Splunk Inc. Announces Fiscal First Quarter 2013 Financial Results

Revenue Grows 80% Year-Over-Year; Customer Count Surpasses 4,000

Marketwired

SAN FRANCISCO, CA--(Marketwire -05/31/12)- Splunk Inc. (SPLK), the leading provider of software for real-time operational intelligence, today announced results for its fiscal first quarter ended April 30, 2012.

"Our first quarter was a strong start to fiscal 2013 and continues the momentum we experienced last year," said Godfrey Sullivan, chairman and CEO, Splunk. "We added more than 350 new customers and now have over 4,000 customers using Splunk software to achieve operational intelligence from their machine-generated data."

First Quarter 2013 Financial Highlights

  • Total revenue was $37.2 million, up 80% year-over-year.

  • License revenue was $24.4 million, up 68% year-over-year.

  • GAAP operating loss was $6.2 million; GAAP operating margin was negative 16.6%. Non-GAAP operating loss was $3.5 million; non-GAAP operating margin was negative 9.5%.

  • GAAP net loss was $20.5 million and included $2.7 million in non-cash, stock-based compensation expenses, and a $14.1 million non-cash, non-recurring warrant-related charge. Non-GAAP net loss was $3.7 million.

  • GAAP loss per share was $0.71 based on a 28.7 million weighted-average share count. Non-GAAP loss per share was $0.04 on a 94.6 million share count.

  • Operating cash flow was $11.6 million with free cash flow of $9.7 million.

  • Cash and cash equivalents totaled $266.1 million as of April 30, 2012 and reflects net cash proceeds of $226.5 million from the company's initial public offering of common stock.

A reconciliation of GAAP to non-GAAP results is provided in the accompanying table.

First Quarter 2013 and Recent Business Highlights

Customers

  • New paid license, expansion, and upgrade customers include: CenturyLink, Daiwa Securities, Evernote, NASA, McKesson Health Solutions, Scottish Parliament, Stanford University, Tesco, and U.S. Department of Health and Human Services.

  • Hosted more than 1,500 customers and partners at 15 SplunkLive! events in Australia, Germany, Hong Kong, Singapore, Spain, Switzerland and the U.S., where attendees learned from existing customers how to leverage their machine data across IT and business use cases.

Product

  • Granted a second U.S. patent for innovative Time-Series Search Engine Technology.

  • Introduced Splunk App for Enterprise Security 2.0, a major enhancement to our next-generation security solution for monitoring known threats, support for forensic investigations, big data analytics to help identify advanced persistent threats, and dashboards for security posture and investigation workflows.

  • Introduced Splunk Storm™ (beta), a service running in the public cloud that provides developers and other customers with an elastic, multi-tenant, scalable, pay-per-use version of Splunk software.

  • Introduced Splunk App for VMware (beta), which collects and analyzes data from the virtualization layer to enable true end-to-end visibility in virtualized environments.

Developers

  • Introduced two software development kits (SDKs) for Python and JavaScript, in beta and preview testing stages respectively. The Splunk SDKs make it easier for customers to integrate Splunk with other applications and systems and build custom visualizations of Splunk data.

Awards

  • The San Francisco Business Times named Splunk one of the "Best Places to Work" in 2012 for a 5th consecutive year.

  • SC Magazine recognized Splunk with its award for "Best Enterprise Security Solution - EMEA."

  • Splunk customer Crossroads HK was honored with a ComputerWorld Laureate's award for their use of Splunk software in organizing volunteer resources in Asia Pacific.

Key Management Appointments

  • Guido Schroeder, formerly an executive with SAP, joined Splunk as senior vice president of products.

  • James Murray, formerly an executive with Autonomy, joined Splunk as vice president and general manager of EMEA.

Financial Outlook
As of May 31, 2012, the company is providing the following guidance for its fiscal second quarter 2013 ending July 31, 2012:

  • Total revenue is expected to be between $38 million and $40 million.
  • Non-GAAP operating margin is expected to be between negative 8% and negative 9%.

As of May 31, 2012, the company is providing the following guidance for its fiscal year ending January 31, 2013:

  • Total revenue is expected to be between $174 million and $177 million.
  • Non-GAAP operating margin is expected to be between negative 4% and negative 5%.

All forward-looking non-GAAP measures contained in this section "Financial Outlook" exclude estimates for stock-based compensation expenses. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis.

Conference Call and Webcast
Splunk's executive management team will host a conference call today beginning at 2:00 p.m. PT (5:00 p.m. ET) to discuss the company's financial results and business highlights. Interested parties may access the call by dialing (866) 501-1535. International parties may access the call by dialing (216) 672-5582. A live audio webcast of the conference call will be available through Splunk's Investor Relations website at http://investors.splunk.com/. A replay of the call will be available through June 7, 2012 by dialing (855) 859-2056 and referencing Conference ID# 77937219.

