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Aug 26, 2020

Splunk Inc. Announces Fiscal Second Quarter 2021 Financial Results

Cloud ARR Grows 89% to Over Half a Billion Dollars;
Cloud More Than Half of Software Bookings

SAN FRANCISCO--(BUSINESS WIRE)--Aug. 26, 2020-- Splunk Inc. (NASDAQ: SPLK), provider of the Data-to-Everything Platform, today announced results for its fiscal second quarter ended July 31, 2020.

Second Quarter 2021 Financial Highlights

  • Cloud ARR was $568 million, up 89% year-over-year.
  • Total ARR was $1.93 billion, up 50% year-over-year.
  • Cloud revenue was $126 million, up 79% year-over-year.
  • Total revenues were $492 million, down 5% year-over-year.
  • 396 customers with ARR greater than $1 million.

“As organizations continue to adapt to tectonic societal shifts brought on by COVID-19, one thing is constant: the power of data to radically transform business,” said Doug Merritt, President and CEO, Splunk. “I’m pleased to see the role Splunk’s Data-to-Everything platform has played in helping our customers drive meaningful insights as they advance into The Data Age to meet the challenges of 2020 and beyond.”

“Splunk’s cloud business continues to accelerate, now representing more than half of our software bookings in the quarter - a major milestone in our cloud journey,” Merritt continued. “I’m very proud of our team, strong execution and continued momentum as we look forward to revealing our line-up of trendsetting product innovations at .conf20.”

“Splunk’s rapid transformation to the cloud has enabled us to reach key milestones ahead of schedule. Cloud ARR growth accelerated to 89%, or $568 Million, far exceeding our expectations. We also now have nearly 400 customers with ARR in excess of $1 million as more and more businesses embrace our cloud platform,” said Jason Child, chief financial officer, Splunk. “Our customers want the flexibility to transition to cloud, and with our diligent planning, we’ve continued to advance our mission to remove the barriers between data and action.”

Recent Business Highlights:

New and Expansion Customers Include: Atlassian (Australia), California Polytechnic State University - San Luis Obispo, Chicago Public Schools, Costco Travel, DHS Cybersecurity and Infrastructure Security Agency, Financial Industry Regulatory Authority (FINRA), Jemena (Australia), L'Oreal USA, Mars, The Motley Fool, NASA, Transport for London (United Kingdom), University of California, Irvine, United Shore, Yale New Haven Health System

  • Splunk Cloud Helps Customers Thrive in The Data Age: To help customers unlock business value with data and shift to the cloud faster than ever at scale, Splunk unveiled new updates to Splunk IT Service Intelligence (ITSI). Splunk ITSI 4.5 delivers a centralized framework for monitoring and investigation in one view, giving organizations enhanced service monitoring and event management features to support large deployments. Splunk also introduced Splunk Machine Learning Toolkit (MLTK) 5.2, which offers a simplified, customizable interface that provides broader access of the tool to less technical users and removes many barriers for machine learning exploration.
  • Data Stream Processor Strengthens IT, Security and DevOps Capabilities: An explosion of data volume coming from new sources is leaving organizations with more data than they ever imagined. To help give customers more control, visibility and insights into their data, Splunk released the latest version of Splunk Data Stream Processor (DSP), a real-time stream processing solution that continuously collects, processes and delivers data to the Splunk platform or other destinations within milliseconds. Splunk DSP 1.1 gives organizations the ability to collect data into a single unified location for better visibility and leverage advanced streaming capabilities.
  • Splunk Customers Can Take Action on Data Anywhere with Splunk Connected Experiences: COVID-19 has created a global tele-workforce and with it, a greater need for customers to act on their data from anywhere in the world. New updates to Splunk Connected Experiences now support popular mobile device management (MDM) providers, allowing customers to securely deploy Splunk Mobile at scale.
  • Splunk Enables Organizations to Navigate the Global Restart with Confidence: Splunk continues to support customers, partners, employees and communities during the COVID-19 pandemic. In addition to releasing Remote Work Insights, a free, downloadable solution which gives organizations real-time visibility on critical business activities across disparate systems, Splunk unveiled its Global Restart program, showcasing how data will help the world get back to work. Visit the Splunk website to learn more about how organizations can bring data to their COVID-19 response and build a more resilient workforce with data.
  • .conf20 is Free...and in Your Living Room: Splunk’s annual user conference, .conf20, is going virtual. Taking place across October 20-22, .conf20 is the premier education event for thousands of IT, security and business professionals looking to bring data to every question, decision and action. To register and learn more about .conf20 and the nearly 200 sessions you can access free from your own home, visit the Splunk website.
  • Splunk Ranks #1 in IDC’s IT Operations Management Market For Second Year in a Row: Leading industry analyst firm IDC ranked Splunk No. 1 for 2019 market share and market revenue in their latest report: Worldwide IT Operations Management Software Market Shares, 2019. With 13% market share of the ITOM market, IDC evaluated Splunk’s IT offerings including Splunk IT Service Intelligence, Splunk App for Infrastructure, Splunk Cloud, SignalFx Infrastructure Monitoring and SignalFx Microservices APM.

