We estimate that the net proceeds from our sale of 12,507,278 shares of common
stock in this offering at the initial public offering price of $17.00 per
share, after deducting underwriting discounts and commissions and estimated
offering expenses payable by us, will be approximately $193.8 million, or
$225.8 million if the underwriters' over-allotment option is exercised in full.
We will not receive any proceeds from the sale of common stock by the selling
stockholders.
The principal purposes of this offering are to increase our capitalization and
financial flexibility, increase our visibility in the marketplace and create a
public market for our common stock. As of the date of this prospectus, we have
no specific plans for the use of the net proceeds we receive from this
offering. However, we currently intend to use the net proceeds we receive from
this offering primarily for general corporate purposes, including working
capital, sales and marketing activities, product development, general and
administrative matters, and capital expenditures. We may also use a portion of
the net proceeds for the acquisition of, or investment in, technologies,
solutions or businesses that complement our business, although we have no
present commitments or agreements to make any acquisitions or investments. We
will have broad discretion over the uses of the net proceeds in this offering.
Pending these uses, we intend to invest the net proceeds from this offering in
short-term, investment-grade interest-bearing securities such as money market
accounts, certificates of deposit, commercial paper and guaranteed obligations
of the U.S. government.
We compete against a variety of large software vendors and smaller specialized
companies, open source initiatives and custom development efforts, which
provide solutions in the specific markets we address. Our principal competitors
include:
o IT departments of potential customers which have undertaken custom software
development efforts to analyze and manage their machine data;
o security and systems management vendors, including BMC Software, CA,
Compuware, HP, IBM, Intel, Microsoft and Quest Software;
o web analytics vendors, including Adobe Systems, Google, IBM and Webtrends;
o business intelligence vendors, including EMC, IBM, Oracle and SAP;
o companies targeting the big data market by commercializing open source
software, such as Hadoop; and
o small specialized vendors, which provide complementary solutions in
enterprise data analytics, data warehousing and big data technologies that
may compete with our software.
The principal competitive factors in our markets are product features,
performance and support, product scalability and flexibility, ease of
deployment and use, total cost of ownership and time to value. We believe that
we generally compete favorably on the basis of the foregoing factors. Our
software contains a rich feature set starting with its powerful, intuitive
search-engine interface and continuing with its ability to provide results to
customized user queries in real time. We offer a broad range of support
options, and our customers consistently provide us with high ratings for our
support. Our software has the capability to collect and index data at massive
scale and enables users to quickly and easily define customized searches and to
correlate, analyze, monitor and report on their data. In addition, our software
does not require long, costly deployment cycles typically associated with
enterprise software. The ability to rapidly capture and analyze massive amounts
of data results in a broad set of use cases for our software and enables our
software to displace traditional enterprise software and discrete solutions
providing IT operations management, security and compliance, and business
intelligence. While we believe that our software provides a broad variety of
use cases at a low total cost of ownership, we price our software licenses
based upon estimated daily indexing capacity. Our pricing method may ultimately
result in a higher total cost to users as data volumes increase over time,
making it more difficult for us to compete in our markets.
Some of our actual and potential competitors have advantages over us, such as
longer operating histories, significantly greater financial, technical,
marketing or other resources, stronger brand and business user recognition,
larger intellectual property portfolios and broader global distribution and
presence. In addition, our industry is evolving rapidly and is becoming
increasingly competitive. Larger and more established companies may focus on
operational intelligence and could directly compete with us. Smaller companies
could also launch new products and services that we do not offer and that could
gain market acceptance quickly.
correlate, analyze,
monitor and report on this data, all in real time. Our software addresses the
risks, challenges and opportunities organizations face with increasingly large
and diverse data sets, commonly referred to as big data, and is specifically
tailored for machine-generated data. Machine data is produced by nearly every
software application and electronic device in an organization and contains a
definitive, time-stamped record of various activities, such as transactions,
customer and user activities, and security threats. Our software is designed to
help users in various roles, including IT and business professionals, quickly
analyze machine data and realize real-time visibility into and intelligence
about their organization's operations. This operational intelligence enables
organizations to improve service levels, reduce costs, mitigate security risks,
demonstrate and maintain compliance and gain new insights that enable them to
drive better business decisions.
