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This Big Data Software Maker Is Playing Well
Posted by: abirk (IP Logged)
Date: March 6, 2014 01:51PM
Technology has created a new era for the human race. It has become a part and parcel of our life. Everybody uses it more, or less. With the hands of technology, business has become easier and their existence is also worldwide. In e-commerce business, customer relationship is the core area. Therefore, to manage such a vast number of customers, solid software platform is needed. Enterprises seeking solutions to their big data challenges always think of Splunk Inc. (SPLK).
About this Big Data Software Maker
With a market cap of $10.41 billion, Splunk provides the leading software platform for real-time Operational Intelligence. Splunk software and cloud services enable organizations to search, monitor, analyze and visualize machine-generated big data coming from websites, applications, servers, networks, sensors and mobile devices. More than 7,000 enterprises, government agencies, universities and service providers in over 90 countries use Splunk software to deepen business and customer understanding, mitigate cybersecurity risk, prevent fraud, improve service performance and reduce cost. Approximately 200 of the Fortune 500 are engaged with Splunk at some level. Splunk products include Splunk® Enterprise, Splunk Cloud™, Splunk Storm®, Hunk™: Splunk Analytics for Hadoop, and premium Splunk Apps.
Tracking the Performance
On Feb. 27, 2014, Splunk announced mixed results for its fiscal fourth quarter and year ended Jan. 31, 2014. The company’s revenue rose 53% to $99.9 million vs. a year earlier, continuing a long string of double-digit gains. License revenue rose 47% to $68.8 million. GAAP operating loss was $32.5 million, and GAAP operating margin was negative 32.5%. Non-GAAP operating income was $4.0 million, and non-GAAP operating margin was 4.0%. The company’s GAAP loss per share was $0.30, and non-GAAP income per share was $0.03. Splunk reported operating cash flow of $34.4 million with free cash flow of $32.4 million.
Of its $99.9 million in fourth quarter revenue, Splunk reported gross profit of $88.7 million. But it continues to spend heavily. It invested $76.3 million in sales and marketing in the quarter, up 90% from the year-ago quarter. It invested $26 million in R&D, almost double that of a year ago. Splunk ended the year with almost $900 million cash, of which about $500 million came from a January follow-on stock offering. The company added more than 500 customers in the fourth quarter, and ended the year with about 7,000 globally.
Without constant innovation, a company can find profits elusive and growth strained. For this reason, Splunk invested a huge amount in R&D. On Dec. 10, 2013, Splunk has acquired Cloudmeter Inc., a provider of network data capture technologies. This acquisition will enhance the ability of Splunk customers to analyze machine data directly from their networks, and correlate it with other machine-generated data to gain insights across Splunk’s core use cases in application and infrastructure management, IT operations, security and business analytics.
On Feb. 4, 2014, Splunk and Internet2 made an agreement to bring Splunk software to hundreds of potential new higher-education customers. The agreement enables member universities to deploy Splunk Enterprise with a pre-negotiated contract and subscription pricing. It also allows all U.S. universities or colleges to subscribe via Internet2, a member-owned advanced technology community. Arizona State University (ASU), and The University of Nevada, Las Vegas (UNLV) are also examples of two members of Internet2 who are already Splunk customers. Further, the company has also introduced version 2.0 of the Splunk App for NetApp Data ONTAP, which provides comprehensive visibility into the operational health of NetApp Data ONTAP storage systems. To secure Electronic Healthcare Records (EHR) and to ensure regulatory compliance across the entire hospital IT network, all leading U.S. hospitals recently expanded their use of Splunk Enterprise.
To strengthen its foothold in the fast-growing security market, Splunk has appointed Haiyan Song as vice president of security markets on Feb. 24, 2014. With more than 20 years of experience, Song will serve as the leader of a cross-functional security team that includes security experts in product development, product management, marketing, business development, sales and field technical services. Recently, Symantec Corporation (SYMC) has selected Splunk Enterprise 6 to help bolster its security intelligence operations. Through this partnership, Symantec will centralize, monitor and analyze security-related data in Splunk Enterprise to help investigate incidents and detect advanced threats.
To leverage the power of advanced visual analytics and real-time machine data, Tableau Software Inc. (DATA) partnered with Splunk yesterday. Tableau Software is the most widely recognized provider of visual analytics software, and the latest version of Tableau software includes Splunk Enterprise as a native data source using Splunk’s recently launched ODBC driver. This partnership will enable people to gain new business insights.
Chart from finviz.com
To Wrap Things Up
To strive well in this competitive market, Splunk is constantly innovating new ideas and technology. Most growth companies invest heavily in sales infrastructure, and Splunk is no different. Splunk’s investment in sales infrastructure will continue to win new customers at a robust rate. Besides gaining new customers and increasing the revenues from current users, overseas expansion represents a massive opportunity.
From its fourth quarter report, it can be assumed that the company can sustain its advantage of growing customer needs of business intelligence and cloud computing in the near future. Big data is a hot sector, and Splunk is leading the revolution. I am therefore pretty bullish that this company won’t let its valued investors and customers down.
Stocks Discussed: SPLK, SYMC, DATA,