Splunk Inc. Announces Fiscal First Quarter 2022 Financial Results
Cloud ARR Grew 83%; Nearly Doubles Number of $1M+ Cloud Customers
First Quarter 2022 Financial Highlights
-
Cloud ARR was
$877 million , up 83% year-over-year. -
Total ARR was
$2.47 billion , up 39% year-over-year. -
Cloud revenue was
$194 million , up 73% year-over-year. -
Total revenues were
$502 million , up 16% year-over-year. -
203 customers with Cloud ARR greater than
$1 million , up 99% year-over-year. -
537 customers with Total ARR greater than
$1 million , up 46% year-over-year.
“Our first quarter success was defined by customers accelerating their move to the cloud,” said
“We saw continued improvement in demand during the first quarter and customer engagement remains high across our portfolio of products and cloud services,” said
Business Highlights:
New and Expansion Customers Include:
- Splunk’s New Observability Cloud Helps Customers Conquer Complexity at Any Scale: The Splunk Observability Cloud, including its entire data-driven observability product portfolio, has been made generally available to Splunk customers.
-
Splunk’s Expanded Partner Ecosystem Further Drives Business Growth and Customer Success: Splunk Cloud became available through
Google Cloud Marketplace and AWS was recognized as the 2021 Global Alliance Partner of the Year for its commitment to the Splunk Partner+ Program. -
Splunk Solidifies its Position as One of the World’s Top Employers: Splunk was named one of Fortune’s 100 Best Places to Work and one of the top 10 Best Workplaces in Technology, ranked among the top five on the San Francisco Business Times’ Best Places to Work in the
Bay Area , and was recognized by theHuman Rights Campaign as one of the Best Places to Work for LGBTQ Equality. -
Splunk Expands Executive Bench: Splunk announced the appointment of
Teresa Carlson as President and Chief Growth Officer and the appointment ofShawn Bice as President of Products and Technology. -
Splunk Providing Mission-Critical Services to the
Department of Defense (DoD ): Working in close partnership withCarahsoft Technology Corp. , Splunk is providing theDoD with asset management and cybersecurity software as part of the Core Enterprise Technology Agreement (CETA) by theDoD . The CETA designation, valued at$833M over 10 years, is part of the DoD’s Enterprise Software Initiative (ESI).
Financial Outlook
The company is providing the following guidance for its fiscal second quarter 2022 (ending
-
Cloud ARR is expected to be between
$950 million and$960 million . -
Total ARR is expected to be between
$2.59 billion and$2.61 billion . -
Total revenues are expected to be between
$550 million and$570 million . - Non-GAAP operating margin is expected to be approximately negative 25%.
All forward-looking non-GAAP financial measures contained in this section “Financial Outlook” exclude estimates for stock-based compensation and related employer payroll tax, acquisition-related adjustments, amortization of intangible assets and capitalized software costs.
