EQUITY REPORT 04.11.2021 | SPLUNK INC (SPLK)

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SPLUNK (SPLK): Fruitful Transition in Cloud Services Business

 

Based in California, Splunk Inc develops and markets worldwide software solutions to get real-time operational intelligence with its key software: Splunk Enterprise (reporting, analysis and data management capabilities. SPLK operates under 3 segments:

  • Licenses
  • Cloud Services
  • Maintenance and services

SKX sales were down by 5% y/y in FY21 to $2.2 Bn, due to SPLK transitioning towards a subscription model, which caused a decreased in sales of Licenses (-29%). This was offset by an increase in cloud services revenue (+77.4%).

A considerable growth driver for the firm, which recently (Data to Everything Platform launched in 2019) enhancing SPLK product capabilities and adding more than 450 new customers which include top tier companies.

 

 

 

 

With a company slowly transtionning towards a reccuring revenue base, this year, SPLK, with its latest earnings (Q2-22), showed it’s a business starting to deliver strong results as its investments on Cloud Services are starting to make progress. Revenue were up by 23% y/y and reached $603 M  (a six-month cumulative sales of $1.1 Bn, up 19% y/y). pushed by substial growth in Cloud business (+72%), which becomes SPLK main revenue stream / business driver.

SPLK, has doubled the number of customers with Cloud as more data continue to shift towards cloud. As it is not making tremoudous growth in the industry, SPLK is still above its peers, as it is still changing its software towards a modern cloud-based format.

 

To exploit this cloud opportunity and fuel this momentum, the digital data and analytics company, SPLK has implemented new updates and innovations to its Data-to-Everrything cloud platform and increased spending on both R&D and marketing. Also, SPLK has invested over $1 Bn in 3 years.

  • Plumbr, a developer of a performance monitoring application which offers deep understanding and performance insights for corporations
  • Rigor, a developer of a digital experience monitoring offering which help its corporate clients to optimize their user experience (digital channels)
  • Flowmill, a cloud network observability company which gives the ability to its customers to ingest, analyze and take action on cloud network and infrastructure data.

 

SHARE PRICE – YTD, SPLK is down by 19.54%. The share price (21/10/2020) closed at $166.25 per share

Growth expectations: 2% per year

FY2022 Revenue range: $2.2Bn-$2.3Bn

Share price expectations: $180.65

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