Splunk Inc. Announces Fiscal Second Quarter 2014 Financial Results

Splunk Inc. Announces Fiscal Second Quarter 2014 Financial Results

Company Crosses 6,000 Customer Mark; Total Revenues Grow 50%

SAN FRANCISCO--(BUSINESS WIRE)-- Splunk Inc. (NAS: SPLK) , the leading software platform for real-time operational intelligence, today announced results for its fiscal second quarter ended July 31, 2013.

  • Total revenues were $66.9 million, up 50% year-over-year.

  • License revenues were $43.2 million, up 43% year-over-year.

  • GAAP operating loss was $13.3 million or 19.9% of revenues.

  • Non-GAAP operating loss was $0.8 million or 1.1% of revenues.

  • GAAP loss per share was $0.13; non-GAAP loss per share was $0.01.

  • Operating cash flow was $6.3 million with free cash flow of $4.3 million.


"This past quarter marked a milestone for Splunk as we expanded the breadth of our product offerings beyond core Splunk Enterprise and premium apps by adding the beta version of Hunk: Splunk Analytics for Hadoop," said Godfrey Sullivan, Chairman and CEO. "We are pleased to welcome more than 400 new customers who are joining the Splunk family at an exciting time as we transition to a multi-product company."

Second Quarter 2014 and Recent Business Highlights

Customers:

  • Signed more than 400 new customers, ending the quarter with more than 6,000 customers worldwide.

  • New license customers include: Bank of the West, Bombardier (Germany), Commercial Bank of Dubai, GitHub, Inc., Hyundai Heavy Industries Co., Ltd. (HHI) (Korea), Middle Tennessee State University, Panasonic Corporation, POLITICO, Shaw Communications Inc., Softbank Telecom Corp., Sony Corporation, South Carolina Department of Health and Human Services, SunTrust Banks, Westdeutsche Lotterie GmbH & Co.

  • Expansion customers include: Adobe, Bloomberg, CalPERS, Cisco Systems, Inc., Comcast Corporation, Duke Medicine, Florida Department of Financial Services, Highmark Blue Cross Blue Shield, Korea Securities Depository, Moody's Corporation, Otto GmbH & Co KG (Germany), Pearson Education, Rally Software, Symantec Corporation, Telstra, TONGYANG Insurance (Korea), U.S. Air Force, U.S. Department of the Interior, U.S. Department of Justice, The Washington Post Company.

Product:

  • Announced the beta version of Hunk: Splunk Analytics for Hadoop. Hunk (beta) is a new software product from Splunk that enables exploration, analysis and visualization of data in Hadoop.

  • Announced the general availability (GA) of the latest version of the Splunk App for VMware to provide accelerated operational visibility into virtualized environments. Customers rely on the Splunk App for VMware to enable proactive monitoring, comprehensive operational analytics and data correlation with all technology tiers beyond virtualization, including applications, operating systems and hardware infrastructure such as servers, storage and network devices.

  • Announced the GA of Splunk Software Developer Kits (SDKs) for C#, PHP and Ruby. These SDKs, along with the SDKs for Java, JavaScript and Python that shipped in December, enable developers to customize and extend the power of Splunk software, further establishing Splunk Enterprise as the platform for machine data.

Recognition:

  • Won two top awards in the Asia Pacific region. CeBIT.AU, a leading business technology conference in Australia, honored Splunk with its top industry prize, the CeBIT.AU ICT Excellence Award and the CeBIT.AU Business Award for Top Business Solution.

  • Named "Best in Big Data Analytics" at the 2013 Information Management Awards by NetworkWorld Asia, an enterprise IT magazine read by more than 16,000 IT professionals.

Financial Outlook

The company is providing the following guidance for its fiscal third quarter 2014 (ending October 31, 2013):

  • Total revenues are expected to be between $69 million and $71 million.

  • Non-GAAP operating margin is expected to be between zero and negative 2%.

The company is updating its previous guidance for its fiscal year 2014 (ending January 31, 2014):

  • Total revenues are expected to be between $275 million and $281 million (were previously expected to be between $266 million and $274 million as of May 30, 2013).

  • Non-GAAP operating margin is expected to be approximately zero (unchanged from May 30, 2013).

All forward-looking non-GAAP financial measures contained in this section "Financial Outlook" exclude estimates for stock-based compensation expenses and employer payroll tax expense related to employee stock plans.

While a reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis, the company has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for its fiscal second quarter 2014 and fiscal first half 2014 non-GAAP results included in this press release.

Conference Call and Webcast

Splunk's executive management team will host a conference call today beginning at 1:30 p.m. PT (4:30 p.m. ET) to discuss the company's financial results and business highlights. Interested parties may access the call by dialing (866) 501-1535. International parties may access the call by dialing (216) 672-5582. A live audio webcast of the conference call will be available through Splunk's Investor Relations website at http://investors.splunk.com/events.cfm. A replay of the call will be available through September 5, 2013 by dialing (855) 859-2056 and referencing Conference ID# 25448696.

