Splunk Inc. Announces Fiscal Third Quarter 2017 Financial Results
Total Revenues Grew 40%; Increases Full-Year Outlook
Third Quarter 2017 Financial Highlights
-
Total revenues were
$245 million , up 40% year-over-year. -
License revenues were
$140 million , up 34% year-over-year. -
GAAP operating loss was
$91.0 million ; GAAP operating margin was negative 37.2%. -
Non-GAAP operating income was
$16.7 million ; non-GAAP operating margin was 6.8%. -
GAAP loss per share was
$0.69 ; non-GAAP earnings per share was$0.12 . -
Operating cash flow was
$45.3 million with free cash flow of$32.3 million .
"Our market opportunity is tremendous," said
Third Quarter 2017 and Recent Business Highlights:
Customers:
- Signed nearly 500 new enterprise customers.
-
New and Expansion Customers Include: BMW (
Germany ), Cequint,Dow Jones , Educational Testing Services,Emirates Airlines , Exostar,Florida State University ,Garanti Bank (Turkey ),Monash University (Australia ),Progressive Insurance , Rackspace,State of Maine ,University Health System ,University of Illinois ,University of Miami ,U.S. Department of Homeland Security , U.S.Department of State, Yaho o Japan and Zendesk.
Products:
-
Announced the newest
versions of
Splunk solutions leverage machine learning to empower IT, security and business teams to make better data decisions and maximize the value machine data can deliver to organizations. -
Announced the general availability (GA) of the new
versions of Splunk Cloud and Splunk Enterprise to expand the
Splunk platform with machine learning and simplified data analysis. -
Announced the GA of
Splunk IT Service Intelligence 2.5 (ITSI) to simplify service operations with machine learning and deliver business and service context to help prioritize incident investigation. -
Announced the GA of
Splunk Enterprise Security 4.5 (ES), which includes Adaptive Response to extend the security architecture beyond legacy preventative technologies and expand its visual analytics capabilities with Glass Tables. -
Announced the GA of
Splunk User Behavior Analytics 3.0 (UBA) to provide customers with the ability to update detection footprint with zero downtime and without hassle. -
Introduced the Talk
to
Splunk with AmazonAlexa App , enablingSplunk instances to interface with Amazon Alexa by way of a custom Alexa skill and thereby provisioning a Natural Language interface forSplunk . -
Released
Splunk AppInspect, the first static and dynamic analysis tool forSplunk apps, making it possible for developers to get their work done faster, with fewer errors and less debugging.
Corporate:
-
Unveiled
Splunk Pledge, a new philanthropic program through the Splunk4Good initiative, which commits to donate a minimum of$100 million in software licenses, training, support, education and volunteerism over a 10-year period to nonprofit organizations and educational institutions in order to support academic research and generate social impact. -
Announced investments
in two companies - Acalvio and Insight Engines - to further drive
innovation and extend the power and reach of the
Splunk platform.
-
Announced the expansion
of the
Splunk -led Adaptive Response Initiative to strengthen enterprise security, with 11 new members including Acalvio, Anomali, Cisco, CrowdStrike, DomainTools,ForeScout , Okta, Proofpoint, Qualys, Recorded Future and Symantec. -
Cisco
and
Splunk joined forces at .conf2016 to highlight the companies' eight-year partnership, together delivering integrated solutions for thousands of organizations around the globe. -
Highlighted the strong
partnership between
Amazon Web Services (AWS) andSplunk at .conf2016, focused on driving customer success in the cloud. -
Ansible by Red Hat introduced theAnsible Tower App forSplunk , a new app developed to ingest all data associated withAnsible deployments, inventories and jobs and deliver this visibility to teams involved in app delivery.
Recognition:
-
Splunk received three Cisco® Partner Summit awards - one Global award and two country awards in theU.S. Splunk was recognized as Global ISV Partner of the Year, as well as aU.S. (West) Outstanding Solutions Partner andU.S. Public Sector ISV and Consultant Partner of the Year. -
Splunk was named byGlassdoor as one of the top-rated public cloud company employers. -
Splunk Cloud was named the 2016
Best Big Data Analytics Solution in the fourth Cloud &
DevOps World Awards, which honor excellence and innovation in cloud computing. -
Splunk was named to Database Trends and Applications' annual Big Data 50 awards. -
Splunk was ranked 18th on the San Francisco Business Times' list of the 75 Largest Software Companies in theGreater Bay Area .
