[November 16, 2017] |
|
Splunk Inc. Announces Fiscal Third Quarter 2018 Financial Results
Splunk
Inc. (NASDAQ: SPLK), first in delivering "aha" moments from machine
data, today announced results for its fiscal third quarter ended October
31, 2017.
Third Quarter 2018 Financial Highlights
-
Total revenues were $328.7 million, up 34% year-over-year.
-
Total billings were $381.6 million, up 38% year-over-year.
-
GAAP operating loss was $50.8 million; GAAP operating margin was
negative 15.5%.
-
Non-GAAP operating profit was $32.3 million; non-GAAP operating margin
was positive 9.8%.
-
GAAP loss per share was $0.36; non-GAAP earnings per share was $0.17.
-
Operating cash flow was $52.3 million with free cash flow of $46.9
million.
"I'm proud of our global performance for the quarter and our increased
outlook through the rest of the year," said Doug Merritt, President and
CEO, Splunk. "Splunk announced a wide range of innovations at .conf2017
including native support for metrics and machine learning updates to
Splunk® Enterprise and Splunk Cloud; new event analytics capabilities in
Splunk IT Service Intelligence; new content updates for Splunk
Enterprise Security; and a host of new use case-specific solutions.
Splunk customers are seizing upon the growing opportunity machine data
presents and only Splunk can help them get answers on-premises, in the
cloud or across hybrid environments."
Third Quarter 2018 and Recent Business
Highlights:
Customers:
-
Signed more than 450 new enterprise customers.
-
New and Expansion Customers Include: 21st Century Fox, Arizona
State University, ATB Financial, Atlassian, Banner Health, BCD Travel,
Blackbaud, Blucora, CallidusCloud, Cincinnati Children's Hospital
Medical Center, Daimler (Germany), Deakin University (Australia),
Defense Health Agency, Derbyshire Fire & Rescue (England), The E.W.
Scripps Company, Johns Hopkins University, Li & Fung (Hong Kong),
Nutanix, Norsk Helsenett (Norway), PIMCO, Purdue University, SAS,
Smithsonian Institution, Texas Department of Transportation, U.S.
Army, U.S. Department of Homeland Security Data Center, Vodafone
Egypt, Yahoo! JAPAN
Products:
Corporate:
-
Acquired selected assets of Rocana
Inc., a company providing analytics solutions for the IT market,
to extend Splunk's IT operations leadership.
-
Acquired SignalSense
Inc., a company offering cloud-based advanced data collection and
breach detection solutions, further advancing Splunk's machine
learning capabilities.
-
Showcased flexible pricing
programs tailored to fit the needs of all customers and deliver
value no matter where organizations are in their Splunk journey.
-
Unveiled new, free training
programs to help military veterans and youth train for careers in
technology through Splunk4Good in partnership with nonprofits AWS
re:Start, NPower, Wounded Warrior Project and Year Up.
-
Inducted 42 members of the 2018
cohort of the SplunkTrust program to recognize some of the most
dedicated members of the Splunk Community.
Strategic and Channel Partners:
Recognition:
Events:
-
Hosted .conf2017:
the 8th Annual Splunk Conference in Washington, drawing more than
7,000 Splunk enthusiasts, customers and partners.
-
Honored the winners of the 2017
Revolution Awards at .conf2017, recognizing spectacular
achievements from Splunk's worldwide customers and partners.
-
Hosted the first-ever SplunkLive! in Montreal
and additional SplunkLive! events in cities worldwide, including Beijing,
Seattle,
Shanghai
and Singapore.
Presentations can be found on the SplunkLive!
website.
Appointments:
-
Appointed
Sara Baack, chief marketing officer of Equinix, and Elisa Steele,
former CEO and president of Jive Software, to Splunk's Board of
Directors.
-
Promoted Susan
St. Ledger to the newly created role of president, worldwide field
operations.
Financial Outlook
The company is providing the following guidance for its fiscal fourth
quarter 2018 (ending January 31, 2018):
-
Total revenues are expected to be between $388 million and $390
million.