Safe Harbor Statement

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding Splunk's revenue and non-GAAP operating margin targets for the company's fiscal third quarter and fiscal year 2014 in the paragraphs under "Financial Outlook" above and other statements regarding momentum in the company's business, growth in the number of new customers, new product offerings, expansion of existing customer usage, and product investments and developments. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: Splunk's limited operating history, particularly as a relatively new public company; risks associated with Splunk's rapid growth, particularly outside of the U.S.; Splunk's inability to realize value from its significant investments in its business; and general market, political, economic and business conditions.

Additional information on potential factors that could affect Splunk's financial results is included in the company's Quarterly Report on Form 10-Q for the quarter ended April 30, 2013, which is on file with the U.S. Securities and Exchange Commission. Splunk does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

About Splunk Inc.

Splunk Inc. (NAS: SPLK) provides the engine for machine data™. Splunk® software collects, indexes and harnesses the machine-generated big data coming from the websites, applications, servers, networks, sensors and mobile devices that power business. Splunk software enables organizations to monitor, search, analyze, visualize and act on massive streams of real-time and historical machine data. More than 6,000 enterprises, universities, government agencies and service providers in over 90 countries use Splunk Enterprise to gain Operational Intelligence that deepens business and customer understanding, improves service and uptime, reduces cost and mitigates cyber-security risk. Splunk Storm™, a cloud-based subscription service, is used by organizations developing applications in the cloud.

To learn more, please visit www.splunk.com/company.

Splunk, Splunk>, Splunk Storm, Listen to Your Data, SPL and The Engine for Machine Data are trademarks and registered trademarks of Splunk Inc. in the United States and other countries. All other brand names, product names, or trademarks belong to their respective owners.© 2013 Splunk Inc. All rights reserved.

SPLUNK INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended

Six Months Ended

July 31,

July 31,

July 31,

July 31,

2013

2012

2013

2012

Revenues

License

$

43,185

$

30,203

$

79,357

$

54,589

Maintenance and services

23,688

14,280

44,723

27,085

Total revenues

66,873

44,483

124,080

81,674

Cost of revenues

License

76

92

145

221

Maintenance and services

7,345

4,553

13,957

8,689

Total cost of revenues 1, 2

7,421

4,645

14,102

8,910

Gross profit

59,452

39,838

109,978

72,764

Operating expenses

Research and development 1, 2

16,210

9,391

30,674

17,494

Sales and marketing 1, 2

44,634

27,740

85,947

51,906

General and administrative 1, 2

11,912

7,247

22,358

14,093

Total operating expenses

72,756

44,378

138,979

83,493

Operating loss

(13,304

)

(4,540

)

(29,001

)

(10,729

)

Interest and other income (expense), net

Interest income, net

58

101

119

82

Other income (expense), net

(82

)

-

(176

)

2

Change in fair value of preferred stock warrants

-

-

-

(14,087

)

Total interest and other income (expense), net

(24

)

101

(57

)

(14,003

)

Loss before income taxes

(13,328

)

(4,439

)

(29,058

)

(24,732

)

Provision for income taxes

365

136

769

313

Net loss

$

(13,693

)

$

(4,575

)

$

(29,827

)

$

(25,045

)

Basic and diluted net loss per share

$

(0.13

)

$

(0.05

)

$

(0.29

)

$

(0.40

)

Weighted-average shares used in computing basic and diluted net loss per share

104,100

95,518

103,075

62,466

1 Includes stock-based compensation expense as follows:

Cost of revenues

$

865

$

267

$

1,570

$

375

Research and development

3,547

1,267

6,590

2,162

Sales and marketing

5,156

1,505

9,478

2,363

General and administrative

2,389

827

4,154

1,638

$

11,957

$

3,866

$

21,792

$

6,538

2 Includes employer payroll tax on employee stock plans as follows:

Cost of revenues

$

22

$

-

$

44

$

-

Research and development

49

-

191

-

Sales and marketing

314

48

592

48

General and administrative

201

214

339

214

$

586

$

262

$

1,166

$

262

SPLUNK INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

July 31,

January 31,

2013

2013

ASSETS

Current assets

Cash and cash equivalents

$

347,114

$

305,939

Accounts receivable, net

40,746

63,948

Prepaid expenses and other current assets

10,547

6,861

Total current assets

398,407

376,748

Property and equipment, net

13,855

13,205

Other assets

403

492

Total assets

$

412,665

$

390,445

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable

$

1,805

$

1,632

Accrued payroll and compensation

21,888

28,123

Accrued expenses and other liabilities

12,224

7,636

Deferred revenue, current portion

96,908

79,568

Total current liabilities

132,825

116,959

Deferred revenue, non-current

30,727

35,144

Other liabilities, non-current

1,302

798

Total non-current liabilities

32,029

35,942

Total liabilities

164,854

152,901

Stockholders' equity:

Common stock

105

101

Accumulated other comprehensive loss

(243

)

(135

)

Additional paid-in capital

368,475

328,277

Accumulated deficit

(120,526

)

(90,699

)

Total stockholders' equity

247,811

237,544

Total liabilities and stockholders' equity

$

412,665

$

390,445