Financial Outlook

The company is providing the following guidance for its fiscal third quarter 2021 (ending October 31, 2020):

  • Total revenues are expected to be between $600 million and $630 million.
  • Non-GAAP operating margin is expected to be between 2% and 5%.

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 second quarter 2021 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 1:30 p.m. PT (4:30 p.m. ET) to discuss the company’s financial results and business highlights. Interested parties may access the call by dialing (866) 501-1535. International parties may access the call by dialing (216) 672-5582. A live audio webcast of the conference call will be available through Splunk’s Investor Relations website at http://investors.splunk.com/events-presentations. A replay of the call will be available through September 2, 2020 by dialing (855) 859-2056 and referencing Conference ID 6881816.

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 third quarter in the paragraphs under “Financial Outlook” above and other statements regarding our market opportunity, including the impact of the COVID-19 pandemic on the business environment, such as the pace of customer digital transformation and the importance of data; the market for data-related products and trends in this market, future growth and related targets, including trends in our cloud software business mix, 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 the United States; Splunk’s inability to realize value from its significant investments in its business, including product and service innovations and through acquisitions; Splunk’s shift from sales of perpetual licenses in favor of sales of term licenses and subscription agreements for our cloud services which impact the timing of revenue, cash collections and margins; 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 our convertible notes; the impact of the COVID-19 pandemic and related public health measures on our business, as well as the impact of the COVID-19 pandemic on the overall economic environment; 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 31, 2020, which is on file with the U.S. Securities and Exchange Commission (“SEC”) and Splunk’s other filings with the SEC. Splunk does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

About Splunk Inc.

Splunk Inc. (NASDAQ: SPLK) turns data into doing with the Data-to-Everything Platform. Splunk technology is designed to investigate, monitor, analyze and act on data at any scale.

Splunk, Splunk>, Data-to-Everything, D2E 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. © 2020 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,

2020

 

2019

 

2020

 

2019

Revenues
License

$

176,814

 

$

279,279

 

$

325,199

 

$

482,141

 

Cloud services

 

125,870

 

 

70,451

 

 

238,022

 

 

132,506

 

Maintenance and services

 

188,974

 

 

166,828

 

 

362,514

 

 

326,761

 

Total revenues

 

491,658

 

 

516,558

 

 

925,735

 

 

941,408

 

Cost of revenues
License

 

5,474

 

 

5,936

 

 

11,540

 

 

11,618

 

Cloud services

 

59,728

 

 

35,155

 

 

113,218

 

 

67,481

 

Maintenance and services

 

66,850

 

 

57,217

 

 

135,911

 

 

115,032

 

Total cost of revenues

 

132,052

 

 

98,308

 

 

260,669

 

 

194,131

 

Gross profit

 

359,606

 

 

418,250

 

 

665,066

 

 

747,277

 

Operating expenses
Research and development

 

197,297

 

 

134,110

 

 

389,421

 

 

263,400

 

Sales and marketing

 

323,687

 

 

298,773

 

 

642,911

 

 

577,734

 

General and administrative

 

78,081

 

 

72,264

 

 

160,805

 

 

138,026

 

Total operating expenses

 

599,065

 

 

505,147

 

 

1,193,137

 

 

979,160

 

Operating loss

 

(239,459

)

 

(86,897

)

 

(528,071

)

 

