[November 20, 2014] |
|
Splunk Inc. Announces Fiscal Third Quarter 2015 Financial Results
SAN FRANCISCO --(Business Wire)--
Splunk
Inc. (NASDAQ: SPLK), provider of the leading software platform for
real-time Operational Intelligence, today announced results for its
fiscal third quarter ended October 31, 2014.
Third Quarter 2015 Financial Highlights
-
Total revenues were $116.0 million, up 48% year-over-year.
-
License revenues were $71.8 million, up 41% year-over-year.
-
GAAP operating loss was $48.3 million; GAAP operating margin was
negative 41.6%.
-
Non-GAAP operating income was $2.7 million; non-GAAP operating margin
was 2.3%.
-
GAAP net loss per share was $0.40; non-GAAP net income per share was
$0.02.
-
Operating cash flow was $24.2 million with free cash flow of $20.2
million.
"This quarter we released new versions of all of our core products,
offered new solutions for mobile, wire, mainframe and sensor data, and
strengthened our market teams," said Godfrey Sullivan, Chairman and CEO.
"We welcomed over 500 new customers, saw growth in all of our core
markets - with the growth in security especially notable - and we had
our best quarter yet with Splunk Cloud."
Third Quarter 2015 and Recent Business
Highlights
Customers:
-
Signed more than 500 new enterprise customers, ending the quarter with
more than 8,400 customers worldwide.
-
New and Expansion Customers Include: Abacus International Pte
Ltd. (Singapore), ADP, AT&T, Beth Israel Deaconess Medical Center,
Boeing Employees Credit Union, Cembra Money Bank (Switzerland),
Chicago Public Schools, Cisco Systems, Comcast, Consolidated Edison,
Dell, 1-800-FLOWERS.COM, Inc., Global Blue Austria GmbH, Hospital
Corporation of America, Intermedia, Johns Hopkins University Applied
Physics Lab, KeyBank, M2 Telecommunications Group (Australia),
Oppenheimer & Co. Inc., Orrstown Bank, SAP, SFR (France), Shazam
(United Kingdom), State of New Mexico, The Warehouse Group (New
Zealand), University of Lyon (France), U.S. Department of Energy, U.S.
Department of Health and Human Services, Valve Corporation, Weight
Watchers and Zulily.
Product:
-
Announced the general availability (GA) of Splunk
Enterprise 6.2, the latest version of the award-winning platform
for machine data, to deliver improved scalability and extend powerful
Splunk analytics to a broader number of users.
-
Announced the GA of Hunk
6.2 to extend the power of exploratory analytics and enable all
professionals to easily unlock the business value of data in Hadoop
and NoSQL data stores.
-
Announced the availability of Hunk
priced on an hourly basis, directly from the Amazon Elastic MapReduce
(Amazon EMR) console.
-
Announced the GA of Splunk
MINT Express and the beta program for Splunk
MINT Enterprise, the first new products from the acquisition of
BugSense, to empower customers to gain greater Operational
Intelligence from mobile apps.
-
Announced the industry's first 100 percent uptime service level
agreement for Splunk
Cloud and a free Splunk
Online Sandbox to give customers a trial experience of Splunk
Cloud within minutes.
-
Announced the GA of the Splunk
App for Stream to capture real-time streaming wire data to support
app management, IT operations, security and business analytics.
Strategic and Channel Partners:
Recognition:
Appointments:
-
Appointed Mark
Carges, Splunk Board of Directors.
-
Appointed Marc
Olesen, Senior Vice President and General Manager, Cloud Solutions.
-
Appointed Rick
Fitz, Vice President, IT Markets.
-
Promoted Haiyan
Song to Senior Vice President, Security Markets.
.Conf:
-
Hosted a record number of customers and partners at this year's
.conf2014 with 80+
customer presentations across use cases and industries.
Financial Outlook
The company is providing the following guidance for its fiscal fourth
quarter 2015 (ending January 31, 2015):
-
Total revenues are expected to be between $135 million and $137
million.
