Splunk (SPLK) to Report Q1 Earnings: What's in the Cards?

Splunk SPLK is set to report first-quarter fiscal 2020 results on May 23.

The company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 31.8%.

In the last reported quarter, Splunk added more than 600 new enterprise customers. Further, cloud revenues soared 85% year over year to $53 million on the back of increased utilization of cloud-based services.

Splunk’s portfolio strength is helping it win new customers. Solid demand for the company’s enterprise, security and cloud solutions is expected to drive the top line in the soon-to-be-reported quarter.

Splunk’s strong partner base that comprises Amazon Web Services (AWS), Accenture, Cisco and Symantec, among others, has been a key catalyst. Integration of the company’s products in partner solution is expected to boost Splunk’s exposure, particularly among enterprise customers.

Splunk Inc. Price and EPS Surprise


Splunk Inc. Price and EPS Surprise

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

Moreover, the company continues its transition to a renewable model (85% of the product mix for 2020), which is a tailwind. However, the transition is expected to negatively impact operating cash flow. Additionally, increasing cloud revenues in the product mix is expected to keep margins under pressure in the to-be-reported quarter.

For the first quarter, Splunk expects revenues of $395 million. The quarter is expected to be negatively impacted by seasonality.

The Zacks Consensus Estimate for first-quarter revenues is pegged at $395.7 million, indicating growth of almost 27% from the figure reported in the year-ago quarter.

Further, the consensus mark for loss is pegged at 15 cents, unchanged over the past 30 days. The estimated loss figure is wider than loss of 7 cents reported in the year-ago quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Meanwhile, the Sell-rated stocks (Zacks Rank #4 or #5) are best avoided.

Splunk has a Zacks Rank #4 and an Earnings ESP of -2.27%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With a Favorable Combination

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Verint Systems VRNT has an Earnings ESP of +2.94% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuit INTU has an Earnings ESP of +0.59% and a Zacks Rank #2.

Momo Inc. MOMO has an Earnings ESP of +1.21% and a Zacks Rank #3.

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Splunk Inc. (SPLK): Free Stock Analysis Report

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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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