Events:
-
Hosted .conf2016,
the 7th annual Splunk Worldwide Users' Conference in
Orlando , drawing more than 4,500Splunk enthusiasts, partners and experts in machine learning, data analytics, security, IT operations, cloud, DevOps, SaaS, business analytics,Internet of Things and more. -
Hosted SplunkLive! events in cities worldwide, including
Auckland ,Santa Clara ,Denver ,Nashville ,Shanghai andStockholm . Presentations can be found on the SplunkLive! website.
Appointments:
-
Appointed
Brian Goldfarb as Chief Marketing Officer. -
Appointed
Richard Campione as Chief Product Officer.
Financial Outlook
The company is providing the following guidance for its fiscal fourth
quarter 2017 (ending
-
Total revenues are expected to be between
$286 and$288 million . - Non-GAAP operating margin is expected to be between 8% and 9%.
The company is updating its previous guidance for its fiscal year 2017
(ending
-
Total revenues are expected to be between
$930 and$932 million (was between$910 and$914 million per prior guidance provided onAugust 25, 2016 ). -
Non-GAAP operating margin is expected to be between 5% and 6% (was
approximately 5% per prior guidance provided on
August 25, 2016 ).
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, acquisition-related costs and adjustments related to a financing lease obligation.
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. For example, stock-based compensation expense is impacted by a number of factors, such as Splunk's future hiring and retention, as well as the future fair market value of Splunk's common stock, all of which are difficult to predict and subject to constant change. The company has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for its fiscal third quarter 2017 non-GAAP results included in this press release. The exclusion of these costs and expenses will have a significant impact on Splunk's non-GAAP operating margin.
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 fourth
quarter and fiscal year 2017 in the paragraphs under "Financial Outlook"
above and other statements regarding customer demand and return on
investment, market opportunity, the rate of customer adoption and growth
strategies. 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, Splunk's limited experience
with respect to predicting future customer demand and customer
acceptance of the company's products and services, in and outside of
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 quarter ended
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) |
||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2016 |
2015 |
2016 |
2015 |
|||||||||||||
Revenues | ||||||||||||||||
License | $ | 139,725 | $ | 104,164 | $ | 356,412 | $ | 263,996 | ||||||||
Maintenance and services | 105,064 | 70,256 | 287,082 | 184,415 | ||||||||||||
Total revenues | 244,789 | 174,420 | 643,494 | 448,411 | ||||||||||||
Cost of revenues | ||||||||||||||||
License | 2,883 | 3,136 | 8,713 | 6,110 | ||||||||||||
Maintenance and services | 45,791 | 27,455 | 124,077 | 72,606 | ||||||||||||
Total cost of revenues | 48,674 | 30,591 | 132,790 | 78,716 | ||||||||||||
Gross profit | 196,115 | 143,829 | 510,704 | 369,695 | ||||||||||||
Operating expenses | ||||||||||||||||
Research and development | 85,659 | 56,186 | 220,254 | 149,192 | ||||||||||||
Sales and marketing | 167,330 | 130,131 | 462,709 | 343,906 | ||||||||||||
General and administrative | 34,079 | 29,857 | 100,464 | 85,489 | ||||||||||||
Total operating expenses | 287,068 | 216,174 | 783,427 | 578,587 | ||||||||||||
Operating loss | (90,953 | ) | (72,345 | ) | (272,723 | ) | (208,892 | ) | ||||||||
Interest and other income (expense), net | ||||||||||||||||