-
Non-GAAP operating margin is expected to be between 4% and 5%.
The company is updating its previous guidance for its fiscal year 2015
(ending January 31, 2015):
-
Total revenues are expected to be between $438 million and $440
million (was $423 million and $428 million per prior guidance provided
on August 28, 2014).
-
Non-GAAP operating margin is expected to be between 1% and 2% (was
previously approximately 1% per prior guidance provided on August 28,
2014).
The Company is providing the following guidance for its fiscal year 2016
(ending January 31, 2016):
-
Total revenues are expected to total approximately $575 million.
All forward-looking non-GAAP financial measures contained in this
section "Financial Outlook" exclude estimates for stock-based
compensation expenses, employer payroll tax expense related to employee
stock plans, amortization of acquired intangible assets, ground lease
expense related to a build-to-suit lease obligation, impairment of a
long-lived asset and acquisition-related costs.
While a reconciliation of non-GAAP guidance measures to corresponding
GAAP measures is not available on a forward-looking basis, the company
has provided a reconciliation of GAAP to non-GAAP financial measures in
the financial statement tables for its fiscal third quarter 2015 and
fiscal year-to-date 2015 non-GAAP results included in this press release.
Conference Call and Webcast
Splunk's executive management team will host a conference call today
beginning at 1:30 p.m. PT (4:30 p.m. ET) to discuss the company's
financial results and business highlights. Interested parties may access
the call by dialing (866) 501-1535. International parties may access the
call by dialing (216) 672-5582. A live audio webcast of the conference
call will be available through Splunk's Investor Relations website at http://investors.splunk.com/events.cfm.
A replay of the call will be available through November 27, 2014 by
dialing (855) 859-2056 and referencing Conference ID 32818367.
Safe Harbor Statement
This press release contains forward-looking statements that involve
risks and uncertainties, including statements regarding Splunk's revenue
and non-GAAP operating margin targets for the company's fiscal fourth
quarter and fiscal year 2015 and Splunk's revenue target for the
company's fiscal year 2016 in the paragraphs under "Financial Outlook"
above and other statements regarding momentum in the company's business,
increasing customer adoption, expected success from product and service
investments and innovations, expected benefits from new product
offerings, expected profitability and growth strategies. There are a
significant number of factors that could cause actual results to differ
materially from statements made in this press release, including:
Splunk's limited operating history and experience developing and
introducing new products; risks associated with Splunk's rapid growth,
particularly outside of the U.S.; Splunk's inability to realize value
from its significant investments in its business, including product and
service innovations; Splunk's transition to a multi-product software and
services business; Splunk's inability to successfully integrate acquired
businesses and technologies; and general market, political, economic and
business conditions.
Additional information on potential factors that could affect Splunk's
financial results is included in the company's Quarterly Report on Form
10-Q for the quarter ended July 31, 2014, which is on file with the U.S.
Securities and Exchange Commission. Splunk does not assume any
obligation to update the forward-looking statements provided to reflect
events that occur or circumstances that exist after the date on which
they were made.
About Splunk Inc.
Splunk Inc. (NASDAQ: SPLK) provides the leading software platform for
real-time Operational Intelligence. Splunk® software and cloud services
enable organizations to search, monitor, analyze and visualize
machine-generated big data coming from websites, applications, servers,
networks, sensors and mobile devices. More than 8,400 enterprises,
government agencies, universities and service providers in more than 100
countries use Splunk software to deepen business and customer
understanding, mitigate cybersecurity risk, prevent fraud, improve
service performance and reduce cost. Splunk products include Splunk®
Enterprise, Splunk Cloud™, Hunk®, Splunk MINT Express™ and premium
Splunk Apps. To learn more, please visit http://www.splunk.com/company.
Social Media: Twitter | LinkedIn | YouTube | Facebook
Splunk, Splunk>, Listen to Your Data, The Engine for Machine Data,
Hunk, Splunk Cloud, Splunk Storm, SPL, Splunk MINT Express and Splunk
MINT Enterprise are trademarks and registered trademarks of Splunk Inc.
in the United States and other countries. All other brand names, product
names, or trademarks belong to their respective owners. © 2014 Splunk
Inc. All rights reserved.
