Splunk Stock Is Falling Because Earnings and Outlook Disappointed
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Shares of data-analytics firm Splunk are tumbling late Wednesday after a disappointing fiscal-third-quarter report, and guidance that fell short of estimates.
David Paul Morris/BloombergSplunk stock is down sharply in late trading Wednesday after the data-analytics company posted disappointing financial results for the fiscal third quarter ended Oct. 31, along with January quarter guidance that fell well shy of Street estimates.
For the quarter, Splunk (ticker: SPLK) posted revenue of $599 million, down 11% from a year ago, and far short of the Street consensus estimate for $613 million. The company had forecast revenue of $600 million to $630 million. Splunk lost 7 cents a share on a non-GAAP basis in the quarter, missing the Street consensus profit forecast for 9 cents a share.
For the January quarter, Splunk sees revenue of between $650 million and $700 million, considerably below the Street consensus estimate for $777.7 million. The company sees non-GAAP operating margin in the quarter of between negative 4% and positive 3%.
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“Even in the face of uncertain market conditions, Splunk remains one of the fastest-growing companies in the history of enterprise software,” CEO Doug Merritt said in a statement. “We crossed an important milestone during the quarter as continued demand for data-driven insights across our global customer-base drove our total ARR [annual recurring revenue] to over $2 billion.”
The company said cloud ARR was $630 million, up 71% from a year ago, while total ARR was $2.07 billion, up 44%.
Chief Financial Officer Jason Child added in a statement that “while the environment was a challenge in the quarter, we are enthusiastic about the large and growing opportunity ahead and remain confident in our long-term growth trajectory.”
In the company’s conference call with analysts on Wednesday afternoon, Merritt said that results were hurt by cautious IT spending. “The environment we saw in the third quarter was similar to the first half ofthe year,” he said. “There was continued pressure brought on by macro conditions, which resulted in some customers hesitating to commit to long-term contracts. As we reached the end of October, we saw a much lower-than-normal close-rate amongst our largest deals, which caused us to fall short of our bookings target. Overall, our third quarter did not meet our expectations.”
Splunk stock is down 19% to $167.19 in late trading.
Write to Eric J. Savitz at eric.savitz@barrons.com