-
Non-GAAP operating margin is expected to be approximately 16%.
The company is updating its previous guidance provided on August 24,
2017 for its fiscal year 2018 (ending January 31, 2018):
-
Total billings are expected to be approximately $1.485 billion (was
approximately $1.450 billion).
-
Total revenues are expected to be between $1.239 and $1.241 billion
(was between $1.210 and $1.215 billion).
-
Non-GAAP operating margin is expected to be approximately 8.5% (was
approximately 8%).
The company is providing the following guidance for its fiscal year 2019
(ending January 31, 2019):
-
Total revenues are expected to be approximately $1.550 billion.
-
Non-GAAP operating margin is expected to be approximately 10.5%.
All forward-looking non-GAAP financial measures contained in this
section "Financial Outlook" exclude estimates for expenses related to
stock-based compensation and related employer payroll tax, amortization
of acquired intangible assets, adjustments related to a financing lease
obligation, adjustments related to facility exits and
acquisition-related adjustments.
A reconciliation of non-GAAP guidance measures to corresponding GAAP
measures is not available on a forward-looking basis without
unreasonable effort due to the uncertainty regarding, and the potential
variability of, many of the excluded costs and expenses that may be
incurred in the future. The company has provided a reconciliation of
GAAP to non-GAAP financial measures in the financial statement tables
for its fiscal third quarter 2018 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 23, 2017 by
dialing (855) 859-2056 and referencing Conference ID 8994427.
Safe Harbor Statement
This press release contains forward-looking statements that involve
risks and uncertainties, including statements regarding Splunk's
revenue, billings, and non-GAAP operating margin targets for the
company's fiscal fourth quarter, fiscal year 2018 and/or fiscal year
2019 in the paragraphs under "Financial Outlook" above and other
statements regarding future growth, strategy, including with respect to
our acquisitions, pricing programs and their expected benefits, our
partner programs and their expected benefits, customer demand and
penetration, expanding use of Splunk by customers, size of machine data
opportunity, Splunk's ability to capture market share, and expected
benefits of new products and product innovations as well as existing
products and services. 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, including its cloud
offerings; risks associated with Splunk's rapid growth, particularly
outside of the United States; 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,
business and competitive market 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 fiscal quarter ended July 31, 2017, 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) turns machine data into answers.
Organizations use market-leading Splunk solutions with machine learning
to solve their toughest IT, Internet of Things and security challenges.
Join millions of passionate users and discover your "aha" moment with
Splunk today: http://www.splunk.com.
Social Media: Twitter
| LinkedIn
| YouTube
| Facebook
Splunk, Splunk>, Listen to Your Data, The Engine for Machine Data,
Splunk Cloud, Splunk Light and SPL 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. © 2017 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,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenues
