Posted on Wednesday, Sep 2nd 2015
According to a MarketsandMarkets report published earlier this summer, the global cyber security market is estimated to be worth $170.21 billion by 2020, recording a growth of 10% annually over the five year period 2015 through 2020. The market is projected to be worth $106.32 billion this year. Big Data analytics software solutions provider and Billion Dollar Unicorn club member Splunk (NASDAQ: SPLK) is making a foray into this market.
Splunk recently announced impressive quarterly results. For the previous quarter, revenues grew 46% over the year to $148.3 million, ahead of the market’s expectations of $140.3 million. EPS of $0.03 was also ahead of the Street’s forecast of $0.02 for the quarter.
By segment, license revenues increased 42% over the year to $87.96 million and maintenance and service revenues grew 53% to $60.37 million. Splunk saw significant growth in their cloud offerings where they reportedly tripled their orders in nine months.
For the current quarter, Splunk forecast revenues of $158 million-$160 million, compared with the Street forecast of $155 million. Splunk expects to end the current year with revenues of $628 million-$632 million, again ahead of the market consensus of $616 million.
Splunk continued to focus on expanding their market presence through acquisitions. Earlier last quarter, they announced the acquisition of anomaly detection and machine learning company Metafor Software. Vancouver-based Metafor was founded in 2010 by serial entrepreneurs to build disruptive technologies to help solve application management challenges within the cloud and enterprise IT environments. Their platform uses unsupervised, non-parametric behavioral analytics to identify security threats and performance problems. Their algorithm is able to locate inconsistencies and perform automated diagnostics. Terms of the deal were not disclosed.
Cyber security is another high growth area for Splunk. According to their reports, customers requiring cyber security solutions account for 40% of their business. To deliver better products to this high-growth market, Splunk recently announced the $190 million acquisition of Caspida. Caspida is a cyber-security and threat detection company that helps detect fraudulent activities, suspicious behavior, and account abuse. Through the acquisition, Splunk will be able to offer an improved product that leverages Caspida’s threat detection capabilities and integrates it with their expertise in responding to data breaches.
The market has been happy with Splunk’s acquisitions. Soon after they announced the acquisition of Caspida, their stock touched a 52-week high of $76.85. It has slipped since and is currently trading at $59.59 with a market capitalization of $7.5 billion. This is one successful Unicorn that has shown strong growth since it went public at $17 a share back in 2012.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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