(231,883

)

Interest and other income (expense), net
Interest income

 

3,581

 

 

16,415

 

 

10,056

 

 

32,761

 

Interest expense

 

(30,148

)

 

(24,104

)

 

(54,585

)

 

(47,121

)

Other income (expense), net

 

5,917

 

 

(654

)

 

5,243

 

 

(1,193

)

Total interest and other income (expense), net

 

(20,650

)

 

(8,343

)

 

(39,286

)

 

(15,553

)

Loss before income taxes

 

(260,109

)

 

(95,240

)

 

(567,357

)

 

(247,436

)

Income tax provision (benefit)

 

1,213

 

 

5,632

 

 

(456

)

 

8,865

 

Net loss

$

(261,322

)

$

(100,872

)

$

(566,901

)

$

(256,301

)

 
Basic and diluted net loss per share

$

(1.64

)

$

(0.67

)

$

(3.58

)

$

(1.71

)

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

 

158,952

 

 

150,306

 

 

158,241

 

 

149,723

 

Splunk Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
July 31, 2020 January 31, 2020
Assets
Current assets
Cash and cash equivalents

$

1,467,895

 

$

778,653

 

Investments, current

 

588,773

 

 

976,508

 

Accounts receivable, net

 

793,081

 

 

838,743

 

Prepaid expenses and other current assets

 

118,047

 

 

129,839

 

Deferred commissions, current

 

112,598

 

 

99,072

 

Total current assets

 

3,080,394

 

 

2,822,815

 

Investments, non-current

 

17,653

 

 

35,370

 

Accounts receivable, non-current

 

330,335

 

 

468,934

 

Operating lease right-of-use assets

 

388,931

 

 

267,086

 

Property and equipment, net

 

183,829

 

 

156,928

 

Intangible assets, net

 

209,124

 

 

238,415

 

Goodwill

 

1,292,840

 

 

1,292,840

 

Deferred commissions, non-current

 

74,498

 

 

88,990

 

Other assets

 

68,888

 

 

68,093

 

Total assets

$

5,646,492

 

$

5,439,471

 

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable

$

40,804

 

$

18,938

 

Accrued compensation

 

224,721

 

 

286,159

 

Accrued expenses and other liabilities

 

207,548

 

 

177,822

 

Deferred revenue, current

 

760,594

 

 

829,377

 

Total current liabilities

 

1,233,667

 

 

1,312,296

 

Convertible senior notes, net

 

2,248,396

 

 

1,714,630

 

Operating lease liabilities

 

349,751

 

 

235,631

 

Deferred revenue, non-current

 

143,308

 

 

176,832

 

Other liabilities, non-current

 

1,889

 

 

653

 

Total non-current liabilities

 

2,743,344

 

 

2,127,746

 

Total liabilities

 

3,977,011

 

 

3,440,042

 

Stockholders' equity
Common stock

 

160

 

 

157

 

Accumulated other comprehensive loss

 

(4,730

)

 

(5,312

)

Additional paid-in capital

 

3,802,423

 

 

3,566,055

 

Accumulated deficit

 

(2,128,372

)

 

(1,561,471

)

Total stockholders' equity

 

1,669,481

 

 

1,999,429

 

Total liabilities and stockholders' equity

$

5,646,492

 

$

5,439,471

 

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

2020

 

2019

 

2020

 

2019

Cash flows from operating activities
Net loss

$

(261,322

)

$

(100,872

)

$

(566,901

)

$

(256,301

)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization

 

22,191

 

 

13,726

 

 

42,685

 

 

27,141

 

Amortization of deferred commissions

 

34,242

 

 

23,850

 

 

61,120

 

 

53,882

 

Amortization of investment premiums (accretion of discounts), net

 

(252

)

 

(2,786

)

 

(944

)

 

(5,645

)

Amortization of debt discount and issuance costs

 

24,322

 

 

20,090

 

 

44,738

 

 

39,095

 

Gain on extinguishment of convertible senior notes

 

(6,952

)

 

-

 

 

(6,952

)

 

-

 

Repurchase of convertible senior notes attributable to the accreted interest related to debt discount

 

(22,149

)

 

-

 

 

(22,149

)

 

-

 

Non-cash operating lease costs

 

5,228

 

