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Cloud Stocks: Splunk Bets Big on Data Streaming

Posted on Monday, Nov 25th 2019

According to a Grand View Research report, the global Big Data as a Service (BDaaS) market is estimated to grow to $51.9 billion by 2025 at a CAGR of 38.7%. Big Data player Splunk (NASDAQ: SPLK) recently announced its third quarter results that continued to surpass market expectations.

Splunk’s Financials

Revenues for the quarter grew 30% over the year to $626 million, ahead of the market’s expectations of $604.1 million. Net loss was $57.6 million, compared with a loss of $55.6 million a year ago. On an adjusted basis, EPS was $0.58 per share, better than the market’s forecast loss of $0.54 per share.

By segment, its License revenue increased 33% to $373.7 million, while maintenance and services revenue climbed 25% to $252 million. Within the segments, software revenues grew 40% to $454 million. During the quarter, Splunk added more than 440 new enterprise customers to its portfolio.

For the current quarter, Splunk expects revenues of $780 million compared with the market’s forecast of revenues of $770 million with an EPS of $1.03.

Splunk’s Acquisitions

During the quarter, Splunk continued on its inorganic growth route. Earlier this year, it had announced the billion dollar acquisition of SignalFx. More recently, it added two other start-ups – Streamlio and Omnition.

Palo Alto-based Streamlio is a data streaming platform that was set up in 2017. Streamlio leverages the Apache Pulsar platform to deliver an enterprise-class solution for fast data that can connect, process, and store data streams in real-time. The acquisition will help Splunk accelerate the development of its real-time streaming process and as its containerized multi-tenant cloud platform applications.

Splunk has recently been focusing on the development of its streaming capabilities. Last spring, it had launched a Beta version of Splunk Data Stream Processor. It plans to leverage Streamlio’s expertise to expand on this offering. Prior to the acquisition, Streamlio was privately held. It had raised $7.5 million in funding from a Series A round led by LightSpeed Ventures in 2017 at an undisclosed sum. Its latest financials, and Splunk’s deal value are not disclosed.

The other acquisition last quarter was that of observability platform Omnition. Redwood City-based Omnition is a startup that uses distributed tracing to monitor microservices applications. Omnition was set up last year but was operating in a stealth mode so far. The acquisition will complement Splunk’s SignalFx acquisition to help it provide real-time monitoring and metrics around cloud and microservices. Omnition’s funding and financial details, along with the acquisition price are not disclosed.

Splunk’s Platform Expansion

Besides inorganic growth, Splunk continues to upgrade its platform and service. It recently announced the launch of Mission Control – an integrated security platform that includes its security information and event management (SIEM), user behavior analytics (UBA), and security orchestration, automation, and response (SOAR) offerings. Mission Control is currently in Beta stage. Splunk plans to provide a native, cloud-based application that can help security analysts investigate, manage, and respond to certain types of events while automated tools take care of the rest.

It also added several new capabilities to its Data-to-Everything Platform that organizations use to search, investigate, monitor, analyze, and act on data at scale. The enhancements include the general availability of Data Fabric Search that streamlines analytics by integrating datasets across diverse data stores and Data Stream Processor that is a real-time stream processing product that continuously collects high-velocity, high-volume data from diverse sources. The recent acquisition of Streamlio will help Splunk continue to build on this enhancement.

The market was pleased with Splunk’s performance. The stock climbed 6% in the after-hours session. It is currently trading at $126.84 with a market capitalization of $19.6 billion. It had climbed to a 52-week high of $143.70 earlier this year. The stock has recovered from the 52-week low of $90.08 that it had fallen to in December last year.

This segment is a part in the series : Cloud Stocks

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