Splunk Marks 4 Straight Years of Beating Guidance
Splunk Inc. (NASDAQ: SPLK) announced strong fiscal third-quarter 2019 results on Thursday after the markets closed, adding hundreds of new enterprise customers and marking its 16th straight quarter of exceeding expectations.
With shares up around 5% in after-hours trading as of this writing, let's dig deeper to better understand how Splunk started the second half, as well as what investors should be watching going forward.
IMAGE SOURCE: THE MOTLEY FOOL (WITH SPLUNK'S PERMISSION)
Splunk results: The raw numbers
| Metric | Fiscal Q3 2019* | Fiscal Q3 2018 | Year-Over-Year Growth |
|---|---|---|---|
| Revenue | $481 million | $342.5 million | 40.4% |
| GAAP net income (loss) | ($55.7 million) | ($29.7 million) | N/A |
| GAAP earnings (loss) per share | ($0.38) | ($0.21) | N/A |
DATA SOURCE: SPLUNK. *FOR THE QUARTER ENDED OCTOBER 31, 2018. GAAP = generally accepted accounting principles.
What happened with Splunk this quarter?
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By comparison, three months ago Splunk told investors to expect significantly lower revenue of between $430 million and $432 million.
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License revenue climbed 44.3% year over year to $279.6 million.
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Maintenance & services revenue grew 35.4% to $201.4 million.
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Adjusted for items like stock-based compensation and acquisition expenses, Splunk generated (non-GAAP) net income of $57.6 million, or $0.38 per share, also above consensus estimates for adjusted earnings of $0.32 per share.
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Adjusted operating margin was 13.6%, above guidance for 13%.
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Splunk generated quarterly cash flow from operations of $59.1 million, and free cash flow of $51.8 million.
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Added over 500 new enterprise customers, with new and expanded relationships with companies and organizations including Jabil, Norfolk Southern, Japan's Softbank, and Australia's Department of Home Affairs.
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Notable new product releases and updates include Splunk Enterprise 7.2 and a new version of Splunk Cloud, Splunk for Industrial (its first Internet of Things product), Splunk ITSI 4.0, and new versions of Splunk Enterprise Security (5.2), Splunk User Behavior Analytics (4.2), Splunk Phantom (4.0), and Splunk Next.
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Splunk announced today that its CFO, David Conte, has decided to retire in March 2020 after eight years with the company.
What management had to say
Splunk CEO Doug Merritt stated:
The strength of our results is a testament to Splunk's pioneering innovation and the rising demand for data-driven insights across all industries. At .conf18, we announced the largest wave of product innovation in our history, unveiled Splunk Next -- our vision to take Splunk beyond IT and security at scale, and released our first Internet of Things product, Splunk for Industrial IoT. Customer feedback is overwhelmingly positive, and Splunk is positioned to continue to lead through this data revolution.