Splunk (SPLK) Surges 13% on Strong Revenue Growth
Shares of software company Splunk (SPLK: Charts, News) soared on Friday, after the data monitoring software provider reported second quarter earnings that exceeded analyst expectations. Splunk reported a second quarter loss of 5 cents per share, a penny better than the 6 cent loss analysts had expected.
Revenue grew 73.2% to $44.5 million, far higher than the $40 million forecast by analysts. The company attributed its strong earnings to a 61% gain in license revenue, which comprises 68% of Splunk's total revenue, as well as a 98% surge in maintenance and services revenue, which makes up the remaining 32%. The stock, which has approximately doubled from its original IPO price of $17, is still down 2% from its initial day of trading in April, when it closed at $36.20. Daily Chart
During the second quarter, Splunk inked new deals with over 400 new customers. 71% of the company's license revenue came from its existing customer base of approximately 1,600, indicating strong customer loyalty. The company's renewal rate came in at 91%, higher than the 85% to 90% the company had previously forecast. As a show of strength, Splunk has continued to increase its workforce, despite macro economic problems in several key markets. Splunk added 16 new quota carriers, ending the quarter with 117 total carriers. 10 of these 16 carriers were overseas. Splunk's average orders are high priced, with 98 orders during the quarter coming it at over $100,000. In the prior year quarter, it only signed 65 deals exceeding $100,000. In the previous quarter, it signed 73. These consistently more expensive deals suggest strong demand for Splunk's data monitoring services. Splunk's major customers include Zynga (ZNGA
), Bank of America (BAC
) and Autodesk (ADSK
), which use Splunk's services to monitor and analyze data from its web services and mobile devices. The company's services are considered essential to next generation cloud-based computing, in which software and services are streamed from Internet-based servers, rather than installed on end-users' computers. Gross profit surged 73% to $39.8 million, while gross margin rose 110 basis points to 89.6%. The company has also been aggressive in its forward-looking expenses. Its R&D (research & development) costs rose 73.5% to $9.4 million, while its S&M (sales & marketing) costs rose 69.2% to $27.7 million. Its general & administrative expenses also rose 63% to $7.2 million. These high expenses were the primary reason for the net loss for the quarter. However, the loss of 5 cents per share is a vast improvement over the loss of 17 cents per share a year earlier. The company currently has $268.3 million in cash, with a quarterly operating cash flow of $3.8 million. Looking ahead, Splunk expects revenue between $45 and $47 million for the next quarter. It also raised its full year revenue guidance, expecting to generate between $183 million and $186 million for fiscal 2013, up from its prior guidance between $174 million and $177 million. Although many analysts find Splunk's revenue growth encouraging, some have expressed concerns regarding its costly investments and expenditures. The Street is generally neutral regarding the stock, with most analysts rating it as "Neutral" or "Hold." Other News About SPLK Splunk Impresses in 2Q
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Published on Sep 4, 2012
By Leo Sun