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Splunk Inc. Announces Fiscal Third Quarter 2021 Financial Results

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Splunk Inc. (SPLK) reported strong fiscal Q3 2021 results, showcasing significant growth in its cloud operations. Cloud ARR surged to $630 million, marking a 71% year-over-year increase, while total ARR reached $2.07 billion, up 44%. However, total revenues fell 11% to $559 million. The company celebrated its milestone of over 444 customers with ARR exceeding $1 million, highlighting ongoing demand for data-driven insights. Looking forward, Splunk anticipates total revenues between $650 million and $700 million for Q4 2021.

Positive
  • Cloud ARR rose to $630 million, up 71% year-over-year.
  • Total ARR reached $2.07 billion, up 44% year-over-year.
  • Cloud revenue increased 80% year-over-year.
Negative
  • Total revenues declined by 11% year-over-year to $559 million.

SAN FRANCISCO--()--Splunk Inc. (NASDAQ: SPLK), provider of the Data-to-Everything Platform, today announced results for its fiscal third quarter ended October 31, 2020.

Third Quarter 2021 Financial Highlights

  • Cloud ARR was $630 million, up 71% year-over-year.
  • Total ARR was $2.07 billion, up 44% year-over-year.
  • Cloud revenue was $145 million, up 80% year-over-year.
  • Total revenues were $559 million, down 11% year-over-year.
  • 444 customers with ARR greater than $1 million.

Even in the face of uncertain market conditions, Splunk remains one of the fastest growing companies in the history of enterprise software,” said Doug Merritt, President and CEO, Splunk. “We crossed an important milestone during the quarter as continued demand for data-driven insights across our global customer-base drove our total ARR to over $2 billion. Today, there’s no better strategic partner to help organizations turn their data into action and accelerate their journey to the cloud than Splunk.”

Our cloud momentum continued in the third quarter, we exceeded our cash flow target significantly and we ended with Cloud ARR up 71% year-over-year — among the highest growth rates in the industry,” said Jason Child, chief financial officer, Splunk. “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.”

Recent Business Highlights:

New and Expansion Customers Include: Bass Pro Shops, Carvana, Clemson University, E.ON (Germany), Founders Federal Credit Union (FIT CUSO), Herbalife Nutrition, HSBC Group (United Kingdom), Idaho National Laboratory, Intrado, James Paget University Hospitals - NHS Foundation Trust (United Kingdom), National University of Singapore, Nu Skin, Ocado Group (United Kingdom), Toyota Systems Corporation (Japan), TripActions

  • The Data Age Is Here: New Splunk Cloud Innovations Unveiled at .conf20: New innovations across Splunk Cloud and Splunk Enterprise help customers achieve faster time to value with immediate access to the latest features. The new Splunk Machine Learning Environment (SMLE) makes it easier to build and operationalize machine learning models and algorithms and helps get value from data at scale in Splunk; while the new Data Stream Processor 1.2 helps customers expand their data streaming capabilities and access, process and route data across multiple cloud services, such as Google Cloud Platform and Azure Event Hub.
  • Splunk Launches the World’s Most Comprehensive Observability Suite: The new Splunk Observability Suite brings together Splunk’s best-in-class solutions for infrastructure monitoring, application performance monitoring, digital experience monitoring, log investigation and incident response into a single, tightly integrated suite of products. Splunk also announced Splunk Log Observer, which brings the power of Splunk logs to site reliability engineers, DevOps engineers and developers; and Splunk Real User Monitoring, which extends its monitoring capabilities to help organizations understand and optimize the digital experiences of their customers.
  • Splunk Accelerates Its Observability Vision with Three Acquisitions: Building on its newly launched Observability Suite, Splunk announced the acquisition of Plumbr, an application performance monitoring (APM) company offering auto-instrumentation, Real User Monitoring and deep application performance insights. Splunk also announced the acquisition of Rigor, a digital experience monitoring (DEM) company; and the intent to acquire Flowmill, a cloud network observability company with expertise in network performance monitoring (NPM). Together, these additions will accelerate Splunk’s vision to deliver a comprehensive Observability Suite with best-in-class DEM, APM and NPM for all applications.
  • Expanded AIOps and Multicloud Monitoring Capabilities Transform IT Modernization: Splunk continues to innovate on its industry-leading IT Operations platform. The newly announced Splunk Service Intelligence for SAP® solutions provides Splunk IT Service Intelligence (ITSI) customers with end-to-end visibility across both the SAP solution-based and entire IT environment. Splunk also unveiled enhancements to Splunk ITSI, providing customers with operational efficiency and business intelligence to predict incidents before they happen; and the Splunk Infrastructure Monitoring Add-On allows organizations to seamlessly collect and integrate Splunk Infrastructure Monitoring metrics data.
  • New Splunk Security Solutions Help Customers Secure and Accelerate the Cloud Journey: Splunk’s Security Operations suite enables security teams to modernize and unify their security operations in the cloud. With Splunk Mission Control, customers can plug in Splunk SIEM, SOAR, UBA and other third-party security technologies for real-time, contextual visibility and control across their entire security infrastructure. Splunk also launched the new Mission Control Plug-In Framework, which accelerates the value customers get from combining their Splunk security tools and non-Splunk security tools.
  • Splunk Names New Chief Customer and Chief Revenue Officers: As customers continue to take action on data across their organization with Splunk’s Data-to-Everything Platform, the company announced two new executive appointments to best position the company for its next phase of growth and category leadership. Splunk welcomes John Sabino, Chief Customer Officer, and Christian Smith, Chief Revenue officer, to its executive team. John and Christian both previously served as senior vice president, Customer Success and senior vice president, Global Sales at Splunk.

