UPDATED 11:27 EDT / NOVEMBER 20 2015

NEWS

Log cruncher Splunk sees revenue surge to $174.4 million in the third quarter

The continued rise in machine-generated data is putting a lot of wind behind the sails of Splunk Inc., which saw revenue jump a staggering 50 percent last quarter to $174.4 million on the back of more than 500 new customer wins across dozens of industries. The earnings handily beat both the company’s own internal guidance and the average estimate of the outside analysts following its stock, who expected sales of between $158 million and $160 million.

Splunk has established something of a reputation for exceeding revenue forecasts since hitting the NASDAQ two years in what was hailed at the time as the first major public offering of a modern analytics vendor. As a result, the company only barely managed to surpass the 48 percent annual sales growth it posted in the third quarter of last year. But the relatively small momentum increase hides a much more noticeable strategic gain for its flagship log processing software that hints towards a sustained upswing.

The value of Splunk Enterprise licenses sold over the three months ended July 31 rose 45 percent on an annual basis compared to 42 percent in the same period last year, entering 10-figure territory for the first time. The remaining $70.3 million portion of the company’s gross revenue came from maintenance fees and professional services, demand for which increased 58.7 percent in the third quarter. That growth is the result of an aggressive investment in engineering that helped produced no fewer than seven major updates since July.

Added up with its marketing and administrative costs, Splunk’s operational bill for the third quarter came out to just over $216 million, putting the bottom line $72.3 million in the red. But while that may seem discouraging, most of the loss can be attributed to expenses that aren’t related to its growth efforts, namely stock-based compensation for insiders and acquisition expenses. Excluding those items, the company actually achieved an operating profit of $6.6 million, which gives shareholders reason to be optimistic.

Management certainly is. Its guidance for the fourth quarter forecasts sales of between $200 million and $202 million, considerably higher than what Wall Street is expecting, which would put total annual revenue at about $650 million for 2015. That places the company on course to rake in $850 million next year, according to the internal estimate, or $832.3 million if the outside analysts are to be believed.

Image via Geralt

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