Splunk (NASDAQ: SPLK) produces software to organize machine-generated data into operational intelligence. By sifting through large troves of data, Splunk is able to extract business insights, thus allowing companies to operate more efficiently and strengthen cyber security measures. Splunk went public in 2012 and recently released an impressive fiscal fourth quarter and full year 2015 report on February 26th.
Highlights of the Q4 report include total revenue of $147.4 million, a 48% year-over-year increase. GAAP losses per share widened from -$0.30 in the last quarter to -$0.47. Splunk has continued to gain customers as the company posted licensing revenue of $98.1 million, up 43% year-over-year. CEO Godfrey Sullivan noted that Splunk is “proud to welcome more than 600 new customers to the Splunk family, which now includes over 9,000 customers around the world.” Splunk’s customers include the U.S. Department of State and Toyota. Sullivan commented that the report reflected the “best quarter yet for both Splunk Cloud and the Splunk App for Enterprise Security.”
Looking forward, Splunk provided guidance of $116 million to $118 million in total revenue for the first fiscal quarter of 2016, exceeding analysts’ estimates of $115.5 million. Additionally, Splunk expects total revenue for fiscal year 2016 to be approximately $600 million, above analysts’ estimates of $580 million.
On February 27th, analyst Brian White of Cantor Fitzgerald reiterated a Buy rating on Splunk and increased his price target from $85 to $90. White believes Splunk is “well positioned for strong growth” due to “a significant uptick in large-sized deals, a broader portfolio, opportunities overseas, strong momentum in security and the tailwind surrounding the Big Data trend.” Looking forward, White estimates next quarter’s revenue to be $121 million. The analyst also raised his revenue estimate for fiscal year 2016 from $575.3 million to $600.9 million. Both of White’s figures are above Splunk’s estimate and the analyst consensus.
Brian White currently has a 71% success rate recommending stocks and a +19.9% average return per recommendation.
Separately on February 27th, analyst Joel Fishbein of BMO Capital reiterated a Market Perform rating on Splunk and raised his price target from $69 to $75. Fishbein acknowledged that “All metrics, including license growth, guidance, upsell activity, large deals, and mix of enterprise/term agreements, were strong and supportive of the narrative around Splunk’s ability to add increasing value in a diverse set of use cases.” However, the analyst is concerned about the company’s valuation noting, “With business transition issues around pricing and concerns around the company’s ability to scale up the business smoothly diminishing, valuation alone is the only knock on the story. The multiple continues to be among the highest in the group, even compared to SaaS peers.” Despite strong fundamentals and Splunk’s strong position in Big Data, Fishebein remains “at Market Perform pending a pull back.”
Joel Fishbein currently has an 81% success rate recommending stocks and a +20.4% average return per recommendation.
On average, the top analyst consensus for Splunk on TipRanks is Moderate Buy.
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