Financial Outlook

The company is providing the following guidance for its fiscal fourth quarter 2021 (ending January 31, 2021):

  • Total revenues are expected to be between $650 million and $700 million.
  • Non-GAAP operating margin is expected to be between negative 4% and positive 3%.

All forward-looking non-GAAP financial measures contained in this section “Financial Outlook” exclude estimates for stock-based compensation and related employer payroll tax, acquisition-related adjustments, amortization of intangible assets and capitalized software costs.

A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, many of these costs and expenses that may be incurred in the future. The company has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for its fiscal third quarter 2021 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-presentations. A replay of the call will be available through December 9, 2020 by dialing (855) 859-2056 and referencing Conference ID 9424378.

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 fourth quarter in the paragraphs under “Financial Outlook” above and other statements regarding our market opportunity, including the impact of the COVID-19 pandemic on the business environment, such as the pace of customer digital transformation and the importance of data; statements and benefits regarding the Plumbr and Rigor acquisitions and our intent to acquire Flowmill; the market for data-related products and trends in this market, future growth and related targets, including trends in our cloud software business mix, momentum, growth rate, strategy, technology and product innovation; expectations for our industry and business, such as our business model, customer demand, our partner relationships, customer success and feedback, expanding use of Splunk by customers, and expected benefits and scale of our products. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: risks associated with Splunk’s rapid growth, particularly outside of the United States; Splunk’s inability to realize value from its significant investments in its business, including product and service innovations and through acquisitions; Splunk’s shift from sales of perpetual licenses in favor of sales of term licenses and subscription agreements for our cloud services which impact the timing of revenue, cash collections and margins; Splunk’s transition to a multi-product software and services business; Splunk’s inability to successfully integrate acquired businesses and technologies, such as Plumbr and Rigor; Splunk’s inability to service its debt obligations or other adverse effects related to our convertible notes; the impact of the COVID-19 pandemic and related public health measures on our business, as well as the impact of the COVID-19 pandemic on the overall economic environment; and general market, political, economic, business and competitive market 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 fiscal quarter ended July 31, 2020, which is on file with the U.S. Securities and Exchange Commission (“SEC”) and Splunk’s other filings with the SEC. 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. (NASDAQ: SPLK) turns data into doing with the Data-to-Everything Platform. Splunk technology is designed to investigate, monitor, analyze and act on data at any scale.

Splunk, Splunk>, Data-to-Everything, D2E and Turn Data Into Doing 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. © 2020 Splunk Inc. All rights reserved.