 

858

 

 

15,759

 

 

5,407

 

Stock-based compensation

 

154,873

 

 

123,013

 

 

313,691

 

 

246,076

 

Disposal of property and equipment

 

476

 

 

-

 

 

981

 

 

-

 

Deferred income taxes

 

257

 

 

(164

)

 

(644

)

 

(184

)

Changes in operating assets and liabilities:
Accounts receivable, net

 

(142,838

)

 

(123,608

)

 

184,261

 

 

60,750

 

Prepaid expenses and other assets

 

17,339

 

 

(91,140

)

 

12,493

 

 

(109,040

)

Deferred commissions

 

(37,939

)

 

(29,762

)

 

(60,154

)

 

(53,214

)

Accounts payable

 

15,627

 

 

2,391

 

 

22,963

 

 

5,316

 

Accrued compensation

 

36,331

 

 

16,562

 

 

(61,378

)

 

(46,215

)

Accrued expenses and other liabilities

 

8,773

 

 

18,344

 

 

(1,294

)

 

10,679

 

Deferred revenue

 

(18,283

)

 

527

 

 

(102,307

)

 

(71,689

)

Net cash used in operating activities

 

(170,076

)

 

(128,971

)

 

(124,032

)

 

(93,942

)

Cash flows from investing activities
Purchases of investments

 

-

 

 

(250,298

)

 

(87,135

)

 

(539,723

)

Maturities of investments

 

242,902

 

 

243,170

 

 

497,725

 

 

541,595

 

Purchases of property and equipment

 

(11,060

)

 

(11,534

)

 

(25,816

)

 

(26,434

)

Capitalized software development costs

 

(3,585

)

 

-

 

 

(7,133

)

 

-

 

Other investment activities

 

(511

)

 

(875

)

 

(2,886

)

 

(1,250

)

Net cash provided by (used in) investing activities

 

227,746

 

 

(19,537

)

 

374,755

 

 

(25,812

)

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

 

1,253

 

 

196

 

 

2,671

 

 

556

 

Proceeds from employee stock purchase plan

 

44,214

 

 

34,482

 

 

44,214

 

 

34,482

 

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

 

1,246,544

 

 

-

 

 

1,246,544

 

 

-

 

Purchase of capped calls

 

(137,379

)

 

-

 

 

(137,379

)

 

-

 

Partial repurchase of convertible senior notes

 

(668,929

)

 

-

 

 

(668,929

)

 

-

 

Taxes paid related to net share settlement of equity awards

 

-

 

 

(48,686

)

 

(49,228

)

 

(117,693

)

Net cash provided by (used in) financing activities

 

485,703

 

 

(14,008

)

 

437,893

 

 

(82,655

)

Effect of exchange rate changes on cash and cash equivalents

 

2,015

 

 

(708

)

 

626

 

 

(1,751

)

Net increase (decrease) in cash and cash equivalents

 

545,388

 

 

(163,224

)

 

689,242

 

 

(204,160

)

Cash and cash equivalents at beginning of period

 

922,507

 

 

1,835,229

 

 

778,653

 

 

1,876,165

 

Cash and cash equivalents at end of period

$

1,467,895

 

$

1,672,005

 

$

1,467,895

 

$

1,672,005

 

Splunk Inc.
Operating Metrics

Total Annual Recurring Revenue (“Total ARR”) represents the annualized revenue run-rate of active subscription, 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 subscription contracts at the end of a reporting period. Contracts are annualized by dividing the total contract value by the number of days in the contract term and then multiplying by 365.