|
|
|
|
|
|
|
|
|
License
|
|
$
|
179,829
|
|
|
$
|
139,725
|
|
|
$
|
439,406
|
|
|
$
|
356,412
|
|
Maintenance and services
|
|
|
148,824
|
|
|
|
105,064
|
|
|
|
411,659
|
|
|
|
287,082
|
|
Total revenues
|
|
|
328,653
|
|
|
|
244,789
|
|
|
|
851,065
|
|
|
|
643,494
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
|
|
|
|
|
|
License
|
|
|
3,013
|
|
|
|
2,883
|
|
|
|
9,100
|
|
|
|
8,713
|
|
Maintenance and services
|
|
|
61,154
|
|
|
|
45,791
|
|
|
|
173,106
|
|
|
|
124,077
|
|
Total cost of revenues
|
|
|
64,167
|
|
|
|
48,674
|
|
|
|
182,206
|
|
|
|
132,790
|
|
Gross profit
|
|
|
264,486
|
|
|
|
196,115
|
|
|
|
668,859
|
|
|
|
510,704
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
74,080
|
|
|
|
85,659
|
|
|
|
217,152
|
|
|
|
220,254
|
|
Sales and marketing
|
|
|
205,364
|
|
|
|
167,330
|
|
|
|
570,596
|
|
|
|
462,709
|
|
General and administrative
|
|
|
35,857
|
|
|
|
34,079
|
|
|
|
111,492
|
|
|
|
100,464
|
|
Total operating expenses
|
|
|
315,301
|
|
|
|
287,068
|
|
|
|
899,240
|
|
|
|
783,427
|
|
Operating loss
|
|
|
(50,815
|
)
|
|
|
(90,953
|
)
|
|
|
(230,381
|
)
|
|
|
(272,723
|
)
|
|
|
|
|
|
|
|
|
|
Interest and other income (expense), net
|
|
|
|
|
|
|
|
|
Interest income (expense), net
|
|
|
270
|
|
|
|
(823
|
)
|
|
|
(422
|
)
|
|
|
(2,023
|
)
|
Other income (expense), net
|
|
|
(289
|
)
|
|
|
(348
|
)
|
|
|
(1,771
|
)
|
|
|
(2,536
|
)
|
Total interest and other income (expense), net
|
|
|
(19
|
)
|
|
|
(1,171
|
)
|
|
|
(2,193
|
)
|
|
|
(4,559
|
)
|
Loss before income taxes
|
|
|
(50,834
|
)
|
|
|
(92,124
|
)
|
|
|
(232,574
|
)
|
|
|
(277,282
|
)
|
Income tax provision (benefit)
|
|
|
(232
|
)
|
|
|
1,367
|
|
|
|
1,459
|
|
|
|
3,702
|
|
Net loss
|
|
$
|
(50,602
|
)
|
|
$
|
(93,491
|
)
|
|
$
|
(234,033
|
)
|
|
$
|
(280,984
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share
|
|
$
|
(0.36
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
(1.68
|
)
|
|
$
|
(2.11
|
)
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in computing basic and diluted net
loss per share
|
|
|
140,413
|
|
|
|
134,677
|
|
|
|
139,111
|
|
|
|
133,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPLUNK INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
|
|
January 31,
|
|
|
2017
|
|
2017
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
393,314
|
|
|
$
|
421,346
|
|
Investments, current portion
|
|
|
665,075
|
|
|
|
662,096
|
|
Accounts receivable, net
|
|
|
264,497
|
|
|
|
238,281
|
|
Prepaid expenses and other current assets
|
|
|
44,545
|
|
|
|
38,650
|
|
Total current assets
|
|
|
1,367,431
|
|
|
|
1,360,373
|
|
|
|
|
|
|
Investments, non-current
|
|
|
5,000
|
|
|
|
5,000
|
|
Property and equipment, net
|
|
|
161,249
|
|
|
|
166,395
|
|
Intangible assets, net
|
|
|
52,434
|
|
|
|
37,713
|
|
Goodwill
|
|
|
161,382
|
|
|
|
124,642
|
|
Other assets
|
|
|
28,284
|
|
|
|
24,423
|
|
Total assets
|
|
$
|
1,775,780
|
|
|
$
|
1,718,546
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Accounts payable
|
|
$
|
12,409
|
|
|
$
|
7,503
|
|
Accrued payroll and compensation
|
|
|
115,733
|
|
|
|
100,092
|
|
Accrued expenses and other liabilities
|
|
|
74,680
|
|
|
|
81,071
|
|
Deferred revenue, current portion
|
|
|
516,401
|
|
|
|
478,707
|
|
Total current liabilities
|
|
|
719,223
|
|
|
|
667,373
|
|
|
|
|
|
|
Deferred revenue, non-current
|
|
|
185,712
|
|
|
|
146,752
|
|
Other liabilities, non-current
|
|
|