Splunk Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2020

 

2019

 

2020

 

2019

Revenues
License

$

240,225

 

$

373,684

 

$

565,424

 

$

855,825

 

Cloud services

 

144,714

 

 

80,439

 

 

382,736

 

 

212,946

 

Maintenance and services

 

173,633

 

 

172,213

 

 

536,147

 

 

498,973

 

Total revenues

 

558,572

 

 

626,336

 

 

1,484,307

 

 

1,567,744

 

Cost of revenues
License

 

5,009

 

 

5,796

 

 

16,549

 

 

17,414

 

Cloud services

 

63,354

 

 

41,045

 

 

176,572

 

 

108,525

 

Maintenance and services

 

68,417

 

 

60,978

 

 

204,328

 

 

176,011

 

Total cost of revenues

 

136,780

 

 

107,819

 

 

397,449

 

 

301,950

 

Gross profit

 

421,792

 

 

518,517

 

 

1,086,858

 

 

1,265,794

 

Operating expenses
Research and development

 

190,222

 

 

158,887

 

 

579,643

 

 

422,287

 

Sales and marketing

 

323,146

 

 

319,023

 

 

966,057

 

 

896,757

 

General and administrative

 

73,941

 

 

88,092

 

 

234,746

 

 

226,118

 

Total operating expenses

 

587,309

 

 

566,002

 

 

1,780,446

 

 

1,545,162

 

Operating loss

 

(165,517

)

 

(47,485

)

 

(693,588

)

 

(279,368

)

Interest and other income (expense), net
Interest income

 

2,382

 

 

12,612

 

 

12,438

 

 

45,373

 

Interest expense

 

(33,972

)

 

(24,406

)

 

(88,557

)

 

(71,527

)

Other income (expense), net

 

(710

)

 

(215

)

 

4,533

 

 

(1,408

)

Total interest and other income (expense), net

 

(32,300

)

 

(12,009

)

 

(71,586

)

 

(27,562

)

Loss before income taxes

 

(197,817

)

 

(59,494

)

 

(765,174

)

 

(306,930

)

Income tax provision (benefit)

 

3,714

 

 

(1,855

)

 

3,258

 

 

7,010

 

Net loss

$

(201,531

)

$

(57,639

)

$

(768,432

)

$

(313,940

)

 
Basic and diluted net loss per share

$

(1.26

)

$

(0.38

)

$

(4.83

)

$

(2.08

)

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

 

160,515

 

 

152,404

 

 

158,998

 

 

150,659

 

Splunk Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
October 31, 2020 January 31, 2020
Assets
Current assets
Cash and cash equivalents

$

1,652,263

 

$

778,653

 

Investments, current

 

341,409

 

 

976,508

 

Accounts receivable, net

 

799,960

 

 

838,743

 

Prepaid expenses and other current assets

 

140,853

 

 

129,839

 

Deferred commissions, current

 

120,762

 

 

99,072

 

Total current assets

 

3,055,247

 

 

2,822,815

 

Investments, non-current

 

18,228

 

 

35,370

 

Accounts receivable, non-current

 

316,824

 

 

468,934

 

Operating lease right-of-use assets

 

374,980

 

 

267,086

 

Property and equipment, net

 

185,606

 

 

156,928

 

Intangible assets, net

 

199,210

 

 

238,415

 

Goodwill

 

1,301,073

 

 

1,292,840

 

Deferred commissions, non-current

 

67,854

 

 

88,990

 

Other assets

 

75,673

 

 

68,093

 

Total assets

$

5,594,695

 

$

5,439,471

 

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable

$

16,479

 

$

18,938

 

Accrued compensation

 

286,101

 

 

286,159

 

Accrued expenses and other liabilities

 

190,820

 

 

177,822

 

Deferred revenue, current

 

763,646

 

 

829,377

 

Total current liabilities

 

1,257,046

 

 

1,312,296

 

Convertible senior notes, net

 

2,275,313

 

 

1,714,630

 

Operating lease liabilities

 

339,394

 

 

235,631

 

Deferred revenue, non-current

 

110,504

 

 

176,832

 

Other liabilities, non-current

 

3,126

 

 

653

 

Total non-current liabilities

 

2,728,337

 

 

2,127,746

 

Total liabilities

 

3,985,383

 

 

3,440,042

 