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 2022 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 total ARR, cloud ARR, revenue and non-GAAP operating margin targets for the company’s fiscal second quarter in the paragraphs under “Financial Outlook” above and other statements regarding our market opportunity, including the continued impact of the COVID-19 pandemic on the business environment, such as trends in the pace of customer digital and cloud transformation and the importance of data and our ability to leverage these trends; the growth of our cloud business; the market for data-related products and trends in this market, future growth and related targets, including trends in our cloud software business mix, customer renewals, momentum, growth rate, strategy, technology and product innovation; expectations for our industry and business, such as our business model, customer demand, 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
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 quarter ended
About
Splunk, Splunk>, Data-to-Everything, D2E and Turn Data Into Doing are trademarks and registered trademarks of
Condensed Consolidated Statements of Operations | ||||||||
(In thousands, except per share amounts) | ||||||||
(Unaudited) | ||||||||
Three Months Ended |
||||||||
2021 |
2020 |
|||||||
Revenues | ||||||||
License |
$ |
143,281 |
|
$ |
148,385 |
|
||
Cloud services |
|
193,958 |
|
|
112,152 |
|
||
Maintenance and services |
|
164,812 |
|
|
173,540 |
|
||
Total revenues |
|
502,051 |
|
|
434,077 |
|
||
Cost of revenues | ||||||||
License |
|
4,290 |
|
|
6,066 |
|
||
Cloud services |
|
88,085 |
|
|
53,490 |
|
||
Maintenance and services |
|
79,531 |
|
|
69,061 |
|
||
Total cost of revenues |
|
171,906 |
|
|
128,617 |
|
||
Gross profit |
|
330,145 |
|
|
305,460 |
|
||
Operating expenses | ||||||||
Research and development |
|
247,198 |
|
|
192,124 |
|
||
Sales and marketing |
|
356,108 |
|
|
319,224 |
|
||
General and administrative |
|
162,186 |
|
|
82,724 |
|
||
Total operating expenses |
|
765,492 |
|
|
594,072 |
|
||
Operating loss |
|
(435,347 |
) |
|
(288,612 |
) |
||
Interest and other income (expense), net | ||||||||
Interest income |
|
379 |
|
|
6,475 |
|
||
Interest expense |
|
(33,590 |
) |
|
(24,437 |
) |
||
Other income (expense), net |
|
(1,223 |
) |
|
(674 |
) |
||
Total interest and other income (expense), net |
|
(34,434 |
) |
|
(18,636 |
) |
||
Loss before income taxes |
|
(469,781 |
) |
|
(307,248 |
) |
||
Income tax provision (benefit) |
|
1,220 |
|
|
(1,669 |
) |
||
Net loss |
$ |
(471,001 |
) |
$ |
(305,579 |
) |
||
Basic and diluted net loss per share |
$ |
(2.89 |
) |
$ |
(1.94 |
) |
||
Weighted-average shares used in computing basic and diluted net loss per share |
|
163,169 |
|
|
157,534 |
|
Condensed Consolidated Balance Sheets | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
|
|
|||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents |
$ |
1,845,198 |
|
$ |
1,771,064 |
|
||
Investments, current |
|
20,196 |
|
|
87,847 |
|
||
Accounts receivable, net |
|
775,942 |
|
|
1,114,199 |
|
||
Prepaid expenses and other current assets |
|
262,146 |
|
|
162,939 |
|
||
Deferred commissions, current |
|
114,715 |
|
|
136,331 |
|
||
Total current assets |
|
3,018,197 |
|
|
3,272,380 |
|
||
Investments, non-current |
|
13,603 |
|
|
13,728 |
|
||
Accounts receivable, non-current |
|
191,113 |
|
|
347,202 |
|
||
Operating lease right-of-use assets |
|
245,756 |
|
|
356,296 |
|
||
Property and equipment, net |
|
138,958 |
|
|
182,780 |
|
||
Intangible assets, net |
|
191,314 |
|
|
206,153 |
|
||
|
1,334,888 |
|
|
1,334,888 |
|
|||
Deferred commissions, non-current |
|
78,504 |
|
|
69,637 |
|
||
Other assets |
|
85,532 |
|
|
85,422 |
|
||
Total assets |
$ |
5,297,865 |
|
$ |
5,868,486 |
|
||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities | ||||||||
Accounts payable |
$ |
48,849 |
|
$ |
9,319 |
|
||
