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Splunk Continues to Acquire

Posted on Friday, Sep 14th 2018

A recent Market Research Future report published this year Billion Dollar Unicorn club member Splunk (NASDAQ: SPLK) recently announced its second quarter results that surpassed all market expectations.

Splunk’s Financials

Revenues for the quarter grew 39% over the year to $388.3 million, significantly ahead of the market’s expectations of $358.4 million. It ended the quarter with a net loss of $103.5 million, compared with $78.6 million reported a year ago. Adjusted EPS of $0.08 was also ahead of the Street’s forecast of $0.05 for the quarter.

By segment, Splunk’s license revenues grew 36% to $200.7 million. Maintenance and services revenues grew 41% to $187.6 million. Cloud revenues within the segments reported an impressive 90% growth to $39 million. During the quarter, Splunk added more than 550 new customers and expanded relationships with names like ADP, the U.K. Ministry of Defence, the U.S. Department of Defense, Dartmouth College, and Southwestern Energy.

For the current quarter, Splunk expects revenues of $430-$432 million, against the market’s forecast of $428.2 million. It expects to end the current year with revenues of $1.69 billion.

Splunk’s Acquisitions

Splunk continued its inorganic growth even in the current quarter. It recently announced the acquisition of VictorOps, a leader in DevOps incident management, for an estimated $120 million. Splunk hopes that by integrating machine data analytics and artificial intelligence from its service with incident management from VictorOps, it will deliver a platform that will be able to deliver better customer experiences. The integration will help organizations resolve and prevent issues to improve customer engagement by applying machine learning and artificial intelligence to monitoring and incident management data. Prior to the acquisition, VictorOps was privately funded having raised $33.7 million from investors including Costanoa Group, Foundry Group, and Shea Ventures. Details of its financials were not disclosed.

In July this year, it also announced the acquisition of KryptonCloud, which offers businesses with cloud solutions that focus on asset performance management. KryptonCloud was founded in 2015 by Ed Albanese and Arun Ramakrishnan to offer data collection and management solutions that help businesses with regards to asset decision making. Its services help provide insight and analytics about failure detection, asset availability, costs, and maintenance expenses. Terms of the acquisition were not disclosed. KryptonCloud had been privately held so far, having received a seed funding of $2.7 million.

Splunk is witnessing robust growth within the enterprise segment. For instance, its long-time customer Amazon recently entered into an enterprise agreement with it. Similarly, its global partner Accenture expanded its use of Splunk by implementing Phantom solution and piloting machine learning capabilities for their operations.

Splunk has received strong recognition for its offerings recently. IDC recognized it as being among the fastest growing top five vendors in the IT Operations Management, Hybrid Management Drives market. A report by Gartner also listed Splunk in its top ten IT Operations Management vendors.

Splunk faces significant competition from the likes of big players like IBM and smaller ones like Rapid7. I would like to know from users how Splunk compares with these other offerings?

Its stock is trading at $125.94 with a market capitalization of $18.5 billion. It has been climbing steadily from the 52-week low of $62.39 that it was trading at in October last year. It had climbed to a 52-week high of $130.00 soon after result announcement.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns.

Photo Credit: Ted Striker/Flickr.com

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