Stockholders' equity
Common stock

 

162

 

 

157

 

Accumulated other comprehensive loss

 

(4,625

)

 

(5,312

)

Additional paid-in capital

 

3,943,678

 

 

3,566,055

 

Accumulated deficit

 

(2,329,903

)

 

(1,561,471

)

Total stockholders' equity

 

1,609,312

 

 

1,999,429

 

Total liabilities and stockholders' equity

$

5,594,695

 

$

5,439,471

 

Splunk Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three Months Ended October 31,

 

Nine Months Ended October 31,

 

 

2020

 

2019

 

2020

 

2019

Cash flows from operating activities
Net loss

$

(201,531

)

$

(57,639

)

$

(768,432

)

$

(313,940

)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization

 

24,584

 

 

18,938

 

 

67,269

 

 

46,079

 

Amortization of deferred commissions

 

38,097

 

 

21,196

 

 

99,217

 

 

75,078

 

Amortization of investment premiums (accretion of discounts), net

 

54

 

 

(2,324

)

 

(890

)

 

(7,969

)

Amortization of debt discount and issuance costs

 

26,917

 

 

20,382

 

 

71,655

 

 

59,477

 

Gain on extinguishment of convertible senior notes

 

-

 

 

-

 

 

(6,952

)

 

-

 

Repurchase of convertible senior notes attributable to the accreted interest related to debt discount

 

-

 

 

-

 

 

(22,149

)

 

-

 

Non-cash operating lease costs

 

24

 

 

2,104

 

 

15,783

 

 

7,511

 

Stock-based compensation

 

138,790

 

 

132,852

 

 

452,481

 

 

378,928

 

Disposal of property and equipment

 

-

 

 

-

 

 

981

 

 

-

 

Deferred income taxes

 

(1,365

)

 

(214

)

 

(2,009

)

 

(398

)

Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net

 

6,632

 

 

(226,485

)

 

190,893

 

 

(165,735

)

Prepaid expenses and other assets

 

(26,949

)

 

(72,161

)

 

(14,456

)

 

(181,201

)

Deferred commissions

 

(39,617

)

 

(31,247

)

 

(99,771

)

 

(84,461

)

Accounts payable

 

(28,142

)

 

(6,445

)

 

(5,179

)

 

(1,129

)

Accrued compensation

 

61,688

 

 

33,394

 

 

310

 

 

(12,821

)

Accrued expenses and other liabilities

 

(12,203

)

 

(8,060

)

 

(13,497

)

 

2,619

 

Deferred revenue

 

(30,043

)

 

40,846

 

 

(132,350

)

 

(30,843

)

Net cash used in operating activities

 

(43,064

)

 

(134,863

)

 

(167,096

)

 

(228,805

)

Cash flows from investing activities
Purchases of investments

 

-

 

 

(275,962

)

 

(87,135

)

 

(815,685

)

Maturities of investments

 

245,595

 

 

264,376

 

 

743,320

 

 

805,971

 

Acquisitions, net of cash acquired

 

(11,758

)

 

(576,296

)

 

(11,758

)

 

(576,296

)

Purchases of property and equipment

 

(2,491

)

 

(27,090

)

 

(28,307

)

 

(53,524

)

Capitalized software development costs

 

(3,570

)

 

-

 

 

(10,703

)

 

-

 

Other investment activities

 

(575

)

 

(2,500

)

 

(3,461

)

 

(3,750

)

Net cash provided by (used in) investing activities

 

227,201

 

 

(617,472

)

 

601,956

 

 

(643,284

)

Cash flows from financing activities
Proceeds from the exercise of stock options

 

413

 

 

68

 

 

3,084

 

 

624

 

Proceeds from employee stock purchase plan

 

-

 

 

-

 

 

44,214

 

 

34,482

 

Proceeds from the issuance of convertible senior notes, net of issuance costs

 

-

 

 

-

 

 

1,246,544

 

 

-

 

Purchase of capped calls

 

-

 

 

-

 

 

(137,379

)

 

-

 

Partial repurchase of convertible senior notes

 

-

 

 

-

 

 

(668,929

)

 

-

 

Taxes paid related to net share settlement of equity awards

 

