Splunk (SPLK) Beats Q4 Earnings Estimates on Solid Revenues

Splunk Inc. SPLK reported solid fourth-quarter fiscal 2024 results, with the bottom and the top lines beating the respective Zack Consensus Estimate. The company’s focus on improving operational efficiency supported the bottom line. Splunk is witnessing healthy traction in the cloud business, which accounted for the bulk of total annual recurring revenues (ARR).

The company reported higher revenues year over year, driven by rising customer engagements, continuous innovation and a robust product portfolio.

Net Income

On a GAAP basis, the company incurred a net income of $426.5 million or $2.28 per share compared with $268.8 million or $1.44 per share in the prior-year quarter. The improved performance was primarily attributable to top-line growth.

Non-GAAP net income in the reported quarter was $579.2 million or $3.08 per share, which beat the Zacks Consensus Estimate of $1.87 by a considerable margin.

Splunk Inc. Price, Consensus and EPS Surprise

Splunk Inc. Price, Consensus and EPS Surprise

Splunk Inc. price-consensus-eps-surprise-chart | Splunk Inc. Quote

For fiscal 2024, GAAP earnings were $263.7 million or $1.52 per share against a net loss of $277.9 million or a net loss of $1.71 per share in fiscal 2023. Non-GAAP net income in fiscal 2024 was $1.03 billion.

Revenues

Total revenues in fourth-quarter fiscal 2024 increased to $1.49 billion from $1.25 billion in the prior year. The top line surpassed the consensus estimate of $1.26 billion. The revenue growth was driven by positive demand trends in cloud services, cybersecurity and observability domains. Backed by its enterprise scale and unified product portfolio, Splunk witnessed significant customer additions and several project wins in the public and private sectors. For fiscal 2024, Splunk recorded revenues of $4.22 billion, up from $3.65 billion in fiscal 2023.

Cloud services revenues rose to $503.4 million from $413.9 million in the year-ago quarter. The uptick was propelled by rising demand for its cloud services. License revenues were $810.1 million, up from $670 million. Net sales from Maintenance and Services increased to $172.6 million from $167.2 million in the year-ago quarter.

Total ARR was $4.21 billion, up 15% year over year. The company had 899 customers with an ARR of more than $1 million at the end of the fiscal fourth quarter. Cloud ARR increased 23% year over year to $2.19 billion.

Other Details

Gross profit increased to $1.26 billion from $1.05 billion in the prior-year quarter. Non-GAAP gross margin from cloud services was 74.5%. Non-GAAP operating income aggregated $710.7 million compared with $474.3 million in the prior-year period, with respective margins of 47.8% and 37.9%.

Cash Flow & Liquidity

In fiscal 2024, Splunk generated $1.01 billion in net cash from operating activities compared with $449.6 million in fiscal 2023. As of Jan 31, 2024, the company had $1.64 billion in cash and cash equivalents with $3.11 billion of long-term debt compared with respective tallies of $690.6 million and $3.1 billion in the prior-year period.

Splunk currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Picks

Arista Networks, Inc. ANET, carrying a Zacks Rank #2 (Buy), is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 17.5% and delivered an earnings surprise of 13.3%, on average, in the trailing four quarters.

It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.

Headquartered in Wilmington, DE, InterDigital, Inc. IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.

This Zacks Rank #2 stock has a long-term earnings growth expectation of 17.4% and has surged 46.7% in the past year. A well-established global footprint, diversified product portfolio and ability to penetrate different markets are key growth drivers for InterDigital. The addition of technologies related to sensors, user interface and video to its already strong portfolio of wireless technology solutions is likely to drive considerable value, given the massive size of the market it offers licensing technologies to.

Ubiquiti Inc. UI, carrying a Zacks Rank #2 at present, is a key pick in the broader industry. Headquartered in New York, it offers a comprehensive portfolio of networking products and solutions for service providers and enterprises at disruptive prices.

It boasts a proprietary network communication platform that is well-equipped to meet end-market customer needs. In addition, it is committed to reducing operational costs by using a self-sustaining mechanism for rapid product support and dissemination of information by leveraging the strength of the Ubiquiti Community.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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