UPDATED 21:20 EDT / MARCH 01 2018

BIG DATA

Splunk breezes past earnings estimates and raises guidance, sending shares higher

Big-data company Splunk Inc. shows no sign of slowing down as it marches towards its stated goal of becoming the next $20 billion company in tech.

The company once again dazzled investors, breezing past its earnings targets with fiscal fourth-quarter results that surpassed Wall Street’s expectations.

The company reported earnings before certain costs such as stock compensation of 37 cents per share, beating Wall Street’s consensus estimate of 34 cents per share. Revenue came in at $419.7 million, up 37 percent from the same period one year ago, beating the consensus estimate of $391 million from Zacks Investment Research. For the full year, Splunk posted a net loss of $259.1 million, or $1.85 per share, on revenue of $1.27 billion.

The solid performance helped drive Splunk’s stock upward by more than 6 percent in after-hours trading as investors signaled a desire to get in on the action. In regular trading, they had risen almost a half-percent, to $93.64 a share.

Splunk is primarily focused on the big-data analytics market, selling software that helps companies monitor and draw business insights from the vast amounts of data they accumulate. In recent times, the company has emerged as one of Wall Street’s darlings, chalking up impressive financial results in successive quarters.

Rob Enderle, president and principal analyst of the Enderle Group, who had previously raised the question of how sustainable Splunk’s growth was, said the most recent results suggest it’s well on track to keep up its successful run.

“Splunk had a solid quarter for two reasons, they have a very good offering in a very hot segment data analytics, and they executed sharply with what appears to be a very strong executive team,” Enderle told SiliconANGLE today. “The foundational nature of both elements, and the fact that AI is making analytics even stronger over time, suggests that this is sustainable and that the firm will continue to perform well against expectations.”

Earlier this week, Splunk took another big expansion step with the $350 million acquisition of startup Phantom Cyber Inc., which sells a security automation and response platform used at companies such as Uber Technologies Inc. and Rackspace Inc. to protect their systems from hacking. The idea is to integrate Phantom’s platform with Splunk’s existing security tools, which are plugins for its data analytics platform that help to detect security breaches and fraud.

The company also added 570 new enterprise customers to its books in the fourth quarter, officials said. However, that’s one area where at least one analyst sees room for improvement. “While overall performance was strong, we continue to monitor Splunk’s ability to attract new customers,” Mizuho Bank Ltd. tech analyst Abhey Lamba wrote in a note to clients. “The company needs to improve its results in that area in order to maintain strong growth in the near term.”

“New customers remains one of our top initiatives,” Splunk Chief Executive Doug Merritt said on the earnings conference call with analysts. “A lot of our investments are geared to focus specifically on this area.”

Splunk also issued guidance for the upcoming first quarter and fiscal year. For the current quarter, the company said it expects revenue in the range of $295 million to $297 million, slightly above the consensus estimate of $295 million. For the full year, Splunk raised its revenue guidance from $1.55 billion to $1.625 billion.

Image: Splunk

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