Interest income (expense), net | (823 | ) | 377 | (2,023 | ) | 1,162 | ||||||||||
Other income (expense), net | (348 | ) | (271 | ) | (2,536 | ) | (477 | ) | ||||||||
Total interest and other income (expense), net | (1,171 | ) | 106 | (4,559 | ) | 685 | ||||||||||
Loss before income taxes | (92,124 | ) | (72,239 | ) | (277,282 | ) | (208,207 | ) | ||||||||
Income tax provision (benefit) | 1,367 | 735 | 3,702 | (8,758 | ) | |||||||||||
Net loss | $ | (93,491 | ) | $ | (72,974 | ) | $ | (280,984 | ) | $ | (199,449 | ) | ||||
Basic and diluted net loss per share | $ | (0.69 | ) | $ | (0.57 | ) | $ | (2.11 | ) | $ | (1.58 | ) | ||||
Weighted-average shares used in computing basic and diluted net loss per share |
134,677 | 128,368 | 133,273 | 126,534 |
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) |
||||||||
2016 |
2016 |
|||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 365,593 | $ | 424,541 | ||||
Investments, current portion | 661,406 | 584,498 | ||||||
Accounts receivable, net | 172,489 | 181,665 | ||||||
Prepaid expenses and other current assets | 29,743 | 26,565 | ||||||
Total current assets | 1,229,231 | 1,217,269 | ||||||
Investments, non-current | 5,000 | 1,500 | ||||||
Property and equipment, net | 159,823 | 134,995 | ||||||
Intangible assets, net | 40,423 | 49,482 | ||||||
|
124,642 | 123,318 | ||||||
Other assets | 15,845 | 10,275 | ||||||
Total assets | $ | 1,574,964 | $ | 1,536,839 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 6,395 | $ | 4,868 | ||||
Accrued payroll and compensation | 83,360 | 95,898 | ||||||
Accrued expenses and other liabilities | 78,873 | 49,879 | ||||||
Deferred revenue, current portion | 385,519 | 347,121 | ||||||
Total current liabilities | 554,147 | 497,766 | ||||||
Deferred revenue, non-current | 113,636 | 102,382 | ||||||
Other liabilities, non-current | 93,010 | 77,277 | ||||||
Total non-current liabilities | 206,646 | 179,659 | ||||||
Total liabilities | 760,793 | 677,425 | ||||||
Stockholders' equity | ||||||||
Common stock | 136 | 132 | ||||||
Accumulated other comprehensive loss | (3,010 | ) | (3,770 | ) | ||||
Additional paid-in capital | 1,763,624 | 1,528,647 | ||||||
Accumulated deficit | (946,579 | ) | (665,595 | ) | ||||
Total stockholders' equity | 814,171 | 859,414 | ||||||
Total liabilities and stockholders' equity | $ | 1,574,964 | $ | 1,536,839 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2016 |
2015 |
2016 |
2015 |
|||||||||||||
Cash Flows From Operating Activities | ||||||||||||||||
Net loss | $ | (93,491 | ) | $ | (72,974 | ) | $ | (280,984 | ) | $ | (199,449 | ) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 8,279 | 5,691 | 22,914 | 13,467 | ||||||||||||
Amortization of investment premiums | 173 | 327 | 620 | 1,049 | ||||||||||||
Stock-based compensation | 105,014 | 74,164 | 285,247 | 203,882 | ||||||||||||
Deferred income taxes | 78 | (111 | ) | (620 | ) | (11,416 | ) | |||||||||
Excess tax benefits from employee stock plans | 476 | (343 | ) | (551 | ) | (995 | ) | |||||||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||||||||||
Accounts receivable, net | (41,227 | ) | (25,963 | ) | 9,176 | 2,756 | ||||||||||
Prepaid expenses, other current and non-current assets | (4,951 | ) | 3,162 | (8,128 | ) | 15,630 | ||||||||||
Accounts payable | 1,265 | 484 | 1,530 | 384 | ||||||||||||
Accrued payroll and compensation | 18,447 | 21,039 | (12,538 | ) | 12,341 | |||||||||||
Accrued expenses and other liabilities | 19,413 | 3,246 | 32,992 | (3,839 | ) | |||||||||||
Deferred revenue | 31,796 | 27,638 | 49,652 | 44,803 | ||||||||||||
Net cash provided by operating activities | 45,272 | 36,360 | 99,310 | 78,613 | ||||||||||||