99,140
|
|
|
|
99,260
|
|
Total non-current liabilities
|
|
|
284,852
|
|
|
|
246,012
|
|
Total liabilities
|
|
|
1,004,075
|
|
|
|
913,385
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
Common stock
|
|
|
141
|
|
|
|
137
|
|
Accumulated other comprehensive loss
|
|
|
(2,074
|
)
|
|
|
(3,013
|
)
|
Additional paid-in capital
|
|
|
2,028,455
|
|
|
|
1,828,821
|
|
Accumulated deficit
|
|
|
(1,254,817
|
)
|
|
|
(1,020,784
|
)
|
Total stockholders' equity
|
|
|
771,705
|
|
|
|
805,161
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,775,780
|
|
|
$
|
1,718,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(50,602
|
)
|
|
$
|
(93,491
|
)
|
|
$
|
(234,033
|
)
|
|
$
|
(280,984
|
)
|
Adjustments to reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
10,123
|
|
|
|
8,279
|
|
|
|
30,039
|
|
|
|
22,914
|
|
Amortization of investment premiums
|
|
|
31
|
|
|
|
173
|
|
|
|
373
|
|
|
|
620
|
|
Stock-based compensation
|
|
|
84,111
|
|
|
|
105,014
|
|
|
|
266,533
|
|
|
|
285,247
|
|
Deferred income taxes
|
|
|
(1,811
|
)
|
|
|
78
|
|
|
|
(2,677
|
)
|
|
|
(620
|
)
|
Excess tax benefits from employee stock plans
|
|
|
-
|
|
|
|
476
|
|
|
|
-
|
|
|
|
(551
|
)
|
Non-cash facility exit adjustment
|
|
|
(5,191
|
)
|
|
|
-
|
|
|
|
(5,191
|
)
|
|
|
-
|
|
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
(56,415
|
)
|
|
|
(41,227
|
)
|
|
|
(26,216
|
)
|
|
|
9,176
|
|
Prepaid expenses, other current and non-current assets
|
|
|
(618
|
)
|
|
|
(4,951
|
)
|
|
|
(8,501
|
)
|
|
|
(8,128
|
)
|
Accounts payable
|
|
|
2,956
|
|
|
|
1,265
|
|
|
|
4,919
|
|
|
|
1,530
|
|
Accrued payroll and compensation
|
|
|
21,890
|
|
|
|
18,447
|
|
|
|
15,626
|
|
|
|
(12,538
|
)
|
Accrued expenses and other liabilities
|
|
|
(5,100
|
)
|
|
|
19,413
|
|
|
|
(693
|
)
|
|
|
32,992
|
|
Deferred revenue
|
|
|
52,913
|
|
|
|
31,796
|
|
|
|
76,654
|
|
|
|
49,652
|
|
Net cash provided by operating activities
|
|
|
52,287
|
|
|
|
45,272
|
|
|
|
116,833
|
|
|
|
99,310
|
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities
|
|
|
|
|
|
|
|
|
Purchases of investments
|
|
|
(177,207
|
)
|
|
|
(207,255
|
)
|
|
|
(517,904
|
)
|
|
|
(523,783
|
)
|
Maturities of investments
|
|
|
175,745
|
|
|
|
156,000
|
|
|
|
514,010
|
|
|
|
446,275
|
|
Acquisitions, net of cash acquired
|
|
|
(42,127
|
)
|
|
|
-
|
|
|
|
(59,350
|
)
|
|
|
-
|
|
Purchases of property and equipment
|
|
|
(5,418
|
)
|
|
|
(12,969
|
)
|
|
|
(13,931
|
)
|
|
|
(27,219
|
)
|
Other investment activities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,500
|
)
|
Net cash used in investing activities
|
|
|
(49,007
|
)
|
|
|
(64,224
|
)
|
|
|
(77,175
|
)
|
|
|
(108,227
|
)
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
|
|
|
|
Proceeds from the exercise of stock options
|
|
|
501
|
|
|
|
1,752
|
|
|
|
2,474
|
|
|
|
7,355
|
|
Excess tax benefits from employee stock plans
|
|
|
-
|
|
|
|
(476
|
)
|
|
|
-
|
|
|
|
551
|
|
Proceeds from employee stock purchase plan
|
|
|
-
|
|
|
|
-
|
|
|
|
19,282
|
|
|
|
15,183
|
|
Taxes paid related to net share settlement of equity awards
|
|
|
(29,542
|
)
|
|
|
(26,533
|
)
|
|
|
(88,651
|
)
|
|
|
(73,355
|
)
|
Repayment of financing lease obligation
|
|
|
(497
|
)
|
|
|
-
|
|
|
|
(1,299
|
)
|
|
|
-
|
|
Net cash used in financing activities
|
|
|
(29,538
|
)
|
|
|
(25,257
|
)
|
|
|
(68,194
|
)
|
|
|
(50,266
|
)
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(238
|
)
|
|
|
(147
|
)
|
|
|
504
|
|
|
|
235