SPLUNK INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
October 31,
|
|
October 31,
|
|
October 31,
|
|
October 31,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Revenues
|
|
|
|
|
|
|
|
|
License
|
|
$
|
71,754
|
|
|
$
|
50,873
|
|
|
$
|
185,109
|
|
|
$
|
130,230
|
|
Maintenance and services
|
|
|
44,275
|
|
|
|
27,760
|
|
|
|
118,374
|
|
|
|
72,483
|
|
Total revenues
|
|
|
116,029
|
|
|
|
78,633
|
|
|
|
303,483
|
|
|
|
202,713
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
|
|
|
|
|
|
License
|
|
|
535
|
|
|
|
84
|
|
|
|
685
|
|
|
|
229
|
|
Maintenance and services 5
|
|
|
17,045
|
|
|
|
10,441
|
|
|
|
46,153
|
|
|
|
24,398
|
|
Total cost of revenues 1,2,3
|
|
|
17,580
|
|
|
|
10,525
|
|
|
|
46,838
|
|
|
|
24,627
|
|
Gross profit
|
|
|
98,449
|
|
|
|
68,108
|
|
|
|
256,645
|
|
|
|
178,086
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Research and development 6
|
|
|
39,534
|
|
|
|
18,961
|
|
|
|
103,455
|
|
|
|
49,635
|
|
Sales and marketing
|
|
|
85,720
|
|
|
|
53,052
|
|
|
|
236,776
|
|
|
|
138,999
|
|
General and administrative 4
|
|
|
21,446
|
|
|
|
12,917
|
|
|
|
75,125
|
|
|
|
35,275
|
|
Total operating expenses 1,2,3
|
|
|
146,700
|
|
|
|
84,930
|
|
|
|
415,356
|
|
|
|
223,909
|
|
Operating loss
|
|
|
(48,251
|
)
|
|
|
(16,822
|
)
|
|
|
(158,711
|
)
|
|
|
(45,823
|
)
|
|
|
|
|
|
|
|
|
|
Interest and other income (expense), net
|
|
|
|
|
|
|
|
Interest income, net
|
|
|
199
|
|
|
|
55
|
|
|
|
492
|
|
|
|
174
|
|
Other income (expense), net
|
|
|
(52
|
)
|
|
|
(283
|
)
|
|
|
(326
|
)
|
|
|
(459
|
)
|
Total interest and other income (expense), net
|
|
|
147
|
|
|
|
(228
|
)
|
|
|
166
|
|
|
|
(285
|
)
|
Loss before income taxes
|
|
|
(48,104
|
)
|
|
|
(17,050
|
)
|
|
|
(158,545
|
)
|
|
|
(46,108
|
)
|
Income tax provision (benefit) 7
|
|
|
447
|
|
|
|
(500
|
)
|
|
|
1,543
|
|
|
|
269
|
|
Net loss
|
|
$
|
(48,551
|
)
|
|
$
|
(16,550
|
)
|
|
$
|
(160,088
|
)
|
|
$
|
(46,377
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share
|
|
$
|
(0.40
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(1.35
|
)
|
|
$
|
(0.45
|
)
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in computing basic and diluted net
loss per share
|
|
|
120,331
|
|
|
|
106,008
|
|
|
|
118,895
|
|
|
|
104,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Includes amortization of acquired intangible assets as
follows:
|
|
|
|
|
Cost of revenues
|
|
$
|
703
|
|
|
$
|
82
|
|
|
$
|
2,093
|
|
|
$
|
82
|
|
Research and development
|
|
|
569
|
|
|
|
12
|
|
|
|
707
|
|
|
|
12
|
|
Sales and marketing
|
|
|
150
|
|
|
|
42
|
|
|
|
447
|
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
2 Includes stock-based compensation expense as follows:
|
|
|
|
|
|
Cost of revenues
|
|
$
|
4,039
|
|
|
$
|
1,165
|
|
|
$
|
11,653
|
|
|
$
|
2,735
|
|
Research and development
|
|
|
15,352
|
|
|
|
4,405
|
|
|
|
41,517
|
|
|
|
10,995
|
|
Sales and marketing
|
|
|
21,075
|
|
|
|
5,947
|
|
|
|
61,458
|
|
|
|
15,425
|
|
General and administrative
|
|
|
7,770
|
|
|
|
2,815
|
|
|
|
36,357
|
|
|
|
6,969
|
|
|
|
|
|
|
|
|
|
|
3 Includes employer payroll tax on employee stock plans
as follows:
|
|
|
|
|
Cost of revenues
|
|
$
|
111
|
|
|
$
|
53
|
|
|
$
|
344
|
|
|
$
|
97
|
|
Research and development
|
|
|
327
|
|
|
|
86
|
|
|
|
1,649
|
|
|
|
277
|
|
Sales and marketing
|
|
|
387
|
|
|
|
315
|
|
|
|
1,668
|
|
|
|
907
|
|
