Splunk Posts Wider-than-Feared Quarterly Loss, Revenues Beat Estimates

Shares of Splunk (SPLK) declined 3.3% in Wednesday’s extended trading session after the company reported a greater-than-expected loss in the fiscal first quarter. However, sales surpassed analysts’ expectations of $491.32 million driven by strong Cloud revenue.

Don't Miss Our Christmas Offers:

Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter

Splunk is a technology company that produces software for searching, monitoring, and analyzing machine-generated data via a Web-style interface.

The company incurred an adjusted loss of $0.91 per share in Q1, compared to the $0.70 loss per share estimated by analysts. A loss of $0.56 per share was reported in the same quarter last year.

Revenue generated in the quarter was $502 million, which grew 16% from the year-ago period. Cloud revenue increased 73% to $194 million.

Splunk’s CFO Jason Child said, “Our Cloud ARR exceeded 70% for the sixth straight quarter and we now have more than 200 customers with Cloud ARR over a million dollars. As we look forward, we have great confidence in our ability to deliver continued high growth, particularly within our cloud business.” (See Splunk stock analysis on TipRanks)

For fiscal Q2, the company expects revenues to come in the range of $550 – 570 million. The consensus estimate is pegged at $561.36 million.

Following the Q1 earnings announcement, Robert W. Baird analyst Jonathan Ruykhaver lowered the stock’s price target to $150 (21.2% upside potential) from $200 and maintained a Buy rating.

Ruykhaver commented, “The bottom-line performance highlights the continued noise in the model transition from perpetual to term and term/on-premise to cloud, though we believe underlying top-line cloud metrics have been strong. Overall, we continue to like the SPLK vision, though look to see more consistent execution drive success going forward.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 15 Buys versus 10 Holds. The average analyst price target of $175.62 implies 41.9% upside potential to current levels. Shares have decreased 21.7% over the past six months.

Splunk scores a 4 of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market averages.