Accrued compensation |
|
227,909 |
|
|
281,986 |
|
||
Accrued expenses and other liabilities |
|
197,481 |
|
|
202,959 |
|
||
Deferred revenue, current |
|
923,914 |
|
|
1,030,484 |
|
||
Total current liabilities |
|
1,398,153 |
|
|
1,524,748 |
|
||
Convertible senior notes, net |
|
2,329,193 |
|
|
2,302,635 |
|
||
Operating lease liabilities |
|
226,019 |
|
|
330,970 |
|
||
Deferred revenue, non-current |
|
86,188 |
|
|
110,418 |
|
||
Other liabilities, non-current |
|
12,081 |
|
|
5,710 |
|
||
Total non-current liabilities |
|
2,653,481 |
|
|
2,749,733 |
|
||
Total liabilities |
|
4,051,634 |
|
|
4,274,481 |
|
||
Stockholders' equity | ||||||||
Common stock |
|
164 |
|
|
163 |
|
||
Accumulated other comprehensive loss |
|
(748 |
) |
|
(592 |
) |
||
Additional paid-in capital |
|
4,187,267 |
|
|
4,063,885 |
|
||
Accumulated deficit |
|
(2,940,452 |
) |
|
(2,469,451 |
) |
||
Total stockholders' equity |
|
1,246,231 |
|
|
1,594,005 |
|
||
Total liabilities and stockholders' equity |
$ |
5,297,865 |
|
$ |
5,868,486 |
|
Condensed Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Three Months Ended |
||||||||
2021 |
2020 |
|||||||
Cash flows from operating activities | ||||||||
Net loss |
$ |
(471,001 |
) |
$ |
(305,579 |
) |
||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization |
|
25,796 |
|
|
20,494 |
|
||
Amortization of deferred commissions |
|
42,314 |
|
|
26,878 |
|
||
Amortization of investment premiums (accretion of discounts), net |
|
50 |
|
|
(692 |
) |
||
Amortization of debt discount and issuance costs |
|
26,558 |
|
|
20,416 |
|
||
Loss on lease termination |
|
52,524 |
|
|
- |
|
||
Non-cash operating lease costs |
|
2,136 |
|
|
10,531 |
|
||
Stock-based compensation |
|
182,417 |
|
|
158,818 |
|
||
Disposal of property and equipment |
|
- |
|
|
505 |
|
||
Deferred income taxes |
|
(1,129 |
) |
|
(901 |
) |
||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net |
|
494,346 |
|
|
327,099 |
|
||
Prepaid expenses and other assets |
|
(98,169 |
) |
|
(4,846 |
) |
||
Deferred commissions |
|
(29,565 |
) |
|
(22,215 |
) |
||
Accounts payable |
|
22,838 |
|
|
7,336 |
|
||
Accrued compensation |
|
(54,077 |
) |
|
(97,709 |
) |
||
Accrued expenses and other liabilities |
|
6,422 |
|
|
(10,067 |
) |
||
Deferred revenue |
|
(130,800 |
) |
|
(84,024 |
) |
||
Net cash provided by operating activities |
|
70,660 |
|
|
46,044 |
|
||
Cash flows from investing activities | ||||||||
Purchases of investments |
|
(20,221 |
) |
|
(87,135 |
) |
||
Maturities of investments |
|
87,766 |
|
|
254,823 |
|
||
Purchases of property and equipment |
|
(853 |
) |
|
(14,756 |
) |
||
Capitalized software development costs |
|
(3,066 |
) |
|
(3,548 |
) |
||
Other investment activities |
|
125 |
|
|
(2,375 |
) |
||
Net cash provided by investing activities |
|
63,751 |
|
|
147,009 |
|
||
Cash flows from financing activities | ||||||||
Proceeds from the exercise of stock options |
|
538 |
|
|
1,418 |
|
||
Taxes paid related to net share settlement of equity awards |
|
(60,815 |
) |
|
(49,228 |
) |
||
Net cash used in financing activities |
|
(60,277 |
) |
|
(47,810 |
) |
||
Effect of exchange rate changes on cash and cash equivalents |
|
- |
|
|
(1,389 |
) |
||
Net increase in cash and cash equivalents |
|
74,134 |
|
|
143,854 |
|
||
Cash and cash equivalents at beginning of period |
|
1,771,064 |
|
|
778,653 |
|
||
Cash and cash equivalents at end of period |
$ |
1,845,198 |
|
$ |
922,507 |
|
Operating Metrics
Total Annual Recurring Revenue (“Total ARR”) represents the annualized revenue run-rate of active cloud services, term license and maintenance contracts at the end of a reporting period. Cloud Annual Recurring Revenue (“Cloud ARR”) represents the annualized revenue run-rate of active cloud services contracts at the end of a reporting period. Each contract is annualized by dividing the contract value by the number of days in the contract term and then multiplying by 365.