General and administrative
|
|
|
267
|
|
|
|
237
|
|
|
|
1,160
|
|
|
|
576
|
|
|
|
|
|
|
|
|
|
|
4 Includes ground lease expense related to build-to-suit
lease obligation
|
|
$
|
222
|
|
|
$
|
-
|
|
|
$
|
444
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
5 Includes charge related to impairment of long-lived
asset
|
|
$
|
-
|
|
|
$
|
2,128
|
|
|
$
|
-
|
|
|
$
|
2,128
|
|
|
|
|
|
|
|
|
|
|
6 Includes acquisition-related costs
|
|
$
|
-
|
|
|
$
|
408
|
|
|
$
|
-
|
|
|
|
408
|
|
|
|
|
|
|
|
|
|
|
7 Includes a partial release of the valuation allowance
due to acquisition
|
|
$
|
-
|
|
|
$
|
(747
|
)
|
|
$
|
-
|
|
|
$
|
(747
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPLUNK INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
|
|
January 31,
|
|
|
2014
|
|
2014
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
329,553
|
|
|
$
|
897,453
|
|
Investments, current portion
|
|
|
466,835
|
|
|
|
-
|
|
Accounts receivable, net
|
|
|
82,550
|
|
|
|
83,348
|
|
Prepaid expenses and other current assets
|
|
|
13,495
|
|
|
|
12,019
|
|
Total current assets
|
|
|
892,433
|
|
|
|
992,820
|
|
|
|
|
|
|
Investments, non-current
|
|
|
160,923
|
|
|
|
-
|
|
Property and equipment, net
|
|
|
43,236
|
|
|
|
15,505
|
|
Intangible assets, net
|
|
|
11,546
|
|
|
|
12,294
|
|
Goodwill
|
|
|
19,070
|
|
|
|
19,070
|
|
Other assets
|
|
|
2,000
|
|
|
|
642
|
|
Total assets
|
|
$
|
1,129,208
|
|
|
$
|
1,040,331
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Accounts payable
|
|
$
|
2,830
|
|
|
$
|
2,079
|
|
Accrued payroll and compensation
|
|
|
48,481
|
|
|
|
43,876
|
|
Accrued expenses and other liabilities
|
|
|
23,461
|
|
|
|
12,743
|
|
Deferred revenue, current portion
|
|
|
180,131
|
|
|
|
149,156
|
|
Total current liabilities
|
|
|
254,903
|
|
|
|
207,854
|
|
|
|
|
|
|
Deferred revenue, non-current
|
|
|
49,146
|
|
|
|
43,165
|
|
Other liabilities, non-current
|
|
|
27,265
|
|
|
|
4,404
|
|
Total non-current liabilities
|
|
|
76,411
|
|
|
|
47,569
|
|
Total liabilities
|
|
|
331,314
|
|
|
|
255,423
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
Common stock
|
|
|
121
|
|
|
|
116
|
|
Accumulated other comprehensive income (loss)
|
|
|
(205
|
)
|
|
|
58
|
|
Additional paid-in capital
|
|
|
1,127,773
|
|
|
|
954,441
|
|
Accumulated deficit
|
|
|
(329,795
|
)
|
|
|
(169,707
|
)
|
Total stockholders' equity
|
|
|
797,894
|
|
|
|
784,908
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,129,208
|
|
|
$
|
1,040,331
|
|
|
|
|
|
|
|
|
|
|
SPLUNK INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
October 31,
|
|
October 31,
|
|
October 31,
|
|
October 31,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(48,551
|
)
|
|
$
|
(16,550
|
)
|
|
$
|
(160,088
|
)
|
|
$
|
(46,377
|
)
|
Adjustments to reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
3,430
|
|
|
|
1,620
|
|
|
|
8,968
|
|
|
|
4,500
|
|
Amortization of investment premiums
|
|
|
316
|
|
|
|
-
|
|
|
|
452
|
|
|
|
-
|
|
Stock-based compensation
|
|
|
48,236
|
|
|
|
14,332
|
|
|
|
150,985
|
|
|
|
36,124
|
|
Deferred income taxes
|
|
|
(280
|
)
|
|
|
(1,068
|
)
|
|
|
(793
|
)
|
|
|
(1,188
|
)
|
Excess tax benefits from employee stock plans
|
|
|
(240
|
)
|
|
|
(271
|
)
|
|
|
(1,108
|
)
|
|
|
(539
|
)
|
Impairment of long-lived asset
|
|
|
-
|
|
|
|
2,128
|
|
|
|
-
|
|
|
|
2,128
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
(12,712
|
)
|
