Splunk: Analyzing Big Data

06/13/2017 2:54 am EST

Focus: TECHNOLOGY

Todd Shaver

Founder and Editor-in-Chief, BullMarket.com

Splunk (SPLK) is an American multinational corporation based in San Francisco, that produces software for searching, monitoring, and analyzing machine-generated big data, explains growth stock expert Todd Shaver, editor of BullMarket.com.

Splunk sold off quickly following Q1 earnings 10 days ago. However, most of the Q1 metrics in terms of revenue, billings and operating cash flow were solid. Furthermore, the revenue guide for Q2 and 2018 were raised a bit relative to consensus.

The negative reaction towards Q1 results stemmed from License revenue and current product billings metrics that were soft and were attributable to Cloud revenue contribution and Europe region revenue under-performance.

The European results may have been related to deal-timing issues. Field contacts indicate that demand generation events have been well attended by prospects and sales activity in that region has been robust.

Nevertheless, the shortfall in Q1 is going to necessitate that Splunk make organizational changes to get that region back on track.

Post Q1 checks indicate the Cloud business continues to enjoy momentum. AWS established a Quick Starts deployment option for Splunk this past February which could facilitate additional business on the AWS platform. Splunk continues to get tremendous leverage from the AWS platform.

Splunk has over 745 active partners globally, and the company wants to grow that number carefully, as we have seen other IT Security vendors suffer from being over distributed.

After a strong performance in the seasonally weakest quarter of the year, we would be buyers of Splunk on any weakness.

Despite more than tripling revenue between FY:2014 to FY:2017 and consistently beating analyst expectations, the stock is 37% below the peak made in 2014. Now is a great time to take a closer look if you have not already.

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