(7

)

 

(46,467

)

 

(49,235

)

 

(164,160

)

Net cash provided by (used in) financing activities

 

406

 

 

(46,399

)

 

438,299

 

 

(129,054

)

Effect of exchange rate changes on cash and cash equivalents

 

(175

)

 

199

 

 

451

 

 

(1,552

)

Net increase (decrease) in cash and cash equivalents

 

184,368

 

 

(798,535

)

 

873,610

 

 

(1,002,695

)

Cash and cash equivalents at beginning of period

 

1,467,895

 

 

1,672,005

 

 

778,653

 

 

1,876,165

 

Cash and cash equivalents at end of period

$

1,652,263

 

$

873,470

 

$

1,652,263

 

$

873,470

 

Splunk Inc.
Operating Metrics

Total Annual Recurring Revenue (“Total ARR”) represents the annualized revenue run-rate of active subscription, term license, and maintenance contracts at the end of a reporting period. Cloud Annual Recurring Revenue (“Cloud ARR”) represents the annualized revenue run-rate of active subscription contracts at the end of a reporting period. Contracts are annualized by dividing the total contract value by the number of days in the contract term and then multiplying by 365.

Non-GAAP Financial Measures and Reconciliations

To supplement Splunk’s condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), Splunk provides investors with the following non-GAAP financial measures: cloud services, cost of revenues, cloud services gross margin, cost of revenues, gross margin, research and development expense, sales and marketing expense, general and administrative expense, operating income (loss), operating margin, income tax provision (benefit), net income (loss), net income (loss) per share and free cash flow (collectively the “non-GAAP financial measures”). These non-GAAP financial measures exclude all or a combination of the following (as reflected in the following reconciliation tables): expenses related to stock-based compensation and related employer payroll tax, amortization of intangible assets, restructuring and facility exit charges, acquisition-related adjustments, capitalized software development costs, non-cash interest expense related to convertible senior notes and a gain on extinguishment of convertible senior notes. The non-GAAP financial measures are also adjusted for Splunk's estimated tax rate on non-GAAP income (loss). To determine the estimated non-GAAP tax rate, Splunk evaluates financial projections based on its non-GAAP results and the tax effect of those projections. The estimated non-GAAP tax rate takes into account many factors including our operating structure and tax positions. The non-GAAP tax rate applied to the three and nine months ended October 31, 2020 was 20%. The applicable fiscal 2020 tax rates are noted in the reconciliations. In addition, non-GAAP financial measures include free cash flow, which represents operating cash flow less purchases of property and equipment. Splunk considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated or used by the business.

Splunk excludes stock-based compensation expense because it is non-cash in nature and excluding this expense provides meaningful supplemental information regarding Splunk’s operational performance and allows investors the ability to make more meaningful comparisons between Splunk’s operating results and those of other companies. Splunk excludes employer payroll tax expense related to employee stock plans in order for investors to see the full effect that excluding that stock-based compensation expense had on Splunk’s operating results. These expenses are tied to the exercise or vesting of underlying equity awards and the price of Splunk’s common stock at the time of vesting or exercise, which may vary from period to period independent of the operating performance of Splunk’s business. Splunk also excludes amortization of intangible assets, restructuring and facility exit charges, acquisition-related adjustments, capitalized software development costs, non-cash interest expense related to convertible senior notes and a gain on extinguishment of convertible senior notes from the applicable non-GAAP financial measures because these adjustments are considered by management to be outside of Splunk’s core operating results.

There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by Splunk’s competitors and exclude expenses that may have a material impact upon Splunk’s reported financial results. Further, stock-based compensation expense has been and will continue to be, for the foreseeable future, a significant recurring expense in Splunk’s business and an important part of the compensation provided to Splunk’s employees. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Splunk uses these non-GAAP financial measures for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. Splunk believes that these non-GAAP financial measures provide useful information about Splunk’s operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. In addition, these non-GAAP financial measures facilitate comparisons to competitors’ operating results. The non-GAAP financial measures are meant to supplement and be viewed in conjunction with GAAP financial measures.

The following tables reconcile Splunk’s GAAP results to Splunk’s non-GAAP results included in this press release.

