After Recent Decline Splunk Still Too Risky
Despite Large Revenue Growth Splunk Is Overvalued
ZNCapital • 23 Comments
ZNCapital • 23 Comments
Splunk - The Next Google Or The Next Goner?
Stephen Simpson, CFA • 23 Comments
Stephen Simpson, CFA • 23 Comments
Despite Large Revenue Growth Splunk Is Overvalued
ZNCapital • 23 Comments
ZNCapital • 23 Comments
Wed, Jan. 20, 1:18 PM
- Like clockwork, high-beta tech stocks continue selling off at a feverish pace as markets nosedive. Today's selloff comes with the Nasdaq down 2.7%, and the S&P 3%. Margin calls are likely a contributing factor.
- Solar stocks, which sold off yesterday even as major indices moved little, are underperforming again as energy stocks get routed once more and oil drops below $27/barrel. Hard-luck SunEdison (SUNE -13.6%) is now close to $2. Also tumbling: Canadian Solar (CSIQ -8.8%), ReneSola (SOL -8.2%), and Yingli (YGE -6.9%).
- Security tech plays FireEye (FEYE -9.3%), Palo Alto Networks (PANW -6.1%), Rapid7 (RPD -11.6%), and Vasco (VDSI -10.5%) aren't faring better - peers Fortinet and Barrcauda were downgraded this morning. Nor are Splunk (SPLK -7.7%) and Tableau (DATA -7.2%), two firms often hyped as big data/analytics plays, or Russian tech firms Yandex (YNDX -6.6%) and Qiwi (QIWI -6.9%), which often sell off when oil prices and the ruble are under pressure.
- Elsewhere in tech, big decliners include Zillow (Z -7.1%), Square (SQ -6.7%), Fitbit (FIT -6.6%), Groupon (GRPN -6.9%), TrueCar (TRUE -7.7%), Pure Storage (PSTG -7.8%), Jive Software (JIVE -7.4%), Shopify (SHOP -7.2%), Ruckus Wireless (RKUS -8%), Renren (RENN -6.8%), Infinera (INFN -6.1%), TripAdvisor (TRIP -6.5%), Ellie Mae (ELLI -6.7%), and Knowles (KN -6.2%).
- Also off sharply: Several large-cap tech stocks, TowerJazz, Synaptics, Adtran
Dec. 31, 2015, 7:03 PM
- Cisco (NASDAQ:CSCO) could make a bid for storage array vendor NetApp (NASDAQ:NTAP) and threat-prevention hardware/software provider FireEye (NASDAQ:FEYE) in 2016, thinks FBR's Dan Ives. Cisco/NetApp speculation has been around for a while. Meanwhile, Cisco has made several security acquisitions in recent years, and appears to be up for more, but has also launched products that compete with FireEye.
- Ives also thinks IBM could bid for machine/log data analytics software leader Splunk (NASDAQ:SPLK) and business intelligence/data visualization software firm QLIK. With a $7.6B market cap and high multiples, Splunk would be a costlier acquisition than IBM's traditional fare.
- HP Enterprise (NYSE:HPE), meanwhile, is seen as a potential suitor for both Qlik and enterprise cloud storage/file-sharing leader BOX. And Oracle (NYSE:ORCL) a potential buyer of cloud ERP, HR, and e-commerce software firm NetSuite (NYSE:N). Larry Ellison owns a large stake in NetSuite (more SMB-focused than Oracle), and the company both competes and partners with Oracle.
- Microsoft (NASDAQ:MSFT), which has made plenty of acquisitions in the Satya Nadella era, is seen as a potential buyer of database security software and Web app firewall vendor Imperva (NYSE:IMPV), as well as of cloud vulnerability management and compliance software firm Qualys (NASDAQ:QLYS). Symantec (NASDAQ:SYMC), which has signaled it will make security acquisitions after the sale of its Veritas unit closes, is considered a possible acquirer of e-mail/compliance security software provider Proofpoint (NASDAQ:PFPT).
- Yesterday: FBR sees improving cybersecurity spend, likes several stocks
Dec. 11, 2015, 3:21 PM
- A long list of tech firms are off sharply as the Nasdaq and S&P respectively drop 2% and 2.2% ahead of an expected Fed rate hike.