Safe Harbor Statement

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding Splunk's revenue and GAAP and non-GAAP operating margin targets for the company's fiscal second quarter and fiscal year 2013 in the paragraphs under "Financial Outlook" above, and other statements regarding momentum in the company's business. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: Splunk's limited operating history, particularly as a new public company; risks associated with Splunk's rapid growth, particularly outside of the U.S.; and general market, political, economic and business conditions.

Additional information on potential factors that could affect Splunk's financial results is included in the company's final prospectus for its initial public offering, which is on file with the U.S. Securities and Exchange Commission. Additional information will also be set forth in Splunk's quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that the company makes with the Securities and Exchange Commission from time to time. Splunk does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

About Splunk Inc.
Splunk® Inc. (SPLK) provides the engine for machine data™. Splunk software collects, indexes and harnesses the massive machine data continuously generated by the websites, applications, servers, networks and mobile devices that power business. Splunk software enables organizations to monitor, search, analyze, visualize and act on massive streams of real-time and historical machine data. More than 4,000 enterprises, universities, government agencies and service providers in over 80 countries use Splunk Enterprise to gain operational intelligence that deepens business understanding, improves service and uptime, reduces cost and mitigates cyber-security risk. To learn more, please visit www.splunk.com/company.

© 2012 Splunk Inc. All rights reserved. All non-Splunk brand names, product names, or trademarks belong to their respective holders.

 
SPLUNK INC.     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

Three Months Ended
------------------------
April 30, April 30,
2012 2011
----------- -----------
Revenues
License $ 24,386 $ 14,546
Maintenance and services 12,805 6,093
----------- -----------
Total revenues 37,191 20,639
----------- -----------
Cost of revenues
License(1) 129 136
Maintenance and services(1) 4,136 1,868
----------- -----------
Total cost of revenues 4,265 2,004
----------- -----------
Gross profit 32,926 18,635
----------- -----------

Operating expenses
Research and development(1) 8,103 4,338
Sales and marketing(1) 24,166 12,768
General and administrative(1) 6,846 3,292
----------- -----------
Total operating expenses 39,115 20,398
----------- -----------
Operating loss (6,189) (1,763)
----------- -----------

Other income (expense), net
Interest income (expense), net (17) (10)
Change in fair value of preferred stock warrants (14,087) (473)
----------- -----------
Total other income (expense), net (14,104) (483)
----------- -----------
Loss before income taxes (20,293) (2,246)
Provision for income taxes 177 -
----------- -----------
Net loss $ (20,470) $ (2,246)
=========== ===========


Basic and diluted net loss per share $ (0.71) $ (0.12)
=========== ===========

Weighted-average shares used in computing basic
and diluted net loss per share 28,679 19,185
=========== ===========


--------------------------------------------------
(1) Includes stock-based compensation expense as
follows:
Cost of revenues $ 108 $ 19
Research and development 895 121
Sales and marketing 858 179
General and administrative 811 191
----------- -----------
$ 2,672 $ 510
=========== ===========



SPLUNK INC.     CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

April 30, January 31,
2012 2012
------------- -------------

ASSETS

Current assets
Cash and cash equivalents $ 266,077 $ 31,599
Accounts receivable, net 23,480 34,495
Prepaid expenses and other current assets 4,353 4,261
------------- -------------
Total current assets 293,910 70,355

Restricted cash 514 514
Property and equipment, net 9,700 8,919
Other assets 330 2,435
------------- -------------
Total assets $ 304,454 $ 82,223
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable $ 2,558 $ 1,455
Accrued payroll and compensation 11,685 16,142
Accrued expenses and other liabilities 6,699 7,711
Deferred revenue, current portion 46,676 42,923
Term debt, current portion - 982
------------- -------------
Total current liabilities 67,618 69,213
------------- -------------

Deferred revenue, non-current 12,466 9,742
Preferred stock warrant liability - 2,133
Other liabilities, non-current 424 561
Term debt, non-current - 1,307
------------- -------------
Total non-current liabilities 12,890 13,743
------------- -------------
Total liabilities 80,508 82,956
------------- -------------

Commitments and contingencies

Convertible preferred stock - 40,913

Stockholders' equity (deficit):
Common stock 95 23
Accumulated other comprehensive loss (17) (24)
Additional paid-in capital 298,356 12,373
Accumulated deficit (74,488) (54,018)
------------- -------------
Total stockholders' equity (deficit) 223,946 (41,646)
------------- -------------
Total liabilities and stockholders' equity
(deficit) $ 304,454 $ 82,223
============= =============