SPLUNK INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
 
Reconciliation of Cash Used in Operating Activities to Free Cash Flow

Three Months Ended October 31,

 

Nine Months Ended October 31,

2020

 

2019

 

2020

 

2019

Net cash used in operating activities

$

(43,064

)

$

(134,863

)

$

(167,096

)

$

(228,805

)

Less purchases of property and equipment

 

(2,491

)

 

(27,090

)

 

(28,307

)

 

(53,524

)

Free cash flow (non-GAAP)

$

(45,555

)

$

(161,953

)

$

(195,403

)

$

(282,329

)

Net cash provided by (used in) investing activities

$

227,201

 

$

(617,472

)

$

601,956

 

$

(643,284

)

Net cash provided by (used in) financing activities

$

406

 

$

(46,399

)

$

438,299

 

$

(129,054

)

Reconciliation of GAAP to Non-GAAP Financial Measures
Three Months Ended October 31, 2020
 

GAAP

 

Stock-based
compensation and
related employer
payroll tax

 

Amortization of
intangible assets

 

Acquisition-related
adjustments

 

Capitalized software
development costs

 

Non-cash interest
expense related to
convertible senior
notes

 

Income tax
adjustment (2)

 

Non-GAAP

Cloud services cost of revenues

$

63,354

 

$

(2,719

)

$

(5,709

)

$

-

 

$

-

 

$

-

 

$

-

 

$

54,926

 

Cloud services gross margin

 

56.2

%

 

1.9

%

 

3.9

%

 

-

%

 

-

%

 

-

%

 

-

%

 

62.0

%

Cost of revenues

 

136,780

 

 

(14,253

)

 

(9,499

)

 

-

 

 

(594

)

 

-

 

 

-

 

 

112,434

 

Gross margin

 

75.5

%

 

2.6

%

 

1.7

%

 

-

%

 

0.1

%

 

-

%

 

-

%

 

79.9

%

Research and development

 

190,222

 

 

(64,668

)

 

-

 

 

-

 

 

3,570

 

 

-

 

 

-

 

 

129,124

 

Sales and marketing

 

323,146

 

 

(45,299

)

 

(4,333

)

 

-

 

 

-

 

 

-

 

 

-

 

 

273,514

 

General and administrative

 

73,941

 

 

(18,678

)

 

-

 

 

(2,223

)

 

-

 

 

-

 

 

-

 

 

53,040

 

Operating loss

 

(165,517

)

 

142,898

 

 

13,832

 

 

2,223

 

 

(2,976

)

 

-

 

 

-

 

 

(9,540

)

Operating margin

 

(29.6

)%

 

25.6

%

 

2.4

%

 

0.4

%

 

(0.5

)%

 

-

%

 

-

%

 

(1.7

)%

Income tax provision (benefit)

 

3,714

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(6,699

)

 

(2,985

)

Net loss

$

(201,531

)

$

142,898

 

$

13,832

 

$

2,223

 

$

(2,976

)

$

26,917

 

$

6,699

 

$

(11,938

)

Net loss per share (1)

$

(1.26

)

$

0.90

 

$

0.09

 

$

0.01

 

$

(0.02

)

$

0.17

 

$

0.04

 

$

(0.07

)

_______________________

(1)

Calculated based on 160,515 weighted-average shares of common stock.

(2)

Represents the income tax adjustment using our estimated non-GAAP tax rate of 20%.

Reconciliation of GAAP to Non-GAAP Financial Measures
Three Months Ended October 31, 2019
 

GAAP

 

Stock-based
compensation and
related employer
payroll tax

 

Amortization of
intangible assets

 

Acquisition-related
adjustments

 

Non-cash interest
expense related to
convertible senior
notes

 

Income tax adjustment (3)

 

Non-GAAP

Cloud services cost of revenues

$

41,045

 

$

(1,543

)

$

(2,498

)

$

-

 

$

-

 

$

-

 

$

37,004

 

Cloud services gross margin

 

49.0

%

 

1.9

%

 

3.1

%

 

-

%

 

-

%

 

-

%

 

54.0

%

Cost of revenues

 

107,819

 

 

(10,729

)

 

(7,865

)

 

-

 

