Splunk GAAP EPS of -$0.88 beats by $0.90, revenue of $901.12M beats by $124.74M

• Splunk press release (NASDAQ:SPLK): Q4 GAAP EPS of -$0.88 beats by $0.90.
• Revenue of $901.12M (+20.9% Y/Y) beats by $124.74M.
• Shares +4%.
• Q1 2022 Guidance: Total revenues are expected to be between $615 million and $635 million vs. consensus of $608.87M
• Non-GAAP operating margin is expected to be between negative 20% and negative 25%.
• FY 2022 Guidance: Cloud ARR is expected to be at least $2 billion.
• Total ARR is expected to be approximately $3.9 billion.
• Total revenues are expected to be between $3.25 billion and $3.3 billion vs. consensus of $3.03B
• Non-GAAP operating margin is expected to be between 0% and 2%.
• Operating cash flow is expected to be at least $400 million.

Comments

[HumphreyAppleby]

Has anyone else done the math to generate the operating margin guidance provided by Splunk management of 0% - 2 percent??

I had to "right-size" expenses a lot to get there. As a result, I would look for a healthy amount of headcount reduction in the upcoming Q1 by the new CEO as he shows that he intends to bring the company to profitability.

This would be a bonus for the stock price and valuation. He can re-hire later.

[User 49215273]

@HumphreyAppleby You do not bring headcount down to get operationally profitable in the short term in a company with explosive growth such as SPLUNK.

Maybe you have not heard, but there is a severe drought for talented professionals. If you lose them, good luck in getting them back. Training costs for new hires if your layoffs don’t return would wipe out any cost savings.

With Splunk’s explosive growth they will need to hire more soon to keep up with all the new business.

[HumphreyAppleby]

@Big fish 73 You put the severance costs in "one-time" costs, so that reduces your operational costs.

A LOT of problems over the last 3 years have been due to the fact that growth has slowed.

[User 49215273]

@HumphreyAppleby Let’s look at the big picture. Based off of the recent results, “For the fourth quarter, Cloud ARR was $1.34 billion, up 65% year-over-year, total ARR was $3.12 billion, up 32% year-over-year and Cloud revenue was $289 million, up 69% year-over-year”.

The point is that growth is still exploding and the outlook is positive. Many companies would love to have that kind of slowing growth.

The one time accounting write off is minimal in comparison and I’m sure with their growth they’ll need to hire.

[Confoundedinterest]

Good report at first glance, also I really like the hire for CEO, very interested in the conference call.

[se2037]

Any updates on the rumoured interest from Cisco?

[User 49215273]

Great numbers, very nice beat. With the recent risk on trade sell off and moderate interest rate hikes, I’m buying in at these after hour prices.

The market is not recognizing the beat yet, but if you want growth you have to buy it now, not in the future when their numbers begin to level off.

[ritholtz47]

@Big fish 73
Also stock is holding around these levels for some time.

[mbarnard4]

This will gap up bc of CEO announcement imo

[lappygums]

way overpiced- hope it jumps so I can start a short position

[Miwicz]

@lappygums agreed not a compelling hold. No specific bad news but with interest rates rising cant justify the hold

[Cgain]

@Miwicz tech historically outperforms other sectors in rising rate environment. Despite what you hear.

[lappygums]

@Cgain
I agree with that- I just don't agree to this company's valuation..it's one of those tech bubble stocks.

[thirdcamper]

That's a good beat - but losing less is still not yet making money...