|
|
Net decrease in cash and cash equivalents
|
|
|
(26,496
|
)
|
|
|
(44,356
|
)
|
|
|
(28,032
|
)
|
|
|
(58,948
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
419,810
|
|
|
|
409,949
|
|
|
|
421,346
|
|
|
|
424,541
|
|
Cash and cash equivalents at end of period
|
|
$
|
393,314
|
|
|
$
|
365,593
|
|
|
$
|
393,314
|
|
|
$
|
365,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPLUNK INC. Non-GAAP financial measures and
reconciliations
To supplement Splunk's condensed 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
cost of revenues, non-GAAP gross margin, non-GAAP research and
development expense, non-GAAP sales and marketing expense, non-GAAP
general and administrative expense, 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 tables): expenses related to stock-based compensation and
related employer payroll tax, amortization of acquired intangible
assets, adjustments related to a financing lease obligation, adjustments
related to facility exits and acquisition-related adjustments, including
the partial release of the valuation allowance due to acquisitions. The
adjustments for the financing lease obligation are to reflect the
expense Splunk would have recorded if its build-to-suit lease
arrangement had been deemed an operating lease instead of a financing
lease and is calculated as the net of actual ground lease expense,
depreciation and interest expense over estimated straight-line rent
expense. The non-GAAP financial measures are also adjusted for Splunk's
estimated tax rate on non-GAAP income (loss). To determine the annual
non-GAAP tax rate, Splunk evaluates a financial projection based on its
non-GAAP results. The annual non-GAAP tax rate takes into account other
factors including Splunk's current operating structure, its existing tax
positions in various jurisdictions and key legislation in major
jurisdictions where Splunk operates. The annual non-GAAP tax rate
applied to the three and nine months ended October 31, 2017 was 27%.
Splunk will utilize this annual non-GAAP tax rate in fiscal 2018 and
will provide updates to this rate on an annual basis, or more frequently
if material changes occur. In addition, non-GAAP financial measures
include free cash flow, which represents cash from operations less
purchases of property and equipment, and billings, which represents
revenues plus the change in deferred revenue during the period. 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 and 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 amortization of acquired
intangible assets, adjustments related to facility exits,
acquisition-related costs, including the partial release of the
valuation allowance due to acquisitions, and makes adjustments related
to a financing lease obligation from its non-GAAP financial measures
because these are considered by management to be outside of 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. Splunk considers billings to be a
useful measure for management and investors because it provides
visibility into Splunk's sales activity for a particular period, which
is not necessarily reflected in its revenues given that Splunk
recognizes term licenses and subscriptions for cloud services ratably.
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 tables reconcile Splunk's GAAP results to Splunk's
non-GAAP results included in this press release.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPLUNK INC.
