketing

 

386,932

 

 

(62,965

)

 

(5,279

)

 

-

 

 

-

 

 

-

 

 

318,688

 

General and administrative

 

112,750

 

 

(35,816

)

 

-

 

 

-

 

 

-

 

 

-

 

 

76,934

 

Operating loss

 

(288,366

)

 

206,395

 

 

14,085

 

 

1,804

 

 

-

 

 

-

 

 

(66,082

)

Operating margin

 

(43.4

)%

 

31.0

%

 

2.2

%

 

0.3

%

 

-

%

 

-

%

 

(9.9

)%

Income tax provision (benefit)

 

5,532

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(20,398

)

 

(14,866

)

Net loss

$

(343,322

)

$

206,395

 

$

14,085

 

$

1,804

 

$

41,174

 

$

20,398

 

$

(59,466

)

Basic and diluted net loss per share (1)

$

(2.14

)

$

1.29

 

$

0.08

 

$

0.01

 

$

0.26

 

$

0.13

 

$

(0.37

)

(1)

Calculated based on 160,202 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
Nine Months Ended October 31, 2022
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
Loss on
strategic investments,
net
Income tax
adjustment (2)
Non-GAAP
 
Cloud services cost of
revenues

$

361,939

 

$

(16,856

)

$

(22,734

)

$

-

 

$

-

 

$

(8,989

)

$

-

 

$

-

 

$

-

 

$

313,360

 

Cloud services gross
margin

 

65.3

%

 

1.6

%

 

2.2

%

 

-

%

 

-

%

 

0.9

%

 

-

%

 

-

%

 

-

%

 

70.0

%

Cost of revenues

 

610,712

 

 

(66,062

)

 

(26,421

)

 

-

 

 

-

 

 

(8,989

)

 

-

 

 

-

 

 

-

 

 

509,240

 

Gross margin

 

74.6

%

 

2.7

%

 

1.1

%

 

-

%

 

-

%

 

0.4

%

 

-

%

 

-

%

 

-

%

 

78.8

%

Research and
development

 

754,143

 

 

(256,938

)

 

-

 

 

-

 

 

-

 

 

5,806

 

 

-

 

 

-

 

 

-

 

 

503,011

 

Sales and marketing

 

1,193,929

 

 

(191,262

)

 

(15,614

)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

987,053

 

General and
administrative

 

345,396

 

 

(101,216

)

 

(0

)

 

(692

)

 

(10,000

)

 

-

 

 

-

 

 

-

 

 

-

 

 

233,488

 

Operating income (loss)

 

(501,577

)

 

615,478

 

 

42,035

 

 

692

 

 

10,000

 

 

3,183

 

 

-

 

 

-

 

 

-

 

 

169,811

 

Operating margin

 

(20.9

)%

 

25.8

%

 

1.7

%

 

-

%

 

0.4

%

 

0.1

%

 

-

%

 

-

%

 

-

%

 

7.1

%

Income tax provision

 

15,652

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

14,021

 

 

29,673

 

Net income (loss)

$

(546,654

)

$

615,478

 

$

42,035

 

$

692

 

$

10,000

 

$

3,183

 

$

7,878

 

$

97

 

$

(14,021

)

$

118,688

 

Basic net income
(loss) per share (1)

$

(3.38

)

$

3.81

 

$

0.26

 

$

-

 

$

0.06

 

$

0.02

 

$

0.05

 

$

-

 

$

(0.09

)

$

0.73

 

Diluted net income
(loss) per share (1)

$

(3.38

)

$

0.64

 

 

(1)

GAAP basic and diluted net loss per share and non-GAAP basic net loss per share is calculated based on 161,738 weighted-average shares of common stock. Non-GAAP net income per share is calculated based on 185,148 diluted weighted-average shares of common stock, which includes 23,410 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
Nine Months Ended October 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

$

286,311

 

$

(12,815

)

$

(21,619

)

$

-

 

$

-

 

$

(3,685

)

$

-

 

$

-

 

$

248,192

 

Cloud services gross margin

 

56.2

%

 

2.0

%

 

3.3

%

 

-

%

 

-

%

 

0.6

%

 

-

%

 

-

%

 

62.1

%

Cost of revenues

 

543,603

 

 

(62,335

)

 

(28,631

)

 

-

 

 

-

 

 

(3,685

)

 

-

 

 

-

 

 

448,952

 

Gross margin

 

69.3

%

 

3.6

%

 

1.6

%

 

-

%

 

-

%

 

0.2

%

 

-

%

 

-

%

 

74.7

%

Research and development

 

772,052

 

 

(248,361

)

 

(26

)

 

-

 

 

-

 

 

5,131

 

 

-

 

 

-

 

 

528,796

 

Sales and marketing

 

1,125,169

 

 

(186,296

)

 

(15,126

)

 

-

 

 

(613

)

 

-

 

 

-

 

 

-

 

 

923,134

 

General and administrative

 

399,864

 

 

(107,603

)

 

-

 

 

(957

)

 

(55,228

)

 

-

 

 

-

 

 

-

 

 

236,076

 

Operating loss

 

(1,068,143

)

 

604,595

 

 

43,783

 

 

957

 

 

55,841

 

 

(1,446

)

 

-

 

 

-

 

 

(364,413

)

Operating margin

 

(60.3

)%

 

34.0

%

 

2.5

%

 

0.1

%

 

3.2

%

 

(0.1

)%

 

-

%

 

-

%

 

(20.6

)%

Income tax provision (benefit)

 

8,913

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(86,248

)

 

(77,335

)

Net loss

$

(1,198,274

)

$

604,595

 

$

43,783

 

$

957

 

$

55,841

 

$

(1,446

)

$

98,958

 

$

86,248

 

$

(309,338

)

Basic and diluted net loss per

share (1)

$

(7.38

)

$

3.72

 

$

0.28

 

$

0.01

 

$

0.34

 

$

(0.01

)

$

0.61

 

$

0.53

 

$

(1.90

)

 

(1)

Calculated based on 162,474 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.