New business

Splunk earnings exceed estimates. Stocks fall as new business slows.

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Splunk said 723 customers generate more than $1 million in annualized revenue.

The time of dreams

Splunk

reported better-than-expected results for its second fiscal quarter ended July 31, while improving its revenue outlook for fiscal January 2023.

But the stock is trading sharply lower due to a slowdown in the company’s new business pipeline.

Data security and IT monitoring software provider Splunk (ticker: SPLK) reported revenue of $799 million, up 32% from a year ago and well ahead of the company’s forecast of $735-755 million. Spunk posted a loss for the quarter of 22 cents per share, narrower than Street’s consensus forecast for a loss of 36 cents per share.

Cloud revenue was $346 million, up 59%. The company said 723 customers are generating more than $1 million in annualized revenue, up 24% from a year ago.

“Splunk is well positioned to deliver sustainable, long-term growth and profitability as we help the world’s largest and most innovative companies improve their cybersecurity and business resilience,” CEO Gary Steele said in a statement. communicated.

For the third fiscal quarter, Splunk forecasts revenue of $835 million to $855 million, above the consensus call of $834.8 million. The company expects a non-GAAP operating margin of between 6% and 8%.

For fiscal year January 2023, Splunk now expects revenue between $3.35 billion and $3.4 billion, up from a previously forecast range of $3.3 billion to $3.35 billion. of dollars. The company raised its non-GAAP operating margin forecast for the full year to 8% from 2%. The company now sees operating cash flow of at least $420 million for the full year, up from a previous target of $400 million.

On the other hand, the company cut its annual recurring revenue forecast to $3.65 billion, including $1.8 billion from cloud, from $3.9 billion in total and $2 billion from cloud. cloud. This reduction is where investors focus on late trades.

When asked about the issue, Splunk responded in a statement, “ARR was lower than our expectations at the start of the quarter, due to a slower pace of cloud expansions and migrations as uncertainty macroeconomic has had a negative impact on the short-term budget availability of many of them. our clients.

Splunk at the end of the session is down 10.3%, at $99.

Write to Eric J. Savitz at [email protected]