 

-

 

 

-

 

 

89,225

 

Gross margin

 

82.8

%

 

1.7

%

 

1.3

%

 

-

%

 

-

%

 

-

%

 

85.8

%

Research and development

 

158,887

 

 

(45,701

)

 

(174

)

 

(12

)

 

-

 

 

-

 

 

113,000

 

Sales and marketing

 

319,023

 

 

(51,795

)

 

(2,081

)

 

(172

)

 

-

 

 

-

 

 

264,975

 

General and administrative

 

88,092

 

 

(27,082

)

 

-

 

 

(7,408

)

 

-

 

 

-

 

 

53,602

 

Operating income (loss)

 

(47,485

)

 

135,307

 

 

10,120

 

 

7,592

 

 

-

 

 

-

 

 

105,534

 

Operating margin

 

(7.6

)%

 

21.6

%

 

1.6

%

 

1.2

%

 

-

%

 

-

%

 

16.8

%

Income tax provision (benefit)

 

(1,855

)

 

-

 

 

-

 

 

6,006

 

(2

)

 

-

 

 

18,630

 

 

22,781

 

Net income (loss)

$

(57,639

)

$

135,307

 

$

10,120

 

$

1,586

 

$

20,382

 

$

(18,630

)

$

91,126

 

Net income (loss) per share (1)

$

(0.38

)

$

0.58

 

_______________________

(1)

GAAP net loss per share calculated based on 152,404 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 156,526 diluted weighted-average shares of common stock, which includes 4,122 potentially dilutive shares related to employee stock awards. GAAP to non-GAAP net income (loss) per share is not reconciled due to the difference in the number of shares used to calculate basic and diluted weighted-average shares of common stock.

(2)

Represents the partial release of the valuation allowance.

(3)

Represents the income tax adjustment using our estimated non-GAAP tax rate of 20%.

Reconciliation of GAAP to Non-GAAP Financial Measures
Nine Months Ended October 31, 2020
 
GAAP Stock-based
compensation and
related employer
payroll tax
Amortization of
intangible assets
Restructuring and
facility exit
charges
Acquisition-
related
adjustments
Capitalized
software
development costs
Non-cash interest
expense related to
convertible senior
notes
Income tax
adjustment (4)
Non-GAAP
Cloud services cost of revenues

$

176,572

 

$

(7,921

)

$

(16,005

)

$

(229

)

$

-

 

$

-

 

$

-

 

$

-

 

$

152,417

 

Cloud services gross margin

 

53.9

%

 

2.1

%

 

4.1

%

 

0.1

%

 

-

%

 

-

%

 

-

%

 

-

%

 

60.2

%

Cost of revenues

 

397,449

 

 

(42,881

)

 

(30,383

)

 

(497

)

 

-

 

 

(594

)

 

-

 

 

-

 

 

323,094

 

Gross margin

 

73.2

%

 

2.9

%

 

2.0

%

 

0.1

%

 

-

%

 

-

%

 

-

%

 

-

%

 

78.2

%

Research and development

 

579,643

 

 

(204,037

)

 

(25

)

 

(2,884

)

 

-

 

 

10,703

 

 

-

 

 

-

 

 

383,400

 

Sales and marketing

 

966,057

 

 

(157,591

)

 

(12,999

)

 

(1,168

)

 

-

 

 

-

 

 

-

 

 

-

 

 

794,299

 

General and administrative

 

234,746

 

 

(64,876

)

 

-

 

 

(518

)

 

(2,223

)

 

-

 

 

-

 

 

-

 

 

167,129

 

Operating loss

 

(693,588

)

 

469,385

 

 

43,407

 

 

5,067

 

 

2,223

 

 

(10,109

)

 

-

 

 

-

 

 

(183,615

)

Operating margin

 

(46.7

)%

 

31.6

%

 

2.9

%

 

0.4

%

 

0.1

%

 

(0.7

)%

 

-

%

 

-

%

 

(12.4

)%

Income tax provision (benefit)

 

3,258

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(41,263

)

 

(38,005

)

Net loss

$

(768,432

)

$

469,385

 

$

43,407

 

$

5,543

 

(2

)

$

2,223

 

$

(10,109

)

$

64,702

 

(3

)

$

41,263

 

$

(152,018

)

Net loss per share (1)

$

(4.83

)

$

2.95

 

$

0.27

 

$

0.03

 

$

0.01

 

$

(0.06

)

$

0.41

 

$

0.26

 

$

(0.96

)

_______________________

(1)

Calculated based on 158,998 weighted-average shares of common stock.