|
|
(13,249
|
)
|
|
|
798
|
|
|
|
9,953
|
|
Prepaid expenses, other current and non-current assets
|
|
|
(3,533
|
)
|
|
|
3,843
|
|
|
|
(2,041
|
)
|
|
|
366
|
|
Accounts payable
|
|
|
654
|
|
|
|
414
|
|
|
|
1,045
|
|
|
|
267
|
|
Accrued payroll and compensation
|
|
|
11,269
|
|
|
|
8,767
|
|
|
|
4,605
|
|
|
|
2,532
|
|
Accrued expenses and other liabilities
|
|
|
3,334
|
|
|
|
(159
|
)
|
|
|
12,673
|
|
|
|
5,220
|
|
Deferred revenue
|
|
|
22,282
|
|
|
|
13,510
|
|
|
|
36,956
|
|
|
|
26,433
|
|
Net cash provided by operating activities
|
|
|
24,205
|
|
|
|
13,317
|
|
|
|
52,452
|
|
|
|
39,419
|
|
|
|
|
|
|
|
|
|
|
Cash Flow From Investing Activities
|
|
|
|
|
|
|
|
|
Purchases of investments
|
|
|
(387,324
|
)
|
|
|
-
|
|
|
|
(691,277
|
)
|
|
|
-
|
|
Maturities of investments
|
|
|
48,000
|
|
|
|
-
|
|
|
|
63,000
|
|
|
|
-
|
|
Acquisitions, net of cash acquired
|
|
|
-
|
|
|
|
(8,958
|
)
|
|
|
(2,500
|
)
|
|
|
(8,958
|
)
|
Purchases of property and equipment
|
|
|
(4,054
|
)
|
|
|
(4,035
|
)
|
|
|
(11,200
|
)
|
|
|
(7,265
|
)
|
Net cash used in investing activities
|
|
|
(343,378
|
)
|
|
|
(12,993
|
)
|
|
|
(641,977
|
)
|
|
|
(16,223
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flow From Financing Activities
|
|
|
|
|
|
|
|
Proceeds from the exercise of stock options
|
|
|
3,387
|
|
|
|
6,342
|
|
|
|
12,805
|
|
|
|
18,865
|
|
Excess tax benefits from employee stock plans
|
|
|
240
|
|
|
|
271
|
|
|
|
1,108
|
|
|
|
539
|
|
Proceeds from employee stock purchase plan
|
|
|
-
|
|
|
|
-
|
|
|
|
8,355
|
|
|
|
6,076
|
|
Taxes paid related to net share settlement of equity awards
|
|
|
-
|
|
|
|
(2,239
|
)
|
|
|
-
|
|
|
|
(2,752
|
)
|
Payment related to build-to-suit lease obligation
|
|
|
-
|
|
|
|
-
|
|
|
|
(523
|
)
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
3,627
|
|
|
|
4,374
|
|
|
|
21,745
|
|
|
|
22,728
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(299
|
)
|
|
|
83
|
|
|
|
(120
|
)
|
|
|
32
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(315,845
|
)
|
|
|
4,781
|
|
|
|
(567,900
|
)
|
|
|
45,956
|
|
Cash and cash equivalents at beginning of period
|
|
|
645,398
|
|
|
|
347,114
|
|
|
|
897,453
|
|
|
|
305,939
|
|
Cash and cash equivalents at end of period
|
|
$
|
329,553
|
|
|
$
|
351,895
|
|
|
$
|
329,553
|
|
|
$
|
351,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPLUNK INC.
Non-GAAP financial measures and reconciliations
To supplement Splunk's consolidated financial statements, which are
prepared and presented in accordance with generally accepted accounting
principles in the United States ("GAAP"), Splunk provides investors with
certain non-GAAP financial measures, including non-GAAP gross margin,
non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP
net income (loss) and non-GAAP net income (loss) per share (collectively
the "non-GAAP financial measures"). These non-GAAP financial measures
exclude all or a combination of the following (as reflected in the
following reconciliation table): stock-based compensation expense,
employer payroll tax expense related to employee stock plans,
amortization of acquired intangible assets, ground lease expense related
to a build-to-suit lease obligation, impairment of a long-lived asset,
acquisition-related costs and the partial release of the valuation
allowance due to acquisition. In addition, non-GAAP financial measures