- The casualty list includes threat-prevention hardware/software provider FireEye (FEYE -6.2%), machine data analytics software vendor Splunk (SPLK -7.1%), driver-assistance system vendor Mobileye (MBLY -6.3%), supercomputer makers Cray (CRAY -7.6%) and Silicon Graphics (SGI -7%), audio codec chipmaker Cirrus Logic (CRUS -5.3%), and local services marketplace Angie's List (ANGI -6.3%).
- Others include cloud HR/financials software provider Workday (WDAY -5.6%). enterprise social networking software firm Jive Software (JIVE -5.9%), cloud telematics software provider FleetMatics (FLTX -5.2%), mobile accessory maker Zagg (ZAGG -7.5%), network visibility/monitoring hardware provider Gigamon (GIMO -5.8%), smart grid networking hardware/software provider Silver Spring (SSNI -8.9%), and online travel deals provider Travelzoo (TZOO -6%).
Dec. 8, 2015, 10:10 AM
- Stating an IT security survey involving 51 CIOs turned up "exceptional strength" for FireEye (FEYE +7.5%), Citi's Walter Pritchard has upgraded shares to Buy and hiked target hiked by $4 to $35.
- Palo Alto Networks (PANW -0.6%), Splunk (SPLK +0.4%), and Imperva (IMPV +2%) also "showed up fairly well" in the survey, which pointed to continued strong end-market demand for security in general. Network security led the way, and demand for endpoint protection offerings was particularly strong. FireEye obtained an endpoint protection product line through the Mandiant acquisition; Palo Alto launched its Traps endpoint protection service a year ago.
- Regarding FireEye, crushed last month due to soft Q3 revenue/billings figures and a full-year guidance cut, Pritchard now sees a favorable risk/reward, and thinks sentiment is "quite negative vs. security peers."
- Pritchard admits he has been worried (like other analysts) about the consolidation of advanced persistent threat (APT) functionality from standalone products such as FireEye's into firewall and endpoint platforms. However, survey results "show continued reversal of consolidation pressure in network security and also buyer support for standalone APT solutions." That leads him to think FireEye "had more of an execution issue in Q3 than a change in demand/secular market shift."
Nov. 19, 2015, 4:21 PM
- Along with its FQ3 results, Splunk (NASDAQ:SPLK) announces Godfrey Sullivan is stepping down as CEO following seven years on the job. Former Cisco marketing exec Doug Merritt, hired last year to be Splunk's field operations (sales) chief, is the new CEO, and has joined the board. Sullivan will remain on the board as non-executive chairman.
- Guidance: FQ4 guidance is for revenue of $200M-$202M, above a $198.3M consensus, and for a 5%-6% op. margin. Initial FY17 (ends Jan. '17) revenue guidance is at $850M, above an $832.3M consensus.
FQ3 details: License revenue (drives future services revenue) rose 45% Y/Y to $104.2M, an acceleration from FQ2's 42% growth. 500+ new customers were added, on par with FQ2;the total base is above 10K.
GAAP operating expenses rose 47% Y/Y to $216.7M, with $130.1M spent on sales/marketing. The deferred revenue balance rose to $348.9M. That helped free cash flow total $21.1M, above non-GAAP net income of $6M.
- Splunk has risen to $64.60 after hours.
- Splunk's FQ3 beat, PR
Nov. 19, 2015, 4:06 PM
- Splunk (NASDAQ:SPLK): Q3 EPS of $0.05 beats by $0.04.
- Revenue of $174.42M (+50.3% Y/Y) beats by $14.16M.
- Shares -2.5%.
Nov. 18, 2015, 5:35 PM
Nov. 5, 2015, 5:46 PM
- In addition to handily beating Q3 estimates, Tableau (NYSE:DATA) has guided on its earnings call for Q4 revenue of $195M-$200M, above a $193M consensus. Preliminary 2016 revenue guidance (possibly conservative, given the company's guidance history) of $845M-$865M is in-line with an $857M consensus.
- With shares down sharply from their June/July highs going into earnings - shares plunged post-earnings in late July - the numbers are being very well-received.
