Splunk Inc. Announces Fiscal First Quarter 2019 Financial Results
Software Revenues Grew 43%; Total Revenues up 37%
First Quarter 2019 Financial Highlights
-
Total revenues were
$311.6 million , up 37% year-over-year. -
Software revenues were
$172.5 million , up 43% year-over-year. -
GAAP operating loss was
$121.5 million ; GAAP operating margin was negative 39.0%. -
Non-GAAP operating loss was
$14.7 million ; non-GAAP operating margin was negative 4.7%. -
GAAP loss per share was
$0.83 ; non-GAAP loss per share was$0.07 . -
Operating cash flow was
$76.5 million with free cash flow of$74.2 million .
“Our increasing product innovation is fueling customers’ success and our
continued growth,” said
First Quarter 2019 and Recent Business Highlights:
Customers:
- Signed more than 460 new enterprise customers.
- New and Expansion Customers Include:
CDK Global , Contentful (Germany ),ENGIE (France ),La Trobe University (Australia ),Lenovo Group (China ),Lockheed Martin ,Mesa Public Schools , Nubank Pagamentos (Brazil ), Relativity, TheCo-Operators ,Together Financial Services (UK ), Total Systems Services, Three UK (UK ),University of Alabama Birmingham Medical Center ,UNC Charlotte ,University of Western Australia
Products:
-
Released
Splunk Enterprise and Splunk Cloud 7.1, which delivers artificial intelligence powered by machine learning to help customers monitor, search and alert on information needed to accelerate business. -
Announced the limited availability release of
Splunk Industrial Asset Intelligence, Splunk’s firstInternet of Things (IoT) solution, which helps organizations in manufacturing, oil and gas, transportation, energy and utilities better monitor and analyze industrial IoT data in real time. -
Announced the general availability of
Splunk Insights for Infrastructure, a new low-cost product to enable systems administrators and DevOps teams to automatically correlate metrics and logs to monitor IT. -
Released a new version of
Splunk IT Service Intelligence (ITSI), which leverages AI to predict imminent outages and how service health could be impacted before outages occur. -
Released a new
Splunk UBA Content Update, which helps customers reduce the time to detect and respond to threats by identifying new anomalies and new threats. -
Released a new version of the
Splunk Machine Learning Toolkit to help increase the accuracy of machine learning models, make sense of unlabeled data and simplify building and managing models.
Corporate:
Acquired Phantom Cyber Corporation , a leader in Security Orchestration, Automation and Response (SOAR), to advance analytics-driven security and enable customers to accelerate incident response while addressing the skills shortage.-
Opened up Call
for Papers for .conf18:
Splunk’s 9th Annual
Users Conference , which takes place fromOctober 1-4 at theWalt Disney World Swan and Dolphin Resort inOrlando, Florida .
- Hosted more than 500 people from 200+ partners at Splunk’s 2018 Global Partner Summit.
-
Recognized Arrow, AWS, Carahsoft,
Palo Alto Networks and other key partners asSplunk Partner+ Award winners at Splunk’s 2018 Global Partner Summit. -
Announced 18 new members of the Splunk Adaptive
Response Initiative at RSA Conference 2018 to speed incident
response across the security ecosystem. New members include
Accenture , SentinelOne, Tenable,Zscaler and more.
Recognition:
-
Congratulated a Federal
100 award winner from
Splunk customerU.S. Department of Health and Human Services for his leadership in cybersecurity through the organization’s Cyber Automation Program (HCAP), of whichSplunk is a partner. Splunk was named one of the “Best Places to Work” in theBay Area for the eleventh consecutive year.-
Awarded a 5-Star Rating in CRN’s
2018 Partner Program Guide, which recognizes the world’s best
channel programs. CRN also honored Splunk’s
Brooke Cunningham , AVP, global partner programs and operations, as one of the 50 most influential channel chiefs.
Appointments:
-
Promoted
Tim Tully to Senior Vice President, Chief Technology Officer. - Promoted Sendur Sellakumar to Senior Vice President, Cloud.
Financial Outlook
The company is providing the following guidance for its fiscal second
quarter 2019 (ending
-
Total revenues are expected to be between
$356 million and $358 million . - Non-GAAP operating margin is expected to be approximately 2.0%.
The company is updating its previous guidance provided on
-
Total revenues are expected to be approximately
$1.645 billion (was approximately$1.625 billion ). - Non-GAAP operating margin is expected to be approximately 11.5% (unchanged from prior guidance).