Non-GAAP Financial Measures and Reconciliations

To supplement Splunk’s condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), Splunk provides investors with the following non-GAAP financial measures: cloud services, cost of revenues, cloud services gross margin, cost of revenues, gross margin, research and development expense, sales and marketing expense, general and administrative expense, operating income (loss), operating margin, income tax provision (benefit), net income (loss), net income (loss) per share and free cash flow (collectively the “non-GAAP financial measures”). These non-GAAP financial measures exclude all or a combination of the following (as reflected in the following reconciliation tables): expenses related to stock-based compensation and related employer payroll tax, amortization of intangible assets, adjustments related to restructuring charges and facility exits, capitalized software development costs, non-cash interest expense related to convertible senior notes and a gain on extinguishment of convertible senior notes. The non-GAAP financial measures are also adjusted for Splunk's estimated tax rate on non-GAAP income (loss). To determine the estimated non-GAAP tax rate, Splunk evaluates financial projections based on its non-GAAP results and the tax effect of those projections. The estimated non-GAAP tax rate takes into account many factors including operating structure, tax positions and legislation. The non-GAAP tax rate applied to the three and six months ended July 31, 2020 was 20%. Splunk provides updates to this rate as needed if material changes occur. The applicable fiscal 2020 tax rates are noted in the reconciliations. In addition, non-GAAP financial measures include free cash flow, which represents operating cash flow less purchases of property and equipment. Splunk considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated or used by the business.

Splunk excludes stock-based compensation expense because it is non-cash in nature and excluding this expense provides meaningful supplemental information regarding Splunk’s operational performance and allows investors the ability to make more meaningful comparisons between Splunk’s operating results and those of other companies. Splunk excludes employer payroll tax expense related to employee stock plans in order for investors to see the full effect that excluding that stock-based compensation expense had on Splunk’s operating results. These expenses are tied to the exercise or vesting of underlying equity awards and the price of Splunk’s common stock at the time of vesting or exercise, which may vary from period to period independent of the operating performance of Splunk’s business. Splunk also excludes amortization of intangible assets, adjustments related to restructuring charges and facility exits, capitalized software development costs, non-cash interest expense related to convertible senior notes and a gain on extinguishment of 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.

SPLUNK INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
 
Reconciliation of Cash Used in Operating Activities to Free Cash Flow
 
Three Months Ended July 31, Six Months Ended July 31,

2020

 

2019

 

2020

 

2019

Net cash used in operating activities

$

(170,076

)

$

(128,971

)

$

(124,032

)

$

(93,942

)

Less purchases of property and equipment

 

(11,060

)

 

(11,534

)

 

(25,816

)

 

(26,434

)

Free cash flow (non-GAAP)

$

(181,136

)

$

(140,505

)

$

(149,848

)

$

(120,376

)

Net cash provided by (used in) investing activities

$

227,746

 

$

(19,537

)

$

374,755

 

$

(25,812

)

Net cash provided by (used in) financing activities

$

485,703

 

$

(14,008

)

$

437,893

 

$

(82,655

)

Reconciliation of GAAP to Non-GAAP Financial Measures
Three Months Ended July 31, 2020
GAAP Stock-based
compensation and
related employer
payroll tax
Amortization of
intangible assets
Adjustments related
to restructuring
charges and facility
exits
Capitalized
software
development costs
Non-cash interest
expense related to
convertible senior
notes
Income tax effects
related to non-
GAAP adjustments
(2)
Non-GAAP
Cloud services cost of revenues

$

59,728

 

$

(2,812

)

$

(5,290

)

$

(229

)

$

-

 

$

-

 

$

-

 

$

51,397

 

Cloud services gross margin

 

52.5

%

 

2.2

%

 

4.3

%

 

0.2

%

 

-

%

 

-

%

 

-

%

 

59.2

%

Cost of revenues

 

132,052

 

 

(14,653

)

 

(10,511

)

 

(497

)

 

-

 

 

-

 

 

-

 

 

106,391

 

Gross margin

 

73.1

%

 

3.1

%

 

2.1

%

 

0.1

%

 

-

%

 

-

%

 

-

%

 

78.4

%

Research and development

 

197,297

 

 

(68,102

)

 

-

 

 

(2,884

)

 

3,585

 

 

-

 

 

-

 

 

129,896

 

Sales and marketing

 

323,687

 

 

(52,865

)

 

(4,333

)

 

(1,168

)

 

-

 

 

-

 

 

-

 

 

265,321

 

General and administrative

 

78,081

 

 

(24,553

)

 

-

 

 

(518

)

 

-

 

 

-

 

 

-

 

 

53,010

 

Operating loss

 

(239,459

)

 

160,173

 

 

14,844

 

 

5,067

 

 

(3,585

)

 

-

 

 

-

 

 

(62,960

)

Operating margin

 

(48.7

)%

 

32.6

%

 

3.0

%

 

1.0

%

 

(0.7

)%

 

-

%

 

-

%

 

(12.8

)%

Income tax provision (benefit)

 

1,213

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(14,366

)

 

(13,153

)

Net loss

$

(261,322

)

$

160,173

 

$

14,844

 

$

5,543

 

(3

)

$

(3,585

)

$

17,369

 

(4

)

$

14,366

 

$

(52,612

)

Net loss per share (1)

$

(1.64

)

$

1.01

 

$

0.09

 

$

0.03

 

$

(0.02

)

$

0.11

 

$

0.09

 

$

(0.33

)

(1)

Calculated based on 158,952 weighted-average shares of common stock.