include free cash flow, which represents cash from operations less
purchases of property and equipment. The presentation of the non-GAAP
financial measures is not intended to be considered in isolation or as a
substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP. Splunk uses these non-GAAP financial
measures for financial and operational decision-making purposes and as a
means to evaluate period-to-period comparisons. Splunk believes that
these non-GAAP financial measures provide useful information about
Splunk's operating results, enhance the overall understanding of past
financial performance and future prospects and allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision making. In addition, these non-GAAP
financial measures facilitate comparisons to competitors' operating
results.
Splunk excludes stock-based compensation expense because it is non-cash
in nature and excluding this expense provides meaningful supplemental
information regarding Splunk's operational performance. In particular,
because of varying available valuation methodologies, subjective
assumptions and the variety of award types that companies can use under
FASB ASC Topic 718, Splunk believes that providing non-GAAP financial
measures that exclude this expense allows investors the ability to make
more meaningful comparisons between Splunk's operating results and those
of other companies. Splunk excludes employer payroll tax expense related
to employee stock plans in order for investors to see the full effect
that excluding that stock-based compensation expense had on Splunk's
operating results. These expenses are tied to the exercise or vesting of
underlying equity awards and the price of Splunk's common stock at the
time of vesting or exercise, which may vary from period to period
independent of the operating performance of Splunk's business. Splunk
also excludes the non-cash charge for previously capitalized Storm
research and development expense (reflected as an impairment of a
long-lived asset) as a result of its strategic decision to start making
its Storm product available at no cost to customers, a decision that
Splunk expects to be infrequent in nature. Splunk also excludes
acquisition-related costs, amortization of acquired intangible assets
and ground lease expense related to its build-to-suit lease obligation
from its non-GAAP financial measures because these are considered by
management to be outside of Splunk's core operating results. Splunk
further excludes the partial release of the valuation allowance due to
acquisition from non-GAAP net income (loss) and non-GAAP net income
(loss) per share because it is also considered by management to be
outside Splunk's core operating results. Accordingly, Splunk believes
that excluding these expenses provides investors and management with
greater visibility to the underlying performance of its business
operations, facilitates comparison of its results with other periods and
may also facilitate comparison with the results of other companies in
its industry. Splunk considers free cash flow to be a liquidity measure
that provides useful information to management and investors about the
amount of cash generated by the business that can be used for strategic
opportunities, including investing in its business, making strategic
acquisitions and strengthening its balance sheet.