The volume and diversity of digital information within and available to today's
organizations, including enterprises, universities and government agencies,
have grown significantly over the last several years due to the proliferation
of network-enabled devices, advances in virtual and cloud-computing, and
evolving business and consumer uses of technology. International Data
Corporation, or IDC, estimates that the volume of digital information created
and replicated worldwide will grow approximately 45% annually from 1.8 trillion
gigabytes in 2011 to 7.9 trillion gigabytes in 2015. Machine data is one of the
fastest growing components of this digital information and comes in an
increasing number of formats. The applications, servers, network devices,
mobile phones, desktop computers, laptops and various other systems and devices
that comprise an organization's IT infrastructure are continuously generating
information in a variety of disparate formats relating to application and
system performance, user activity, configuration changes, transactions,
security alerts, error messages and other time-series information. Outside of
an organization's traditional IT infrastructure, nearly every electronic device
and software application, such as smart electrical meters, mobile applications,
GPS equipment and radio-frequency identification devices, continually generate
machine data.
We believe our software is disrupting established markets and enabling new ones
by delivering operational intelligence to organizations of all sizes. Our
software enables organizations to harness the value of machine data in their
enterprise across a variety of use cases. Our customers are deploying our
software to enable more effective application management, IT operations
management, security and compliance, and to realize operational intelligence
and insight across a broad base of their organizations' activities.
The core of our software is a proprietary machine data engine, comprised of
collection, indexing, search and data management capabilities. Our software can
collect and index terabytes of information daily, irrespective of format or
source. Our machine data engine uses an innovative data architecture that
enables dynamic, schema creation on the fly, allowing users to run queries on
data without having to understand the structure of the data prior to collection
and indexing. Our machine data fabric for data collection and indexing delivers
speed and scalability when processing massive amounts of machine data. Our
software leverages improvements in the cost and performance of commodity
computing and can be deployed in a wide variety of computing environments, from
a single laptop to large globally distributed data centers.
To extend our software's functionality, customers can deploy additional
solutions as well as lightweight applications, or apps, on top of our core data
engine. Our apps, which are available for download via our Splunkbase website,
provide incremental functionality in the form of pre-built data inputs,
searches, reports, alerts and dashboards, and are generally available for free.
We, along with a number of third-party developers and customers, have developed
approximately 350 apps for specific use cases in our core and adjacent markets.
We also build and deliver a select number of packaged solutions that provide
more robust functionality targeting a specific end market or use case. We
currently provide Splunk for Enterprise Security and Splunk for PCI (payment
card industry) Compliance and have made available, through a controlled
preview, Splunk for VMware. These packaged solutions and apps allow our
customers to further extend the value of their machine data using our software.
We provide application programming interfaces, or APIs, and software
development kits, or SDKs, in various programming languages that enable
developers to leverage our machine data engine and its broad capabilities in
their own software. In addition to our packaged solutions and apps, we are
investing in the development of Splunk Storm, which is a cloud-based service
currently in beta that provides a subset of our software's capabilities, but is
tailored for machine data in the cloud. Our online user communities, Splunkbase
and Splunk Answers, provide our customers with an environment to share these
apps, collaborate on the use of our software and provide community-based
support. We believe this user-driven ecosystem results in greater use of our
software and drives cost-effective marketing, increased brand awareness and
viral adoption of our product.
Our software is designed to accelerate adoption and return-on-investment for
our customers. It does not require customization, long deployment cycles or
extensive professional services commonly associated with traditional enterprise
software applications. Users can simply download and install the software,
typically in a matter of hours, to connect to their relevant machine data
sources and begin realizing operational intelligence. We also offer customers
with complex IT infrastructure the ability to leverage the expertise of our
professional services organization to deploy our software.
As of January 31, 2012, we had over 3,700 customers, including a majority of
the Fortune 100. Some of our largest customers include Autodesk, Bank of
America, Comcast, Etsy, Harvard University, Viacom and Zynga. Our customers pay
license fees based on their estimated indexing capacity needs. For fiscal 2010,
2011 and 2012, our revenues were $35.0 million, $66.2 million and $121.0
million, respectively, representing year-over-year growth of 89% for fiscal
2011 and 83% for fiscal 2012, and our net loss was $7.5 million, $3.8 million
and $11.0 million, respectively.
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Our principal executive offices are located at 250 Brannan Street, San
Francisco, California 94107, and our telephone number is (415) 848-8400. Our
website is www.splunk.com.