|
Reconciliation of GAAP to Non-GAAP Financial Measures
|
(In thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Cash Provided by
Operating Activities to Free Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
|
October 31,
|
|
October 31,
|
|
October 31,
|
|
|
October 31,
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
52,287
|
|
|
$
|
45,272
|
|
|
$
|
116,833
|
|
|
|
$
|
99,310
|
|
|
|
|
|
|
|
Less purchases of property and equipment
|
|
|
(5,418
|
)
|
|
|
(12,969
|
)
|
|
|
(13,931
|
)
|
|
|
|
(27,219
|
)
|
|
|
|
|
|
|
Free cash flow (non-GAAP)
|
|
$
|
46,869
|
|
|
$
|
32,303
|
|
|
$
|
102,902
|
|
|
|
$
|
72,091
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
$
|
(49,007
|
)
|
|
$
|
(64,224
|
)
|
|
$
|
(77,175
|
)
|
|
|
$
|
(108,227
|
)
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
$
|
(29,538
|
)
|
|
$
|
(25,257
|
)
|
|
$
|
(68,194
|
)
|
|
|
$
|
(50,266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP
Financial Measures
|
Three Months Ended October 31, 2017
|
|
|
GAAP
|
|
Stock-based compensation and related
employer payroll tax
|
|
Amortization of acquired intangible
assets
|
|
Adjustments related to financing lease obligation
|
|
|
Adjustments related to facility exits
|
|
Acquisition- related adjustments
|
|
Income tax effects related to non-GAAP adjustments
(3)
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
$
|
64,167
|
|
$
|
(8,116)
|
|
$
|
(2,873)
|
|
$
|
316
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
53,494
|
Gross margin
|
|
|
80.5%
|
|
|
2.4%
|
|
|
0.9%
|
|
|
(0.1)%
|
|
|
|
-%
|
|
|
-%
|
|
|
-%
|
|
|
83.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
74,080
|
|
|
(25,502)
|
|
|
(130)
|
|
|
489
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
48,937
|
Sales and marketing
|
|
|
205,364
|
|
|
(37,789)
|
|
|
(561)
|
|
|
1,170
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
168,184
|
General and administrative
|
|
|
35,857
|
|
|
(14,882)
|
|
|
-
|
|
|
230
|
|
|
|
5,191
|
|
|
(643)
|
|
|
-
|
|
|
25,753
|
Operating income (loss)
|
|
|
(50,815)
|
|
|
86,289
|
|
|
3,564
|
|
|
(2,205)
|
|
|
|
(5,191)
|
|
|
643
|
|
|
-
|
|
|
32,285
|
Operating margin
|
|
|
(15.5)%
|
|
|
26.3%
|
|
|
1.1%
|
|
|
(0.7)%
|
|
|
|
(1.6)%
|
|
|
0.2%
|
|
|
-%
|
|
|
9.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
(232)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
1,995
|
|
|
7,514
|
|
|
9,277
|
Net income (loss)
|
|
$
|
(50,602)
|
|
$
|
86,289
|
|
$
|
3,564
|
|
$
|
(111)
|
(2)
|
|
$
|
(5,191)
|
|
$
|
(1,352)
|
|
$
|
(7,514)
|
|
$
|
25,083
|
Net income (loss) per share(1)
|
|
$
|
(0.36)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) GAAP net loss per share calculated based on 140,413
weighted-average shares of common stock. Non-GAAP net income per
share calculated based on 144,415 diluted weighted-average shares of
common stock, which includes 4,002 potentially dilutive shares
related to employee stock awards. GAAP to non-GAAP net income (loss)
per share is not reconciled due to the difference in the number of
shares used to calculate basic and diluted weighted-average shares
of common stock.
|
(2) Includes $2.1 million of interest expense related to
the financing lease obligation.