There are limitations in using non-GAAP financial measures because the
non-GAAP financial measures are not prepared in accordance with GAAP,
may be different from non-GAAP financial measures used by Splunk's
competitors and exclude expenses that may have a material impact upon
Splunk's reported financial results. Further, stock-based compensation
expense has been and will continue to be for the foreseeable future a
significant recurring expense in Splunk's business and an important part
of the compensation provided to Splunk's employees. The non-GAAP
financial measures are meant to supplement and be viewed in conjunction
with GAAP financial measures.
The following table reconciles Splunk's non-GAAP results to Splunk's
GAAP results included in this press release.
SPLUNK INC.
|
Reconciliation of GAAP to Non-GAAP Financial Measures
|
(In thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
October 31,
|
|
|
October 31,
|
|
|
October 31,
|
|
|
October 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of cash provided by
operating activities to free cash flow:
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
24,205
|
|
|
$
|
13,317
|
|
|
$
|
52,452
|
|
|
$
|
39,419
|
Less purchases of property and equipment
|
|
|
(4,054)
|
|
|
|
(4,035)
|
|
|
|
(11,200)
|
|
|
|
(7,265)
|
Free cash flow (Non-GAAP)
|
|
$
|
20,151
|
|
|
$
|
9,282
|
|
|
$
|
41,252
|
|
|
$
|
32,154
|
Net cash used in investing activities
|
|
$
|
(343,378)
|
|
|
$
|
(12,993)
|
|
|
$
|
(641,977)
|
|
|
$
|
(16,223)
|
Net cash provided by financing activities
|
|
$
|
3,627
|
|
|
$
|
4,374
|
|
|
$
|
21,745
|
|
|
$
|
22,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin
|
|
|
84.8
|
%
|
|
|
86.6
|
%
|
|
|
84.6
|
%
|
|
|
87.9
|
Stock-based compensation expense
|
|
|
3.5
|
|
|
|
1.5
|
|
|
|
3.8
|
|
|
|
1.3
|
Employer payroll tax on employee stock plans
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
-
|
Amortization of acquired intangible assets
|
|
|
0.6
|
|
|
|
0.1
|
|
|
|
0.7
|
|
|
|
-
|
Impairment of long-lived asset
|
|
|
-
|
|
|
|
2.7
|
|
|
|
-
|
|
|
|
1.0
|
Non-GAAP gross margin
|
|
|
89.0
|
%
|
|
|
91.0
|
%
|
|
|
89.2
|
%
|
|
|
90.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) reconciliation:
|
|
|
|
|
|
|
|
|
|
|
GAAP operating loss
|
|
$
|
(48,251)
|
|
|
$
|
(16,822)
|
|
|
$
|
(158,711)
|
|
|
$
|
(45,823)
|
Stock-based compensation expense
|
|
|
48,236
|
|
|
|
14,332
|
|
|
|
150,985
|
|
|
|
36,124
|
Employer payroll tax on employee stock plans
|
|
|
1,092
|
|
|
|
691
|
|
|
|
4,821
|
|
|
|
1,857
|
Amortization of acquired intangible assets
|
|
|
1,422
|
|
|
|
136
|
|
|
|
3,247
|
|
|
|
136
|
Impairment of long-lived asset
|
|
|
-
|
|
|
|
2,128
|
|
|
|
-
|
|
|
|
2,128
|
Acquisition-related costs
|
|
|
-
|
|
