Splunk Inc. today announced that Chief Executive Officer Doug Merritt has stepped down after leading the publicly traded data analytics giant for six years.

Graham Smith, the chair of Splunk’s board, has been appointed interim CEO. Merritt (pictured) will stay on in an “advisory role” as the company begins searching for a permanent CEO. 

Shares of Splunk declined by more than 18% on the news of the leadership change. The company’s stock dropped despite the fact that it released strong preliminary financial results for the third quarter in conjunction with the announcement of Merritt’s departure. Splunk told investors that it estimates revenues jumped 19% in the third quarter, to about $660 million. 

San Francisco-based Splunk provides a popular data processing platform that enterprises use to detect and troubleshoot technical issues in their information technology infrastructure. Splunk’s platform also provides an extensive set of tools for tackling cybersecurity incidents such as breaches. The company counts tens of thousands of organizations as customers, including many of the world’s largest enterprises.

Merritt led Splunk as CEO for the past six years. In fiscal 2014, the year before Merritt took the helm, Splunk generated total revenues of $302 million. Today, the company has annualized recurring revenue of nearly $3 billion, according to its preliminary third-quarter results. 

Under Merritt, Splunk has not only significantly grown its revenue and market presence but also launched a major effort to refocus on a cloud-centric business model. Earlier this year, Splunk raised a $1 billion investment from Silver Lake that the company said will help support its shift to the new business model. 

“It’s been nine years since Splunk went public and the world has changed a lot since then,” said SiliconANGLE co-founder and CEO John Furrier. “My take is that Splunk has transformed itself many times over to ride the data wave and now it’s the cloud-scale wave. Many companies have to reboot themselves to keep up with the scale. Splunk is good at this.”

He added that he expects new leadership from Amazon Web Services Inc., including Splunk President Teresa Carlson and Shawn Bice, Splunk’s new president of products and technology, will be a “big part of the next generation.”

Splunk Chair Graham Smith, who will lead Splunk as interim CEO until a successor to Merritt is named, has been a member of the company’s board since 2011 and served as its chair for the past two years, a role he will retain. Splunk said that the executive “will focus on investments and priorities for the company’s upcoming fiscal year to ensure continued customer and cloud transformation success.”

In the preliminary earnings report released by Splunk today alongside the announcement of the leadership change, the company posted estimated third-quarter revenue of about $660 million. The figure represents a 19% improvement from a year ago. Splunk’s adjusted operating margin, meanwhile, will be negative 14%, according to its estimates.

Splunk’s recurring revenue segment achieved particularly strong growth during the quarter. The company estimates that its annualized recurring revenue now stands at about $2.825 billion, a 37% improvement over the same time a year ago. Splunk’s sales momentum is driven in significant part by its fast-growing cloud business: Annualized recurring revenue attributed to the cloud business jumped by 75% in the third quarter, to an estimated $1.105 billion.

Spunk is set to post full third-quarter results on Dec. 1 after markets close.

Photo: SiliconANGLE