|
(3) Represents the tax effect of the non-GAAP adjustments
based on the estimated annual effective tax rate of 27%.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP
Financial Measures
|
Three Months Ended October 31, 2016
|
|
|
GAAP
|
|
Stock-based compensation and related
employer payroll tax
|
|
Amortization of acquired intangible
assets
|
|
Adjustments related to financing lease obligation
|
|
|
Income tax effects related to non-GAAP adjustments(3)
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
$
|
48,674
|
|
$
|
(7,740)
|
|
$
|
(2,814)
|
|
$
|
276
|
|
|
$
|
-
|
|
$
|
38,396
|
|
|
|
|
Gross margin
|
|
|
80.1%
|
|
|
3.2%
|
|
|
1.1%
|
|
|
(0.1)%
|
|
|
|
-%
|
|
|
84.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
85,659
|
|
|
(45,889)
|
|
|
(63)
|
|
|
559
|
|
|
|
-
|
|
|
40,266
|
|
|
|
|
Sales and marketing
|
|
|
167,330
|
|
|
(39,462)
|
|
|
(110)
|
|
|
1,124
|
|
|
|
-
|
|
|
128,882
|
|
|
|
|
General and administrative
|
|
|
34,079
|
|
|
(13,803)
|
|
|
-
|
|
|
236
|
|
|
|
-
|
|
|
20,512
|
|
|
|
|
Operating income (loss)
|
|
|
(90,953)
|
|
|
106,894
|
|
|
2,987
|
|
|
(2,195)
|
|
|
|
-
|
|
|
16,733
|
|
|
|
|
Operating margin
|
|
|
(37.2)%
|
|
|
43.7%
|
|
|
1.2%
|
|
|
(0.9)%
|
|
|
|
-%
|
|
|
6.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
1,367
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
2,336
|
|
|
3,703
|
|
|
|
|
Net income (loss)
|
|
$
|
(93,491)
|
|
$
|
106,894
|
|
$
|
2,987
|
|
$
|
(123)
|
(2)
|
|
$
|
(2,336)
|
|
$
|
13,931
|
|
|
|
|
Net income (loss) per share(1)
|
|
$
|
(0.69)
|
|
|
|
|
|
|
|
|
|
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) GAAP net loss per share calculated based on 134,677
weighted-average shares of common stock. Non-GAAP net income per
share calculated based on 138,401 diluted weighted-average shares of
common stock, which includes 3,724 potentially dilutive shares
related to employee stock awards. GAAP to Non-GAAP net income (loss)
per share is not reconciled due to the difference in the number of
shares used to calculate basic and diluted weighted-average shares
of common stock.
|
|
|
(2) Includes $2.1 million of interest expense related to
the financing lease obligation.
|
|
|
|
|
(3) For consistency, prior year non-GAAP net loss has
been adjusted to reflect the tax effect of the non-GAAP adjustments
based on the annual effective tax rate of 21%.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP
Financial Measures
|
Nine Months Ended October 31, 2017
|
|
|
GAAP
|
|
Stock-based compensation and related
employer payroll tax
|
|
Amortization of acquired intangible
assets
|
|
Adjustments related to financing lease obligation
|
|
|
Adjustments related to facility exits
|
|
Acquisition- related adjustments
|
|
Income tax effects related to non-GAAP adjustments
(3)
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
$
|
182,206
|
|
$
|
(25,436)
|
|
$
|
(8,392)
|
|
$
|
931
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
149,309
|
Gross margin
|
|
|
78.6%
|
|
|
3.0%
|
|
|
1.0%
|
|
|
(0.1)%
|
|
|
|
-%
|
|
|
-%
|
|
|
-%
|
|
|
82.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
217,152
|
|
|
(80,100)
|
|
|
(213)
|
|
|
1,515
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
138,354
|
Sales and marketing
|
|
|
570,596
|
|
|
(124,041)
|
|
|
(1,893)
|
|
|
3,514
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
448,176
|
General and administrative
|
|
|
111,492
|
|
|
(45,673)
|
|
|
-
|
|
|
694
|
|
|
|
5,191
|
|
|
(643)
|
|
|
-
|
|
|
71,061
|
Operating income (loss)
|
|
|
(230,381)
|
|
|
275,250
|
|
|
10,498
|
|
|
(6,654)
|
|
|
|
(5,191)
|
|
|
643
|
|
|
-
|
|
|
44,165
|
Operating margin
|
|
|
(27.1)%
|
|
|
32.4%
|
|
|
1.2%
|
|
|
(0.8)%
|
|
|
|
(0.6)%
|
|
|
0.1%
|
|
|
-%
|
|
|
5.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
1,459
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
2,540
|
|
|
9,038
|
|
|
13,037
|
Net income (loss)
|
|
$
|
(234,033)
|
|
$
|
275,250
|
|
$
|
10,498
|
|
$
|
(339)
|
(2)
|
|
$
|
(5,191)
|
|
$
|
(1,897)
|
|
$
|
(9,038)
|
|
$
|
35,250
|
Net income (loss) per share(1)
|
|
$
|
(1.68)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) GAAP net loss per share calculated based on 139,111
weighted-average shares of common stock. Non-GAAP net income per
share calculated based on 143,552 diluted weighted-average shares of
common stock, which includes 4,441 potentially dilutive shares
related to employee stock awards. GAAP to non-GAAP net income (loss)
per share is not reconciled due to the difference in the number of
shares used to calculate basic and diluted weighted-average shares
of common stock.
