Shares of the big-data company Splunk Inc. took a tumble today after it reported a slowdown in its new business pipeline, despite posting better-than-expected second quarter results and boosting its outlook for the fiscal year.

The company reported a net loss of $209.7 million for the quarter, down from a $383.9 million loss in the same period one year ago. The loss before certain costs such as stock compensation came to 22 cents per share, with revenue rising 32% to $799 million, ahead of the company’s own forecast of $735 million to $755 million. Wall Street had been looking for a bigger loss of 36 cents per share on lower sales of $747.7 million.

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

Splunk Chief Executive Gary Steele (pictured), who has only been in the job since March, said the company delivered a “substantially higher” operating margin for the quarter, driven by its laser focus on balancing growth with profitability.

“Splunk is well-positioned to deliver long-term, durable growth and profitability as we help the world’s largest and most innovative enterprises improve their cybersecurity and business resilience,” Steele said. “These customers appreciate the unique and unmatched level of visibility we provide into their data and consider Splunk their partner of choice to secure and strengthen their mission critical operations.”

The company also reported cloud revenue of $346 million, up 59% from a year ago. It ended the quarter with 723 customers that generated at least $1 million in annualized revenue, up 24% from a year ago.

For the third quarter, Splunk sees revenue of $835 million to $855 million, well ahead of Wall Street’s consensus estimate of $834.8 million. As a result, Splunk has upped its full-year guidance. It now sees total revenue of $3.35 billion to $3.4 billion in fiscal 2023, up from an earlier range of $3.3 billion to $3.35 billion. Wall Street is guiding for $3.3 billion in full-year revenue.

Despite the apparently rosy forecast, there was a caveat, with Splunk trimming its full-year annual recurring revenue outlook to just $3.65 billion, with $1.8 billion from cloud sales. That’s down from an earlier forecast of $3.9 billion in ARR, with $2 billion from the cloud. Investors apparently didn’t like that one bit, as Splunk’s stock fell more than 11% in extended trading.

Splunk Chief Financial Officer Jason Child said the company’s ARR outlook was revised downward on a “slower pace of expansions and cloud migrations” as a result of macro uncertainty that hurt the near-term budgets of many of its customers.

Holger Mueller of Constellation Research Inc. was kinder in his assessment of the company than most investors, noting that it has found its growth engines again. “What’s even better is that Splunk’s costs grew at a lower rate than its revenues, and as usual this meant good things happened, as Splunk was able to reduce its loss per share by a dollar,” Mueller said. “It still has ways to go in its cloud transformation, but it is on the right path.”

Photo: CNBC Television/YouTube