Splunk’s Q4 Results Exceed Expectations; Shares Rise 2%

Software company focused on security and observability Splunk Inc. (NASDAQ: SPLK) has reported better-than-expected results for the fourth quarter ended January 31, 2022.

Following the results, shares of the company rose 1.9% to close at $117.15 in Wednesday’s extended trading session.

Revenue & Earnings

Splunk reported quarterly revenues of $901 million, up 21% year-over-year. Further, the figure comfortably surpassed the consensus estimate of $777.28 million. Cloud services revenue (up 68.8% year-over-year) and license revenue (up 9.6% year-over-year) stood at $289.3 million and $444.6 million, respectively.

Earnings during the quarter stood at $0.66 per share, up 73.7% from the same quarter last year. Further, the figure surpassed the consensus loss estimate of $0.19 per share.

Other Operating Metrics

Splunk recorded total annual recurring revenue (ARR) of $3.12 billion, up 32% year-over-year. Further, customers with cloud ARR greater than $1 million rose 70% from the previous year to 317, while customers with a total ARR greater than $1 million stood at 675, up 32% from the year-ago quarter.

The company generated a quarterly free cash flow of $131.8 million, which compares favorably with an outflow of $32.6 million last year.

Management Commentary

The CEO of Splunk, Graham Smith, said, “Q4 was an excellent finish to a strong year for Splunk. Our team delivered across our platform, observability and security businesses as organizations around the world turned to Splunk to monitor and secure their business-critical infrastructure and applications.”

Stock Rating

The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 9 Buys and 5 Holds. The average Splunk stock prediction of $154.27 implies that the stock has upside potential of 34.2% from current levels. Shares have declined 19.7% over the past year.

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