$SPLK Q3 2022 Earnings Report
$SPLK Long
Splunk is a software used for monitoring and searching through big data. It indexes and correlates information in a way that makes it searchable, and makes it possible to generate alerts, reports, and visualizations. During the last three years, they have only missed the estimates three times which is one factor why I want to long this company. Currently speaking, their stock price is considered highly undervalued and investors are looking at any good news they could find to buy it. Analyst Brian White has noted that the company's platform is stronger than it was before and its new leadership is encouraging, after some internal issues transitioning to the cloud. "With the worst of Splunk’s cloud journey behind it and new leadership at the helm, the company appears to be in better shape today than before the pandemic began," White wrote in a note to clients. They are expected to report revenue of 7 $790.5M, $269.9M is expected to come from licenses, and $352M from cloud services revenue, up 62% year over year. The remainder is expected to be made up of maintenance and services revenue at $168.8M. Billings are also expected to rise 28% year over year to $804.4M. Disadvantages: However, I still have some doubts in the back of my mind as inflation and high costs have been eating into many of the company's profit margins. Earlier this Monday, Morgan Stanley lowered their revenue outlooks on a few software companies such as Splunk. This usually isn’t a good sign as it shows the financial stability of the company and whether or not they are capable of beating the estimates. Investors will be looking at if the company can stabilize its cloud business after the cloud services fell to 57% of the company's software bookings during the first quarter of this year, as opposed to 63% in the second quarter a year ago. Weiss also cut their 2022 revenue forecast on Splunk to $3.27B from $3.3B and also lowered his price target on the company's stock to $128 a share from $138. Other downgrades include Monness, Crespi, Hardt, Morgan Stanley, and BTIG all stating they are expecting slower growth. Having all these in mind, I believe that the chances of them going up are higher than the chances of them going down. They recently changed their subscription method which allowed more customers to sign up at more affordable pricing. Other stocks in the same field: At the same time looking at other data sharing companies in the same field, they were all able to beat the estimates, two of the main ones being Adobe and DropBox. At the same time, none of them revised their estimates for the year which shows that this sector isn’t being impacted as heavily as other sectors.
Top 10 Owners of Splunk Inc Stockholder Stake Shares owned Total value ($) Shares bought / sold Total change The Vanguard Group, Inc. 9.30 % 14,959,17 7 1,554,408,082 +726,719 +5.11% PRIMECAP Management Co. 5.20 % 8,365,550 869,264,301 +475,589 +6.03% BlackRock Fund Advisors 4.26 % 6,848,201 711,596,566 +95,547 +1.41% ClearBridge Investments LLC 3.34 % 5,365,529 557,532,118 -388,040 -6.74% Pictet Asset Management SA 3.06 % 4,924,085 511,661,672 +566,899 +13.01 % SSgA Funds Management, Inc. 2.92 % 4,705,269 488,924,502 -150,331 -3.10% Vulcan Value Partners LLC 2.24 % 3,607,607 374,866,443 -508,609 -12.36% First Trust Advisors LP 1.90 % 3,062,736 318,248,898 -357,928 -10.46% Whale Rock Capital Management LLC 1.71 % 2,748,086 285,553,616 +1,117,545 +68.54 % Barclays Bank Plc (Private Banking... 1.42 % 2,277,382 236,642,764 +759,205 +50.01 % Initial reaction: Long Researched reaction: 50/50 CEO: Time: After market Estimate: +8% Market Cap: 17,828,524,500 P/E Ratio: -25.77