Splunk Earnings Beat Estimates but the Stock Falls on New Business Slowdown
posted better-than-expected results for its fiscal second quarter ended July 31, while boosting its revenue outlook for the 2023 fiscal year ending in January.
But the stock was trading sharply lower in premarket trading Thursday on a slowdown in the company’s new business pipeline.
A provider of data security and IT monitoring software, Splunk (ticker: SPLK) posted revenue of $799 million, up 32% from a year ago, and well ahead of the company’s forecast of $735 million to $755 million. Spunk posted a loss for the quarter of 22 cents a share, narrower than the Wall Street consensus forecast for a loss of 36 cents.
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 long-term, durable growth and profitability as we help the world’s largest and most innovative enterprises improve their cybersecurity and business resilience,” CEO Gary Steele said in a statement.
For the fiscal third quarter, Splunk is projecting 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 the January 2023 fiscal year, Splunk now sees revenue of between $3.35 billion and $3.4 billion, up from a previously forecast range of $3.3 billion to $3.35 billion. The company boosted its forecast for full-year non-GAAP operating margin to 8%, from 2%. The company now sees full-year operating cash flow of at least $420 million, up from a previous target of $400 million.
On the other hand, the company trimmed its forecast for full-year annual recurring revenue to $3.65 billion, with $1.8 billion from the cloud, down from $3.9 billion total and $2 billion from the cloud. That reduction is the focus for investors.
Asked about the issue, Splunk replied in a statement, “ARR came in below the expectations we had at the beginning of the quarter, driven by a slower pace of expansions and cloud migrations as macro uncertainty negatively impacted near-term budget availability of many of our customers.
Splunk was down 10% in premarket trading Thursday to $99.38.
Write to Eric J. Savitz at email@example.com