(2)

Includes a $0.5 million loss on disposal of property, plant and equipment.

(3)

Includes non-cash interest expense of $71.7 million and a $7.0 million non-recurring gain on extinguishment of convertible senior notes.

(4)

Represents the income tax adjustment using our estimated non-GAAP tax rate of 20%.

Reconciliation of GAAP to Non-GAAP Financial Measures
Nine Months Ended October 31, 2019
 
GAAP Stock-based
compensation and
related employer
payroll tax
Amortization of
intangible assets
Acquisition-related
adjustments
Non-cash interest expense
related to convertible
senior notes
Income tax adjustment (3) Non-GAAP
Cloud services cost of revenues

$

108,525

 

$

(4,709

)

$

(3,334

)

$

-

 

$

-

 

$

-

 

$

100,482

 

Cloud services gross margin

 

49.0

%

 

2.2

%

 

1.6

%

 

-

%

 

-

%

 

-

%

 

52.8

%

Cost of revenues

 

301,950

 

 

(33,342

)

 

(19,662

)

 

-

 

 

-

 

 

-

 

 

248,946

 

Gross margin

 

80.7

%

 

2.1

%

 

1.3

%

 

-

%

 

-

%

 

-

%

 

84.1

%

Research and development

 

422,287

 

 

(130,539

)

 

(672

)

 

(12

)

 

-

 

 

-

 

 

291,064

 

Sales and marketing

 

896,757

 

 

(155,657

)

 

(3,991

)

 

(172

)

 

-

 

 

-

 

 

736,937

 

General and administrative

 

226,118

 

 

(72,206

)

 

-

 

 

(7,408

)

 

-

 

 

-

 

 

146,504

 

Operating income (loss)

 

(279,368

)

 

391,744

 

 

24,325

 

 

7,592

 

 

-

 

 

-

 

 

144,293

 

Operating margin

 

(17.8

)%

 

24.9

%

 

1.6

%

 

0.5

%

 

-

%

 

-

%

 

9.2

%

Income tax provision

 

7,010

 

 

-

 

 

-

 

 

6,006

 

(2

)

 

-

 

 

22,226

 

 

35,242

 

Net income (loss)

$

(313,940

)

$

391,744

 

$

24,325

 

$

1,586

 

$

59,478

 

$

(22,226

)

$

140,967

 

Net income (loss) per share (1)

$

(2.08

)

$

0.90

 

_______________________

(1)

GAAP net loss per share calculated based on 150,659 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 155,960 diluted weighted-average shares of common stock, which includes 5,301 potentially dilutive shares related to employee stock awards. GAAP to non-GAAP net income (loss) per share is not reconciled due to the difference in the number of shares used to calculate basic and diluted weighted-average shares of common stock.

(2)

Represents the partial release of the valuation allowance.

(3)

Represents the income tax adjustment using our estimated non-GAAP tax rate of 20%.

 

Contacts

Media Contact
Bill Bode
Splunk Inc.
press@splunk.com

Investor Contact
Ken Tinsley
Splunk Inc.
IR@splunk.com

FAQ

What were Splunk's Q3 2021 revenue results?

Splunk reported total revenues of $559 million for Q3 2021, an 11% decrease year-over-year.

How did Splunk's cloud ARR perform in Q3 2021?

Cloud ARR reached $630 million in Q3 2021, reflecting a 71% increase compared to the previous year.

What is Splunk's guidance for Q4 2021?

Splunk expects total revenues for Q4 2021 to be between $650 million and $700 million.

How many customers does Splunk have with ARR greater than $1 million?

Splunk has 444 customers with ARR greater than $1 million.

What are the key growth metrics for Splunk in Q3 2021?

Cloud revenue increased by 80% year-over-year, while total ARR grew by 44%.

Splunk Inc.

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