All forward-looking non-GAAP financial measures contained in this section “Financial Outlook” exclude estimates for stock-based compensation expenses, employer payroll tax expense related to employee stock plans, amortization of acquired intangible assets, adjustments related to a financing lease obligation and acquisition-related adjustments.
A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, many of these costs and expenses that may be incurred in the future. The company has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for its fiscal first quarter 2019 non-GAAP results included in this press release.
Conference Call and Webcast
Splunk’s executive management team will host a conference call today
beginning at
Safe Harbor Statement
This press release contains forward-looking statements that involve
risks and uncertainties, including statements regarding Splunk’s revenue
and non-GAAP operating margin targets for the company’s fiscal second
quarter and fiscal year 2019 in the paragraphs under “Financial Outlook”
above and other statements regarding our market opportunity, future
growth, strategy, expectations for our industry and business, customer
demand and penetration, our partner relationships, customer success, and
expected benefits of new products, product innovations and acquisitions,
in particular Phantom. There are a significant number of factors that
could cause actual results to differ materially from statements made in
this press release, including: Splunk’s limited operating history and
experience developing and introducing new products, including its cloud
offerings; risks associated with Splunk’s rapid growth, particularly
outside of
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
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SPLUNK INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(In thousands, except per share data) | ||||||||
(Unaudited) | ||||||||
Three Months Ended April 30, | ||||||||
2018 |
2017 | |||||||
|
*As Adjusted | |||||||
Revenues | ||||||||
License | $ | 138,975 | $ | 102,562 | ||||
Maintenance and services | 172,664 | 124,206 | ||||||
Total revenues | 311,639 | 226,768 | ||||||
Cost of revenues | ||||||||
License | 5,124 | 2,928 | ||||||
Maintenance and services | 72,846 | 55,235 | ||||||
Total cost of revenues | 77,970 | 58,163 | ||||||
Gross profit | 233,669 | 168,605 | ||||||
Operating expenses | ||||||||
Research and development | 86,357 | 71,298 | ||||||
Sales and marketing | 218,036 | 173,461 | ||||||
General and administrative | 50,742 | 36,496 | ||||||
Total operating expenses | 355,135 | 281,255 | ||||||
Operating loss | (121,466 | ) | (112,650 | ) | ||||
Interest and other income (expense), net | ||||||||
Interest income (expense), net | 1,114 | (528 | ) | |||||
Other income (expense), net | (135 | ) | (608 | ) | ||||
Total interest and other income (expense), net | 979 | (1,136 | ) | |||||
Loss before income taxes | (120,487 | ) | (113,786 | ) | ||||
Income tax provision (benefit) | (1,988 | ) | 1,338 | |||||
Net loss | $ | (118,499 | ) | $ | (115,124 | ) | ||
Basic and diluted net loss per share | $ | (0.83 | ) | $ | (0.84 | ) | ||
Weighted-average shares used in computing basic and diluted net loss per share |
143,548 | 137,785 |
* Prior-period information has been restated for the adoption of ASU No.
2014-09, Revenue from Contracts with Customers (ASC 606), which
SPLUNK INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
April 30, 2018 |
January 31, 2018 | |||||||
|
*As Adjusted | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 481,826 | $ | 545,947 | ||||
Investments, current portion | 468,321 | 619,203 | ||||||
Accounts receivable, net | 207,913 | 396,413 | ||||||
Prepaid expenses and other current assets | 90,072 | 70,021 | ||||||
Deferred commissions, current portion | 52,545 | 52,451 | ||||||
Total current assets | 1,300,677 | 1,684,035 | ||||||
Investments, non-current | 9,750 | 5,375 | ||||||
Property and equipment, net | 155,674 | 160,880 | ||||||
Intangible assets, net | 87,537 | 48,142 | ||||||
Goodwill | 413,881 | 161,382 | ||||||
Deferred commissions, non-current | 36,754 | 37,920 | ||||||
Other assets | 46,009 | 41,711 | ||||||
Total assets | $ | 2,050,282 | $ | 2,139,445 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 9,898 | $ | 11,040 | ||||
Accrued compensation | 100,156 | 145,365 | ||||||
Accrued expenses and other liabilities | 76,105 | 84,631 | ||||||
Deferred revenue, current portion | 472,313 | 489,913 | ||||||
Total current liabilities | 658,472 | 730,949 | ||||||
Deferred revenue, non-current | 176,076 | 178,792 | ||||||
Other liabilities, non-current | 97,194 | 98,383 | ||||||
Total non-current liabilities | 273,270 | 277,175 | ||||||
Total liabilities | 931,742 | 1,008,124 | ||||||
Stockholders' equity | ||||||||
Common stock | 144 | 143 | ||||||
Accumulated other comprehensive income (loss) | (1,538 | ) | 156 | |||||
Additional paid-in capital | 2,194,900 | 2,086,893 | ||||||
Accumulated deficit | (1,074,966 | ) | (955,871 | ) | ||||
Total stockholders' equity | 1,118,540 | 1,131,321 | ||||||
Total liabilities and stockholders' equity | $ | 2,050,282 | $ | 2,139,445 |
* Prior-period information has been restated for the adoption of ASU No.