Non-GAAP Financial Measures and Reconciliations
To supplement Splunk’s condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in
Splunk excludes stock-based compensation expense because it is non-cash in nature and excluding this expense provides meaningful supplemental information regarding Splunk’s operational performance and allows investors the ability to make more meaningful comparisons between Splunk’s operating results and those of other companies. Splunk excludes employer payroll tax expense related to employee stock plans in order for investors to see the full effect that excluding that stock-based compensation expense had on Splunk’s operating results. These expenses are tied to the exercise or vesting of underlying equity awards and the price of Splunk’s common stock at the time of vesting or exercise, which may vary from period to period independent of the operating performance of Splunk’s business. Splunk also excludes amortization of intangible assets, adjustments related to facility exits, capitalized software development costs and non-cash interest expense related to convertible senior notes from the applicable non-GAAP financial measures because these adjustments are considered by management to be outside of Splunk’s core operating results.
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.
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 |
||||||||
2021 |
2020 |
|||||||
Net cash provided by operating activities |
$ |
70,660 |
|
$ |
46,044 |
|
||
Less purchases of property and equipment |
|
(853 |
) |
|
(14,756 |
) |
||
Free cash flow (non-GAAP) |
$ |
69,807 |
|
$ |
31,288 |
|
||
Net cash provided by investing activities |
$ |
63,751 |
|
$ |
147,009 |
|
||
Net cash used in financing activities |
$ |
(60,277 |
) |
$ |
(47,810 |
) |
Reconciliation of GAAP to Non-GAAP Financial Measures | ||||||||||||||||||||||||||||||||
Three Months Ended |
||||||||||||||||||||||||||||||||
GAAP | Stock-based compensation and related employer payroll tax |
Amortization of intangible assets |
Adjustments related to facility exits |
Capitalized software development costs |
Non-cash interest expense related to convertible senior notes |
Income tax adjustment (2) |
Non-GAAP | |||||||||||||||||||||||||
Cloud services cost of revenues |
$ |
88,085 |
|
$ |
(3,670 |
) |
$ |
(6,741 |
) |
$ |
- |
|
$ |
(594 |
) |
$ |
- |
|
$ |
- |
|
$ |
77,080 |
|
||||||||
Cloud services gross margin |
|
54.6 |
% |
|
1.9 |
% |
|
3.5 |
% |
|
- |
% |
|
0.3 |
% |
|
- |
% |
|
- |
% |
|
60.3 |
% |
||||||||
Cost of revenues |
|
171,906 |
|
|
(18,322 |
) |
|
(10,067 |
) |
|
- |
|
|
(594 |
) |
|
- |
|
|
- |
|
|
142,923 |
|
||||||||
Gross margin |
|
65.8 |
% |
|
3.6 |
% |
|
2.0 |
% |
|
- |
% |
|
0.1 |
% |
|
- |
% |
|
- |
% |
|
71.5 |
% |
||||||||
Research and development |
|
247,198 |
|
|
(80,274 |
) |
|
(26 |
) |
|
- |
|
|
3,067 |
|
|
- |
|
|
- |
|
|
169,965 |
|
||||||||
Sales and marketing |
|
356,108 |
|
|
(57,718 |
) |
|
(4,746 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
