Real time operational intelligence software maker
) recently entered into an agreement to acquire analytics
solution provider BugSense Inc. The acquisition will enable
Splunk to analyze machine data directly from devices and will
help combine it with other information available from sensors and
IT gear to improve operational intelligence.
BugSense was founded in 2011 and offers analytics to determine
mobile app performance and collects information to troubleshoot
problems. The solutions offered by BugSense support Android, iOS
and Windows Phone.
Splunk is one of the pioneers in the field of mining machine
data and has served customers in the IT market for quite some
time now. This acquisition will help the company to focus on
mobile data analysis.
This acquisition will also help Splunk to gain access to
BugSense customers such as Soundcloud, Box, Trulia, Skype and
).The acquisition will therefore not only enhance Splunk's
technological expertise but will also expand its customer base.
The acquisition comes at an opportune time when Splunk is set to
expand its offerings and increase its business volume.
However, increasing investments for product development are
expected to drag profitability in the near term. Splunk continues
to explore and expand into new markets. Hence, sales &
marketing expenditure is expected to increase significantly,
which may hurt margins in the near term.
As IT monitoring contributes a large chunk of Splunk's
revenue, so this acquisition makes sense for the company. On the
other hand, substantial cash outflow that the company is expected
to incur in order to finance this acquisition will also take some
time to recover. Moreover, the company continues to face tough
competition from established players such as
Splunk Inc. has a Zacks Rank #3 (Hold).
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