2014-09, Revenue from Contracts with Customers (ASC 606), which
SPLUNK INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Three Months Ended April 30, | ||||||||
2018 |
2017 | |||||||
|
*As Adjusted | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (118,499 | ) | $ | (115,124 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 11,416 | 9,103 | ||||||
Amortization of deferred commissions | 15,788 | 10,317 | ||||||
Amortization of investment premiums (accretion of discounts) | (176 | ) | 217 | |||||
Stock-based compensation | 94,621 | 90,055 | ||||||
Deferred income taxes | (239 | ) | 101 | |||||
Changes in operating assets and liabilities, net of acquisition: | ||||||||
Accounts receivable, net | 195,576 | 66,056 | ||||||
Prepaid expenses and other assets | (38,015 | ) | (17,333 | ) | ||||
Accounts payable | (1,078 | ) | 714 | |||||
Accrued compensation | (44,435 | ) | (10,988 | ) | ||||
Accrued expenses and other liabilities | (14,340 | ) | (7,905 | ) | ||||
Deferred revenue | (24,132 | ) | 16,145 | |||||
Net cash provided by operating activities | 76,487 | 41,358 | ||||||
Cash flows from investing activities | ||||||||
Purchases of investments | (22,875 | ) | (122,473 | ) | ||||
Maturities of investments | 174,125 | 163,065 | ||||||
Acquisition, net of cash acquired | (284,170 | ) | - | |||||
Purchases of property and equipment | (2,296 | ) | (5,605 | ) | ||||
Other investment activities | (4,375 | ) | - | |||||
Net cash provided by (used in) investing activities | (139,591 | ) | 34,987 | |||||
Cash flows from financing activities | ||||||||
Proceeds from the exercise of stock options | 1,113 | 1,487 | ||||||
Taxes paid related to net share settlement of equity awards | (779 | ) | (32,462 | ) | ||||
Repayment of financing lease obligation | (589 | ) | (317 | ) | ||||
Net cash used in financing activities | (255 | ) | (31,292 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (762 | ) | 28 | |||||
Net increase (decrease) in cash and cash equivalents | (64,121 | ) | 45,081 | |||||
Cash and cash equivalents at beginning of period | 545,947 | 421,346 | ||||||
Cash and cash equivalents at end of period | $ | 481,826 | $ | 466,427 |
* Prior-period information has been restated for the adoption of ASU No.
2014-09, Revenue from Contracts with Customers (ASC 606), which
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
There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by Splunk’s competitors and exclude expenses that may have a material impact upon Splunk’s reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in Splunk’s business and an important part of the compensation provided to Splunk’s employees. The non-GAAP financial measures are meant to supplement and be viewed in conjunction with GAAP financial measures.