|
(2) Includes $6.3 million of interest expense related to
the financing lease obligation.
|
(3) Represents the tax effect of the non-GAAP adjustments
based on the estimated annual effective tax rate of 27%.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP
Financial Measures
|
Nine Months Ended October 31, 2016
|
|
|
GAAP
|
|
Stock-based compensation and related
employer payroll tax
|
|
Amortization of acquired intangible
assets
|
|
Adjustments related to financing lease obligation
|
|
|
Income tax effects related to non-GAAP adjustments(3)
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
$
|
132,790
|
|
$
|
(23,075)
|
|
$
|
(8,612)
|
|
$
|
561
|
|
|
$
|
-
|
|
$
|
101,664
|
|
|
|
|
Gross margin
|
|
|
79.4%
|
|
|
3.6%
|
|
|
1.3%
|
|
|
(0.1)%
|
|
|
|
-%
|
|
|
84.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
220,254
|
|
|
(104,269)
|
|
|
(193)
|
|
|
1,172
|
|
|
|
-
|
|
|
116,964
|
|
|
|
|
Sales and marketing
|
|
|
462,709
|
|
|
(120,883)
|
|
|
(412)
|
|
|
2,373
|
|
|
|
-
|
|
|
343,787
|
|
|
|
|
General and administrative
|
|
|
100,464
|
|
|
(43,448)
|
|
|
-
|
|
|
513
|
|
|
|
-
|
|
|
57,529
|
|
|
|
|
Operating income (loss)
|
|
|
(272,723)
|
|
|
291,675
|
|
|
9,217
|
|
|
(4,619)
|
|
|
|
-
|
|
|
23,550
|
|
|
|
|
Operating margin
|
|
|
(42.4)%
|
|
|
45.4%
|
|
|
1.4%
|
|
|
(0.7)%
|
|
|
|
-%
|
|
|
3.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
3,702
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
1,465
|
|
|
5,167
|
|
|
|
|
Net income (loss)
|
|
$
|
(280,984)
|
|
$
|
291,675
|
|
$
|
9,217
|
|
$
|
994
|
(2)
|
|
$
|
(1,465)
|
|
$
|
19,437
|
|
|
|
|
Net income (loss) per share(1)
|
|
$
|
(2.11)
|
|
|
|
|
|
|
|
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) GAAP net loss per share calculated based on 133,273
weighted-average shares of common stock. Non-GAAP net income per
share calculated based on 136,690 diluted weighted-average shares of
common stock, which includes 3,417 potentially dilutive shares
related to employee stock awards. GAAP to Non-GAAP net income (loss)
per share is not reconciled due to the difference in the number of
shares used to calculate basic and diluted weighted-average shares
of common stock.
|
|
|
(2) Includes $5.6 million of interest expense related to
the financing lease obligation.
|
|
|
|
|
(3) For consistency, prior year non-GAAP net loss has
been adjusted to reflect the tax effect of the non-GAAP adjustments
based on the annual effective tax rate of 21%.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Total Billings
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
|
|
October 31,
|
|
October 31,
|
|
October 31,
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
328,653
|
|
|
$
|
244,789
|
|
|
$
|
851,065
|
|
|
$
|
643,494
|
|
|
|
|
|
|
|
|
|
|
Increase in deferred revenue
|
|
|
52,913
|
|
|
|
31,796
|
|
|
|
76,654
|
|
|
|
49,652
|
|
|
|
|
|
|
|
|
|
|
Billings (non-GAAP)
|
|
$
|
381,566
|
|
|
$
|
276,585
|
|
|
$
|
927,719
|
|
|
$
|
693,146
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20171116006317/en/
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