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Splunk Q2 Results Top Expectations; Issues Guidance

Splunk (SPLK) delivered better-than-expected second-quarter results for Fiscal 2022. The provider of the data-to-everything platform delivered growth in cloud revenue and customer numbers. Shares jumped 1.31% following the news to close at $155.02 on August 25.

Revenue increased 23% year-over-year to $606 million, easily beating consensus estimates of $562.82 million. Average recurring revenue (ARR) totaled $2.63 billion, up 37% compared to the same quarter last year. Cloud ARR increased 72% year-over-year to $976 million. Earnings per share landed at a loss of $0.33, better than an expected loss of $0.69 a share.

Splunk had 234 customers with Cloud ARR of $1 million or more, benefiting from a good chunk of workloads and data shifting to the cloud. Additionally, the company ended the quarter with 582 customers with a total ARR of more than $1 million. (See Splunk stock charts on TipRanks)

“We outperformed in the first half of the year and are well-positioned heading into the second half. We expect $1.3 billion of Cloud ARR and Total ARR of well over $3 billion by fiscal year end as we help our customers accelerate their digital transformations,” said CFO Jason Child.

For the fiscal third quarter, the company expects revenue to range between $625 million and $650 million, while full-year revenue is expected at between $2.53 billion and $2.60 billion.

Recently, Cowen & Co analyst Derrick Wood reiterated a Hold rating on the stock with a $140 price target, implying 9.69% downside potential to current levels. According to the analyst, Splunk’s forward-quarter pipeline outlook looks better.

“The outlook for CY21 up-ticked with an avg growth outlook of 11% up from 3% last qtr but in-line with the outlook from our 4Q21 survey,” Wood stated.

Consensus among analysts is a Moderate Buy based on 17 Buys and 10 Holds. The average Splunk price target of $164.91 implies a 6.38% upside potential to current levels.

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