(2)

Represents the tax effect of the non-GAAP adjustments based on a tax rate of 20%.

(3)

Includes a $0.5 million loss on disposal of property, plant and equipment.

(4)

Includes non-cash interest expense of $24.3 million and a $7.0 million non-recurring gain on extinguishment of convertible senior notes.
Reconciliation of GAAP to Non-GAAP Financial Measures
Three Months Ended July 31, 2019
GAAP Stock-based
compensation and
related employer
payroll tax
Amortization of
intangible assets
Non-cash interest
expense related to
convertible senior
notes
Income tax effects
related to non-
GAAP adjustments
(2)
Non-GAAP
Cloud services cost of revenues

$

35,155

 

$

(1,634

)

$

(418

)

$

-

 

$

-

 

$

33,103

 

Cloud services gross margin

 

50.1

%

 

2.3

%

 

0.6

%

 

-

%

 

-

%

 

53.0

%

Cost of revenues

 

98,308

 

 

(10,939

)

 

(5,876

)

 

-

 

 

-

 

 

81,493

 

Gross margin

 

81.0

%

 

2.1

%

 

1.1

%

 

-

%

 

-

%

 

84.2

%

Research and development

 

134,110

 

 

(41,393

)

 

(249

)

 

-

 

 

-

 

 

92,468

 

Sales and marketing

 

298,773

 

 

(50,458

)

 

(955

)

 

-

 

 

-

 

 

247,360

 

General and administrative

 

72,264

 

 

(23,578

)

 

-

 

 

-

 

 

-

 

 

48,686

 

Operating income (loss)

 

(86,897

)

 

126,368

 

 

7,080

 

 

-

 

 

-

 

 

46,551

 

Operating margin

 

(16.8

)%

 

24.4

%

 

1.4

%

 

-

%

 

-

%

 

9.0

%

Income tax provision

 

5,632

 

 

-

 

 

-

 

 

-

 

 

6,028

 

 

11,660

 

Net income (loss)

$

(100,872

)

$

126,368

 

$

7,080

 

$

20,090

 

$

(6,028

)

$

46,638

 

Net income (loss) per share (1)

$

(0.67

)

$

0.30

 

(1)

GAAP net loss per share calculated based on 150,306 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 155,440 diluted weighted-average shares of common stock, which includes 5,134 potentially dilutive shares related to employee stock awards. GAAP to non-GAAP net income (loss) per share is not reconciled due to the difference in the number of shares used to calculate basic and diluted weighted-average shares of common stock.

(2)

Represents the tax effect of the non-GAAP adjustments based on a tax rate of 20%
Reconciliation of GAAP to Non-GAAP Financial Measures
Six Months Ended July 31, 2020
GAAP Stock-based
compensation and
related employer
payroll tax
Amortization of
intangible assets
Adjustments related
to restructuring
charges and facility
exits
Capitalized
software
development costs
Non-cash interest
expense related to
convertible senior
notes
Income tax effects
related to non-
GAAP adjustments
(2)
Non-GAAP
Cloud services cost of revenues

$

113,218

 

$

(5,202

)

$

(10,296

)

$

(229

)

$

-

 

$

-

 

$

-

 

$

97,491

 

Cloud services gross margin

 

52.4

%

 

2.2

%

 

4.3

%

 

0.1

%

 

-

%

 

-

%

 

-

%

 

59.0

%

Cost of revenues

 

260,669

 

 

(28,635

)

 

(20,884

)

 

(497

)

 

-

 

 

-

 

 

-

 

 

210,653

 

Gross margin

 

71.8

%

 

3.0

%

 