The following tables reconcile Splunk’s 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 Operating Activities to Free Cash Flow |
||||||||||||||||||||||||||||
Three Months Ended April 30, | ||||||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||||||
Net cash provided by operating activities | $ | 76,487 | $ | 41,358 | ||||||||||||||||||||||||
Less purchases of property and equipment | (2,296 | ) | (5,605 | ) | ||||||||||||||||||||||||
Free cash flow (non-GAAP) | $ | 74,191 | $ | 35,753 | ||||||||||||||||||||||||
Net cash provided by (used in) investing activities | $ | (139,591 | ) | $ | 34,987 | |||||||||||||||||||||||
Net cash used in financing activities | $ | (255 | ) | $ | (31,292 | ) | ||||||||||||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
||||||||||||||||||||||||||||
Three Months Ended April 30, 2018 |
||||||||||||||||||||||||||||
GAAP |
Stock-based |
Amortization of |
Adjustments |
Acquisition- |
Income tax |
Non-GAAP | ||||||||||||||||||||||
Cost of revenues | $ | 77,970 | $ | (9,549 | ) | $ | (4,250 | ) | $ | 312 | $ | - | $ | - | $ | 64,483 | ||||||||||||
Gross margin | 75.0 | % | 3.0 | % | 1.4 | % | (0.1 | )% | - | % | - | % | 79.3 | % | ||||||||||||||
Research and development | 86,357 | (28,238 | ) | (278 | ) | 489 | - | - | 58,330 | |||||||||||||||||||
Sales and marketing | 218,036 | (45,840 | ) | (178 | ) | 1,170 | - | - | 173,188 | |||||||||||||||||||
General and administrative | 50,742 | (17,287 | ) | - | 234 | (3,304 | ) | - | 30,385 | |||||||||||||||||||
Operating loss | (121,466 | ) | 100,914 | 4,706 | (2,205 | ) | 3,304 | - | (14,747 | ) | ||||||||||||||||||
Operating margin | (39.0 | )% | 32.4 | % | 1.5 | % | (0.7 | )% | 1.1 | % | - | % | (4.7 | )% | ||||||||||||||
Income tax benefit | (1,988 | ) | - | - | - | 3,313 | (3,665 | ) | (2,340 | ) | ||||||||||||||||||
Net loss | $ | (118,499 | ) | $ | 100,914 | $ | 4,706 | $ | (136 | ) |
(2) |
$ | (9 | ) | $ | 3,665 | $ | (9,359 | ) | |||||||||
Net loss per share(1) | $ | (0.83 | ) | $ | 0.70 | $ | 0.03 | $ | - | $ | - | $ | 0.03 | $ | (0.07 | ) | ||||||||||||
(1) Calculated based on 143,548 basic and diluted weighted-average shares of common stock. |
||||||||||||||||||||||||||||
(2) Includes $2.1 million of interest expense related to the financing lease obligation. | ||||||||||||||||||||||||||||
(3) Represents the tax effect of the non-GAAP adjustments based on the estimated annual effective tax rate of 20%. Application of this annual effective tax rate to the non-GAAP pre-tax loss during the quarter resulted in a non-GAAP tax benefit, which is expected to be offset by future tax expense. | ||||||||||||||||||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
||||||||||||||||||||||||||||
Three Months Ended April 30, 2017 |
||||||||||||||||||||||||||||
GAAP |
Stock-based |
Amortization of |
Adjustments |
Income tax |
Non-GAAP |
|||||||||||||||||||||||
Cost of revenues | $ | 58,163 | $ | (8,633 | ) | $ | (2,649 | ) | $ | 306 | $ | - | $ | 47,187 | ||||||||||||||
Gross margin | 74.4 | % | 3.7 | % | 1.2 | % |
(0.1 |
)% |
- | % | 79.2 | % | ||||||||||||||||
Research and development | 71,298 | (28,048 | ) | (28 | ) | 531 | - | 43,753 | ||||||||||||||||||||
Sales and marketing | 173,461 | (42,415 | ) | (16 | ) | 1,170 | - | 132,200 | ||||||||||||||||||||
General and administrative | 36,496 | (15,100 | ) | - | 237 | - | 21,633 | |||||||||||||||||||||
Operating loss | (112,650 | ) | 94,196 | 2,693 | (2,244 | ) | - | (18,005 | ) | |||||||||||||||||||
Operating margin | (49.7 | )% | 41.6 | % | 1.2 | % |
(1.0 |
)% |
- | % | (7.9 | )% | ||||||||||||||||
Income tax provision (benefit) | 1,338 | - | - | - | (5,935 | ) | (4,597 | ) | ||||||||||||||||||||
Net loss | $ | (115,124 | ) | $ | 94,196 | $ | 2,693 | $ | (130 | ) |
(2) |
$ | 5,935 | $ | (12,430 | ) | ||||||||||||
Net loss per share(1) | $ | (0.84 | ) | $ | 0.69 | $ | 0.02 | $ | - | $ | 0.04 | $ | (0.09 | ) | ||||||||||||||
* Prior-period information has been restated for the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606), which Splunk adopted on February 1, 2018. | ||||||||||||||||||||||||||||
(1) Calculated based on 137,785 basic and diluted weighted-average shares of common stock. | ||||||||||||||||||||||||||||
(2) Includes $2.1 million of interest expense related to the financing lease obligation. | ||||||||||||||||||||||||||||
(3) Represents the tax effect of the non-GAAP adjustments based on the estimated annual effective tax rate of 27%. Application of this annual effective tax rate to the non-GAAP pre-tax loss during the quarter resulted in a non-GAAP tax benefit, which was offset by future tax expense during fiscal 2018. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20180524006217/en/
Source:
Media Contact
Splunk Inc.
Tom Stilwell, 415-852-5561
tstilwell@splunk.com
or
Investor
Contact
Splunk Inc.
Ken Tinsley, 415-848-8476
ktinsley@splunk.com