|
|
408
|
|
|
|
-
|
|
|
|
408
|
Ground lease expense related to build-to-suit lease obligation
|
|
|
222
|
|
|
|
-
|
|
|
|
444
|
|
|
|
-
|
Non-GAAP operating income (loss)
|
|
$
|
2,721
|
|
|
$
|
873
|
|
|
$
|
786
|
|
|
$
|
(5,170)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating margin
|
|
|
(41.6)
|
%
|
|
|
(21.4)
|
%
|
|
|
(52.3)
|
%
|
|
|
(22.6)
|
Stock-based compensation expense
|
|
|
41.6
|
|
|
|
18.2
|
|
|
|
49.8
|
|
|
|
17.8
|
Employer payroll tax on employee stock plans
|
|
|
0.9
|
|
|
|
0.9
|
|
|
|
1.6
|
|
|
|
0.9
|
Amortization of acquired intangible assets
|
|
|
1.2
|
|
|
|
0.2
|
|
|
|
1.1
|
|
|
|
0.1
|
Impairment of long-lived asset
|
|
|
-
|
|
|
|
2.7
|
|
|
|
-
|
|
|
|
1.0
|
Acquisition-related costs
|
|
|
-
|
|
|
|
0.5
|
|
|
|
-
|
|
|
|
0.2
|
Ground lease expense related to build-to-suit lease obligation
|
|
|
0.2
|
|
|
|
-
|
|
|
|
0.1
|
|
|
|
-
|
Non-GAAP operating margin
|
|
|
2.3
|
%
|
|
|
1.1
|
%
|
|
|
0.3
|
%
|
|
|
(2.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss
|
|
$
|
(48,551)
|
|
|
$
|
(16,550)
|
|
|
$
|
(160,088)
|
|
|
$
|
(46,377)
|
Stock-based compensation expense
|
|
|
48,236
|
|
|
|
14,332
|
|
|
|
150,985
|
|
|
|
36,124
|
Employer payroll tax on employee stock plans
|
|
|
1,092
|
|
|
|
691
|
|
|
|
4,821
|
|
|
|
1,857
|
Amortization of acquired intangible assets
|
|
|
1,422
|
|
|
|
136
|
|
|
|
3,247
|
|
|
|
136
|
Impairment of long-lived asset
|
|
|
-
|
|
|
|
2,128
|
|
|
|
-
|
|
|
|
2,128
|
Acquisition-related costs
|
|
|
-
|
|
|
|
408
|
|
|
|
-
|
|
|
|
408
|
Ground lease expense related to build-to-suit lease obligation
|
|
|
222
|
|
|
|
-
|
|
|
|
444
|
|
|
|
-
|
Partial release of the valuation allowance due to acquisition
|
|
|
-
|
|
|
|
(747)
|
|
|
|
-
|
|
|
|
(747)
|
Non-GAAP net income (loss)
|
|
$
|
2,421
|
|
|
$
|
398
|
|
|
$
|
(591)
|
|
|
$
|
(6,471)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of shares used in
computing basic and diluted net income (loss) per share:
|
|
|
|
|
Weighted-average shares used in computing GAAP basic net loss per
share
|
|
|
120,331
|
|
|
|
106,008
|
|
|
|
118,895
|
|
|
|
104,063
|
Effect of dilutive securities: Employee stock awards
|
|
|
6,541
|
|
|
|
12,117
|
|
|
|
-
|
|
|
|
-
|
Weighted-average shares used in computing Non-GAAP basic and diluted
net income (loss) per share
|
|
|
126,872
|
|
|
|
118,125
|
|
|
|
118,895
|
|
|
|
104,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP basic and diluted net loss per share
|
|
$
|
(0.40)
|
|
|
$
|
(0.16)
|
|
|
$
|
(1.35)
|
|
|
$
|
(0.45)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP basic and diluted net income (loss) per share
|
|
$
|
0.02
|
|
|
$
|
0.00
|
|
|
$
|
(0.00)
|
|
|
$
|
(0.06)
|
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