Cash Flow From Investing Activities | ||||||||||||||||
Purchases of investments | (207,255 | ) | - | (523,783 | ) | (219,195 | ) | |||||||||
Maturities of investments | 156,000 | 152,145 | 446,275 | 399,145 | ||||||||||||
Acquisitions, net of cash acquired | - | - | - | (142,693 | ) | |||||||||||
Purchases of property and equipment | (12,969 | ) | (15,272 | ) | (27,219 | ) | (24,496 | ) | ||||||||
Other investment activities | - | - | (3,500 | ) | (1,500 | ) | ||||||||||
Net cash provided by (used in) investing activities | (64,224 | ) | 136,873 | (108,227 | ) | 11,261 | ||||||||||
Cash Flow From Financing Activities | ||||||||||||||||
Proceeds from the exercise of stock options | 1,752 | 1,960 | 7,355 | 12,696 | ||||||||||||
Excess tax benefits from employee stock plans | (476 | ) | 343 | 551 | 995 | |||||||||||
Proceeds from employee stock purchase plan | - | - | 15,183 | 10,906 | ||||||||||||
Taxes paid related to net share settlement of equity awards | (26,533 | ) | - | (73,355 | ) | - | ||||||||||
Net cash provided by (used in) financing activities | (25,257 | ) | 2,303 | (50,266 | ) | 24,597 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | (147 | ) | (45 | ) | 235 | (95 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | (44,356 | ) | 175,491 | (58,948 | ) | 114,376 | ||||||||||
Cash and cash equivalents at beginning of period | 409,949 | 326,200 | 424,541 | 387,315 | ||||||||||||
Cash and cash equivalents at end of period | $ | 365,593 | $ | 501,691 | $ | 365,593 | $ | 501,691 | ||||||||
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 non-GAAP results to Splunk's 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 | Nine Months Ended | |||||||||||||||
2016 |
2015 |
2016 |
2015 |
|||||||||||||
Net cash provided by operating activities | $ | 45,272 | $ | 36,360 | $ | 99,310 | $ | 78,613 | ||||||||
Less purchases of property and equipment | (12,969 | ) | (15,272 | ) | (27,219 | ) | (24,496 | ) | ||||||||
Free cash flow (Non-GAAP) | $ | 32,303 | $ | 21,088 | $ | 72,091 | $ | 54,117 | ||||||||
Net cash provided by (used in) investing activities | $ | (64,224 | ) | $ | 136,873 | $ | (108,227 | ) | $ | 11,261 | ||||||
Net cash provided by (used in) financing activities | $ | (25,257 | ) | $ | 2,303 | $ | (50,266 | ) | $ | 24,597 |
Reconciliation of GAAP to Non-GAAP
Financial Measures |
||||||||||||||||||
GAAP |
Stock-based |
Employer payroll |
Amortization of |
Adjustments |
Non-GAAP |
|||||||||||||
Cost of revenues | $ | 48,674 | $ | (7,610) | $ | (130) | $ | (2,814) | $ | 276 | $ | 38,396 | ||||||
Gross Margin | 80.1% | 3.1% | 0.1% | 1.1% | (0.1)% | 84.3% | ||||||||||||
Research and development | 85,659 | (45,355) | (534) | (63) | 559 | 40,266 | ||||||||||||
Sales and marketing | 167,330 | (38,750) | (712) | (110) | 1,124 | 128,882 | ||||||||||||
General and administrative | 34,079 | (13,299) | (504) | - | 236 | 20,512 | ||||||||||||
Operating income (loss) | (90,953) | 105,014 | 1,880 | 2,987 | (2,195) | 16,733 | ||||||||||||
Operating margin | (37.2)% | 42.9% | 0.8% | 1.2% | (0.9)% | 6.8% | ||||||||||||
Net income (loss) | $ | (93,491) | $ | 105,014 | $ | 1,880 | $ | 2,987 | $ | (123) |
(2) |
$ | 16,267 | |||||
Net income (loss) per share(1) | $ | (0.69) | $ | 0.12 | ||||||||||||||
(1) GAAP net loss per share calculated based on 134,677 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 138,401 diluted weighted-average shares of common stock, which includes 3,724 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) Includes |
Reconciliation of GAAP to Non-GAAP
Financial Measures |
||||||||||||||||||
GAAP |
Stock-based |
Employer payroll |
Amortization of |
Adjustments |
Non-GAAP | |||||||||||||