- BI/data visualization software rival QLIK, which tumbled last month due to a revenue miss and license growth slowdown, is up 3.7% after hours. Machine/log data analytics leader Splunk (NASDAQ:SPLK) is up 4% ahead of its Nov. 19 FQ3 report, and Hadoop analytics software provider Hortonworks (NASDAQ:HDP) is up 2.4%, after dropping 18.7% in regular trading in the wake of its Q3 beat and in-line Q4 guidance.
- Tableau's license revenue rose 57% Y/Y in Q3 to $109.5M, after growing 60% in Q2. New customer accounts totaled 3,100+ vs. 3,000+ in Q2, bringing the total count above 35K. $100K+ deals rose to 296 from 233. International revenue rose 75% Y/Y to $42.2M (25% of total revenue).
- As with many other growth-stage enterprise software firms, spending remains aggressive: GAAP operating expenses rose 66% Y/Y to $164.1M. $91.6M was spent on sales/marketing, $55M on R&D, and $17.6M on G&A.
- Tableau's Q3 beat, PR
Oct. 13, 2015, 6:41 PM
- Newly-public security software/services firm Rapid7 (NASDAQ:RPD) is buying Logentries, a provider of software for searching and analyzing the large volumes of machine/log data produced by IT systems, for $68M - $36M in cash + $32M in stock.
- Rapid7, which has relied heavily on analytics to differentiate its incident-detection and threat-management software: "The disruptive combination of Rapid7's industry-leading data collection and security analytics and Logentries' compelling machine data search technology, enables customers to better understand and quickly respond to risk in their IT environment ... This is a natural progression of our security data and analytics platform, complementing our value proposition and accelerating our time to market."
- The purchase represents a challenge to machine data analytics leader Splunk (NASDAQ:SPLK), which now gets a large portion of its revenue from security use cases and recently bought security analytics software firm Caspida for $190M. Logentries has emphasized ease-of-use as a selling point. CEO Andrew Burton in 2013: “We want to do to Splunk what [LogMeIn's] Join.me did to [Cisco's] WebEx which is to make it easy to use and accessible ... The market opportunity is big enough for all these companies. But there is a real need for a logging tool that is usable by mere mortals, not just programmers and techies."
Sep. 17, 2015, 6:47 PM
- Unified threat management (UTM) appliance leader Fortinet (NASDAQ:FTNT) has launched an app that leverages machine data analytics software leader Splunk's (NASDAQ:SPLK) platform to analyze log data produced by Fortinet's FortiGate appliances, and by doing so improve threat-detection and response times. (PR)
- Fortinet has also developed an add-on for the Splunk Enterprise platform that ingests and maps security and traffic data collected from Fortinet appliances into Splunk's software. Splunk: "By harnessing the threat data captured by the FortiGate devices, and translating that quickly into actionable intelligence and remediation steps, organizations can better leverage Splunk as the Nerve Center in their [security] command centers..."
- Splunk mentioned on its Q2 call (transcript) it saw triple-digit Y/Y bookings growth the Splunk App for Enterprise Security, which runs on top of Splunk Enterprise. A deal was struck in July to buy Caspida, a security analytics software firm whose products rely on machine learning and behavioral analytics.
Aug. 27, 2015, 4:28 PM
- Splunk (NASDAQ:SPLK) is up 3.5% after hours (following a 4.5% gain in market hours) after posting a Q2 report where it grew net income to $4.1M from a prior $1.2M, and boosting full-year revenue guidance.
- Revenue breakout: License revenue, $87.96M (up 41.7%); Maintenance and Services, $60.4M (up 53%).
- It signed more than 500 new customers to end the quarter with more than 10,000.
- Operating cash flow was $13.6M; free cash flow of $10.8M.
- The company's guided to Q3 revenues of $158M-$160M, just higher than expected $155.1M, and non-GAAP operating margin of 1%-2%. It's bumping full-year guidance (fiscal year ends Jan. 31) on revenues to $628M-$632M, up from previous $610M-$614M, and higher than a consensus of $616M, and non-GAAP operating margin of 2%-3%.
- Conference call to come at 4:30 p.m. ET.