2.3

%

 

0.1

%

 

-

%

 

-

%

 

-

%

 

77.2

%

Research and development

 

389,421

 

 

(139,367

)

 

(25

)

 

(2,884

)

 

7,133

 

 

-

 

 

-

 

 

254,278

 

Sales and marketing

 

642,911

 

 

(112,287

)

 

(8,666

)

 

(1,168

)

 

-

 

 

-

 

 

-

 

 

520,790

 

General and administrative

 

160,805

 

 

(46,198

)

 

-

 

 

(518

)

 

-

 

 

-

 

 

-

 

 

114,089

 

Operating loss

 

(528,071

)

 

326,487

 

 

29,575

 

 

5,067

 

 

(7,133

)

 

-

 

 

-

 

 

(174,075

)

Operating margin

 

(57.0

)%

 

35.3

%

 

3.2

%

 

0.5

%

 

(0.8

)%

 

-

%

 

-

%

 

(18.8

)%

Income tax benefit

 

(456

)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(34,564

)

 

(35,020

)

Net loss

$

(566,901

)

$

326,487

 

$

29,575

 

$

5,543

 

(3

)

$

(7,133

)

$

37,785

 

(4

)

$

34,564

 

$

(140,080

)

Net loss per share (1)

$

(3.58

)

$

2.05

 

$

0.19

 

$

0.04

 

$

(0.05

)

$

0.24

 

$

0.22

 

$

(0.89

)

(1)

Calculated based on 158,241 weighted-average shares of common stock.

(2)

Represents the tax effect of the non-GAAP adjustments based on a tax rate of 20%

(3)

Includes a $0.5 million loss on disposal of property, plant and equipment.

(4)

Includes non-cash interest expense of $44.7 million and a $7.0 million non-recurring gain on extinguishment of convertible senior notes.
Reconciliation of GAAP to Non-GAAP Financial Measures
Six Months Ended July 31, 2019
GAAP Stock-based
compensation and
related employer
payroll tax
Amortization of
intangible assets
Non-cash interest
expense related to
convertible senior
notes
Income tax effects
related to non-
GAAP adjustments
(2)
Non-GAAP
Cloud services cost of revenues

$

67,481

 

$

(3,167

)

$

(836

)

$

-

 

$

-

 

$

63,478

 

Cloud services gross margin

 

49.1

%

 

2.4

%

 

0.6

%

 

-

%

 

-

%

 

52.1

%

Cost of revenues

 

194,131

 

 

(22,613

)

 

(11,798

)

 

-

 

 

-

 

 

159,720

 

Gross margin

 

79.4

%

 

2.3

%

 

1.3

%

 

-

%

 

-

%

 

83.0

%

Research and development

 

263,400

 

 

(84,838

)

 

(498

)

 

-

 

 

-

 

 

178,064

 

Sales and marketing

 

577,734

 

 

(103,862

)

 

(1,910

)

 

-

 

 

-

 

 

471,962

 

General and administrative

 

138,026

 

 

(45,124

)

 

-

 

 

-

 

 

-

 

 

92,902

 

Operating income (loss)

 

(231,883

)

 

256,437

 

 

14,206

 

 

-

 

 

-

 

 

38,760

 

Operating margin

 

(24.6

)%

 

27.2

%

 

1.5

%

 

-

%

 

-

%

 

4.1

%

Income tax provision

 

8,865

 

 

-

 

 

-

 

 

-

 

 

3,595

 

 

12,460

 

Net income (loss)

$

(256,301

)

$

256,437

 

$

14,206

 

$

39,095

 

$

(3,595

)

$

49,842

 

Net income (loss) per share (1)

$

(1.71

)

$

0.32

 

(1)

GAAP net loss per share calculated based on 149,723 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 155,619 diluted weighted-average shares of common stock, which includes 5,896 potentially dilutive shares related to employee stock awards. GAAP to non-GAAP net income (loss) per share is not reconciled due to the difference in the number of shares used to calculate basic and diluted weighted-average shares of common stock.

(2)

Represents the tax effect of the non-GAAP adjustments based on a tax rate of 20%.

 

For more information, please contact:
Media Contact

Bill Bode
Splunk Inc.
press@splunk.com

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

Source: Splunk Inc.