Cost of revenues | $ | 30,591 | $ | (6,384) | $ | (145) | $ | (2,896) | $ | - | $ | 21,166 | ||||||
Gross Margin | 82.5% | 3.6% | 0.1% | 1.7% | 0.0% | 87.9% | ||||||||||||
Research and development | 56,186 | (22,534) | (510) | (86) | - | 33,056 | ||||||||||||
Sales and marketing | 130,131 | (33,247) | (501) | (164) | - | 96,219 | ||||||||||||
General and administrative | 29,857 | (11,999) | (283) | - | (222) | 17,353 | ||||||||||||
Operating income (loss) | (72,345) | 74,164 | 1,439 | 3,146 | 222 | 6,626 | ||||||||||||
Operating margin | (41.5)% | 42.5% | 0.8% | 1.9% | 0.1% | 3.8% | ||||||||||||
Net income (loss) | $ | (72,974) | $ | 74,164 | $ | 1,439 | $ | 3,146 | $ | 222 | $ | 5,997 | ||||||
Net income (loss) per share(1) | $ | (0.57) | $ | 0.05 | ||||||||||||||
(1) GAAP net loss per share calculated based on 128,368 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 132,675 diluted weighted-average shares of common stock, which includes 4,307 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. |
Reconciliation of GAAP to Non-GAAP
Financial Measures |
||||||||||||||||||
GAAP |
Stock-based |
Employer |
Amortization |
Adjustments |
Non-GAAP | |||||||||||||
Cost of revenues | $ | 132,790 | $ | (22,475) | $ | (600) | $ | (8,612) | $ | 561 | $ | 101,664 | ||||||
Gross Margin | 79.4% | 3.5% | 0.1% | 1.3% | (0.1)% | 84.2% | ||||||||||||
Research and development | 220,254 | (102,303) | (1,966) | (193) | 1,172 | 116,964 | ||||||||||||
Sales and marketing | 462,709 | (118,354) | (2,529) | (412) | 2,373 | 343,787 | ||||||||||||
General and administrative | 100,464 | (42,115) | (1,333) | - | 513 | 57,529 | ||||||||||||
Operating income (loss) | (272,723) | 285,247 | 6,428 | 9,217 | (4,619) | 23,550 | ||||||||||||
Operating margin | (42.4)% | 44.4% | 1.0% | 1.4% | (0.7)% | 3.7% | ||||||||||||
Net income (loss) | $ | (280,984) | $ | 285,247 | $ | 6,428 | $ | 9,217 |
$ |
994 |
(2) |
$ | 20,902 | |||||
Net income (loss) per share(1) | $ | (2.11) | $ | 0.15 | ||||||||||||||
(1) GAAP net loss per share calculated based on 133,273 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 136,690 diluted weighted-average shares of common stock, which includes 3,417 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) Includes |
Reconciliation of GAAP to Non-GAAP
Financial Measures |
|||||||||||||||||||||
GAAP |
Stock-based |
Employer |
Amortization |
Acquisition- |
Adjustments |
Non-GAAP | |||||||||||||||
Cost of revenues | $ | 78,716 | $ | (18,578) | $ | (806) | $ | (5,379) | $ | - | $ | - | $ | 53,953 | |||||||
Gross Margin | 82.4% | 4.2% | 0.2% | 1.2% | 0.0% | 0.0% | 88.0% | ||||||||||||||
Research and development | 149,192 | (61,910) | (2,145) | (234) | - | - | 84,903 | ||||||||||||||
Sales and marketing | 343,906 | (91,067) | (2,562) | (469) | - | - | 249,808 | ||||||||||||||
General and administrative | 85,489 | (32,327) | (1,465) | - | (1,993) | (666) | 49,038 | ||||||||||||||
Operating income (loss) | (208,892) | 203,882 | 6,978 | 6,082 | 1,993 | 666 | 10,709 | ||||||||||||||
Operating margin | (46.6)% | 45.5% | 1.6% | 1.4% | 0.4% | 0.1% | 2.4% | ||||||||||||||
Net income (loss) | $ | (199,449) | $ | 203,882 | $ | 6,978 | $ | 6,082 | $ | (8,931) |
(2) |
$ | 666 | $ | 9,228 | ||||||
Net income (loss) per share(1) | $ | (1.58) | $ | 0.07 | |||||||||||||||||
(1) GAAP net loss per share calculated based on 126,534 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 131,693 diluted weighted-average shares of common stock, which includes 5,159 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) Includes |
View source version on businesswire.com: http://www.businesswire.com/news/home/20161129006213/en/
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