Aug. 27, 2015, 4:04 PM
- Splunk (NASDAQ:SPLK): FQ2 EPS of $0.03 beats by $0.01.
- Revenue of $148.3M (+46.0% Y/Y) beats by $7.99M.
Aug. 26, 2015, 5:35 PM
Jul. 29, 2015, 9:38 AM
- High expectations are taking a heavy toll on Tableau (NYSE:DATA), as shares tumble in the wake of a Q2 beat and strong Q3/2015 guidance. Shares were up 50% YTD going into earnings, and well over 2x from their August 2014 lows.
- The BI/data visualization software upstart guided on its earnings call for Q3 revenue of $153M-$157M (above a $150.5M consensus) and full-year revenue of $617M-$627M (mostly above a $618.8M consensus). It has a track record of guiding conservatively.
- Top-line metrics: License revenue (drives future maintenance/services revenue) rose 60% Y/Y in Q2 to $96.7M. However, growth slowed from Q1's 74% and Q4's 75%. Maintenance/services revenue rose 76% to $53.1M. Over 3K new customer accounts were added (up from Q1's 2.6K+), and 233 $100K+ deals were closed (down from Q1's 249).
- Financials: GAAP operating expenses rose 75% Y/Y to $151.1M - sales/marketing spend totaled $85.1M, R&D $47.3M, and G&A $18.7M. Tableau ended Q2 with $729.5M in cash, and no debt.
- Machine data analytics leader Splunk (NASDAQ:SPLK) is following Tableau lower. Though not direct rivals, Tableau and Splunk are both widely seen as plays on big data/analytics growth.
- Tableau's Q2 results, PR
Jul. 10, 2015, 4:15 PM
- "Strategically, we believe this is a smart acquisition," writes FBR's Daniel Ives regarding Splunk's (NASDAQ:SPLK) $190M acquisition of security analytics/threat-detection software vendor Caspida, expressing a common view.
- Ives: "When coupled with Splunk's existing security solutions, the company should have the ability to detect advanced, hidden, and insider threats, improve threat detection with targeted incident response, and increase security operations center (SOC) efficiency. ... with the addition of Caspida, we believe Splunk has another solid upsell/cross-sell opportunity as it penetrates new/existing customers ... adding to what we believe is a healthy pipeline of potential deals for FY16 and beyond."
- Morgan Stanley's Keith Weiss notes Caspida's technology fits with a growing trend towards using probabilistic approaches to analyzing security threats. "With its strong background in data/analytics and the shift in spending we see towards more analytically focused solutions, Splunk remains one of our top plays on the security theme in software."
- William Blair's Bhavan Suri: "We believe Splunk's acquisition of Caspida represents another solid strategic move that further extends the company's technology differentiation vs. the competition, which gives us incremental conviction that it is well-positioned to continue delivering what we view as rare growth metrics."
- Shares rallied to $71.86 today, aided by a 1.5% Nasdaq gain. They're up 22% YTD.
Jul. 9, 2015, 5:28 PM
- Splunk (NASDAQ:SPLK) is acquiring Caspida, provider of a security software platform that attempts to uncover malware, advanced persistent threats (APTs), and insider threats with the help of machine learning and behavioral analytics. The company is paying $127M in cash, and $63M in restricted shares.
- Splunk, which received about a third of its FQ1 business from security analytics deployments, proclaims pairing its machine data analytics software (used to respond to breaches) with Caspida's offerings (used to detect breaches) will yield an unmatched end-to-end platform.
- The purchase comes amid surging corporate cybersecurity spend following numerous well-publicized breaches. Splunk: "Recent high-profile breaches show virtually all attacks happen with compromised credentials, and automated detection leveraging machine learning is the future for detecting known and unknown threats from insider and external attackers."
- Caspida is expected to contribute to revenue next year. Splunk is affirming its FY16 (ends Jan. '16) revenue, op. margin, and op. cash flow guidance.
Splunk, Inc. develops and markets software products. Its software collects and indexes data at massive scale, regardless of format or source and enables users to search, correlate, analyze, monitor and report on this data in real time. The company's machine data is generated by software... More
Industry: Application Software
Country: United States
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