293,644 |
|
||||||||
General and administrative |
|
162,186 |
|
|
(33,688 |
) |
|
- |
|
|
(55,234 |
) |
|
(177 |
) |
|
- |
|
|
- |
|
|
73,087 |
|
||||||||
Operating loss |
|
(435,347 |
) |
|
190,002 |
|
|
14,839 |
|
|
55,234 |
|
|
(2,296 |
) |
|
- |
|
|
- |
|
|
(177,568 |
) |
||||||||
Operating margin |
|
(86.7 |
)% |
|
37.8 |
% |
|
3.0 |
% |
|
11.0 |
% |
|
(0.5 |
)% |
|
- |
% |
|
- |
% |
|
(35.4 |
)% |
||||||||
Income tax provision (benefit) |
|
1,220 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(38,309 |
) |
|
(37,089 |
) |
||||||||
Net loss |
$ |
(471,001 |
) |
$ |
190,002 |
|
$ |
14,839 |
|
$ |
55,234 |
|
$ |
(2,296 |
) |
$ |
26,558 |
|
$ |
38,309 |
|
$ |
(148,355 |
) |
||||||||
Net loss per share (1) |
$ |
(2.89 |
) |
$ |
1.17 |
|
$ |
0.09 |
|
$ |
0.34 |
|
$ |
(0.01 |
) |
$ |
0.16 |
|
$ |
0.23 |
|
$ |
(0.91 |
) |
||||||||
(1) Calculated based on 163,169 weighted-average shares of common stock. | ||||||||||||||||||||||||||||||||
(2) Represents the income tax adjustment using our estimated non-GAAP tax rate of 20%. |
Reconciliation of GAAP to Non-GAAP Financial Measures | ||||||||||||||||||||||||||||
Three Months Ended |
||||||||||||||||||||||||||||
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 |
$ |
53,490 |
|
$ |
(2,390 |
) |
$ |
(5,006 |
) |
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
46,094 |
|
|||||||
Cloud services gross margin |
|
52.3 |
% |
|
2.1 |
% |
|
4.5 |
% |
|
- |
% |
|
- |
% |
|
- |
% |
|
58.9 |
% |
|||||||
Cost of revenues |
|
128,617 |
|
|
(13,982 |
) |
|
(10,373 |
) |
|
- |
|
|
- |
|
|
- |
|
|
104,262 |
|
|||||||
Gross margin |
|
70.4 |
% |
|
3.2 |
% |
|
2.4 |
% |
|
- |
% |
|
- |
% |
|
- |
% |
|
76.0 |
% |
|||||||
Research and development |
|
192,124 |
|
|
(71,265 |
) |
|
(25 |
) |
|
3,548 |
|
|
- |
|
|
- |
|
|
124,382 |
|
|||||||
Sales and marketing |
|
319,224 |
|
|
(59,422 |
) |
|
(4,333 |
) |
|
- |
|
|
- |
|
|
- |
|
|
255,469 |
|
|||||||
General and administrative |
|
82,724 |
|
|
(21,645 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
61,079 |
|
|||||||
Operating loss |
|
(288,612 |
) |
|
166,314 |
|
|
14,731 |
|
|
(3,548 |
) |
|
- |
|
|
- |
|
|
(111,115 |
) |
|||||||
Operating margin |
|
(66.5 |
)% |
|
38.3 |
% |
|
3.4 |
% |
|
(0.8 |
)% |
|
- |
% |
|
- |
% |
|
(25.6 |
)% |
|||||||
Income tax benefit |
|
(1,669 |
) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(20,198 |
) |
|
(21,867 |
) |
|||||||
Net loss |
$ |
(305,579 |
) |
$ |
166,314 |
|
$ |
14,731 |
|
$ |
(3,548 |
) |
$ |
20,416 |
|
$ |
20,198 |
|
$ |
(87,468 |
) |
|||||||
Net loss per share (1) |
$ |
(1.94 |
) |
$ |
1.05 |
|
$ |
0.09 |
|
$ |
(0.02 |
) |
$ |
0.13 |
|
$ |
0.13 |
|
$ |
(0.56 |
) |
|||||||
(1) Calculated based on 157,534 weighted-average shares of common stock. | ||||||||||||||||||||||||||||
(2) Represents the income tax adjustment using our estimated non-GAAP tax rate of 20%. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210602005942/en/
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