SPLUNK INC.     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

Three Months Ended
------------------------
April 30, April 30,
2012 2011
----------- -----------

Cash Flows From Operating Activities
Net loss $ (20,470) $ (2,246)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 931 348
Change in fair value of preferred stock warrants 14,087 473
Stock-based compensation 2,672 510
Changes in operating assets and liabilities
Accounts receivable, net 11,015 (1,406)
Prepaid expenses, other current and non-
current assets 12 (1,374)
Accounts payable 1,006 965
Accrued payroll and compensation (4,457) (2,244)
Accrued expenses and other liabilities 313 (353)
Deferred revenue 6,477 2,571
----------- -----------
Net cash provided by (used in) operating
activities 11,586 (2,756)
----------- -----------

Cash Flow From Investing Activities
Purchases of property and equipment (1,877) (1,228)
----------- -----------
Net cash used in investing activities (1,877) (1,228)
----------- -----------

Cash Flow From Financing Activities
Repayments of financing obligation under sale
leaseback - (61)
Repayments of term debt (2,289) (58)
Proceeds from term debt - 2,000
Proceeds from intial public offering, net of
offering costs 226,512 -
Proceeds from early exercise of employee stock
options - 235
Issuance of common stock from exercise of stock
options 546 257
----------- -----------
Net cash provided by financing activities 224,769 2,373
----------- -----------

Net increase (decrease) in cash and cash
equivalents 234,478 (1,611)
Cash and cash equivalents at beginning of period 31,599 19,736
----------- -----------
Cash and cash equivalents at end of period $ 266,077 $ 18,125
=========== ===========

SPLUNK INC.
Non-GAAP financial measures and reconciliations

To supplement Splunk's consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States ("GAAP"), Splunk provides investors with certain non-GAAP financial measures, including non-GAAP operating loss, non-GAAP net loss, non-GAAP operating margin, and non-GAAP loss per share (collectively the "non-GAAP financial measures"). These non-GAAP financial measures exclude stock-based compensation expense and the change in fair value of certain preferred stock warrants previously issued by Splunk. In addition, non-GAAP financial measures include free cash flow, which represents cash from operations less purchases of property and equipment. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Splunk uses these non-GAAP financial measures for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. Splunk believes that these non-GAAP financial measures provide useful information about Splunk's operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. In addition, these non-GAAP financial measures facilitate comparisons to competitors' operating results.

Splunk excludes stock-based compensation expense from its non-GAAP operating loss, non-GAAP net loss, non-GAAP operating margin and non-GAAP loss per share because such expense is non-cash in nature. Splunk excludes expense attributable to the change in fair value of certain preferred stock warrants from its non-GAAP financial measures because it is a non-recurring, non-cash expense. Splunk considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities, including investing in Splunk's business, making strategic acquisitions, and strengthening Splunk's balance sheet.

There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by Splunk's competitors and exclude expenses that may have a material impact upon Splunk's reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in Splunk's business and an important part of the compensation provided to Splunk's employees. The non-GAAP financial measures are meant to supplement, and be viewed in conjunction with, GAAP financial measures.

The following table reconciles Splunk's non-GAAP results to Splunk's GAAP results included in this press release.

 

SPLUNK INC.     Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)

Three Months Ended
-------------------------
April 30, April 30,
2012 2011
----------- -----------

Reconciliation of cash provided by (used in) operating
activities to free cash flow:
Net cash provided by (used in) operating
activities $ 11,586 $ (2,756)
Less purchases of property and equipment (1,877) (1,228)
----------- -----------
Free cash flow (Non-GAAP) $ 9,709 $ (3,984)
=========== ===========
Net cash used in investing activities $ (1,877) $ (1,228)
=========== ===========
Net cash provided by financing activities $ 224,769 $ 2,373
=========== ===========


Operating loss reconciliation:
GAAP operating loss $ (6,189) $ (1,763)
Stock-based compensation expense A 2,672 510
----------- -----------
Non-GAAP operating loss $ (3,517) $ (1,253)
=========== ===========


Operating margin reconciliation:
GAAP operating margin (16.6)% (8.5)%
Stock-based compensation expense A 7.1 2.4
----------- -----------
Non-GAAP operating margin (9.5)% (6.1)%
=========== ===========


Net loss reconciliation:
GAAP net loss $ (20,470) $ (2,246)
Stock-based compensation expense A 2,672 510
Change in fair value of preferred stock
warrants B 14,087 473
----------- -----------
Non-GAAP net loss $ (3,711) $ (1,263)
=========== ===========

----------- -----------
Non-GAAP basic and diluted net loss per share $ (0.04) $ (0.02)
=========== ===========


Reconciliation of shares used in computing
net loss per share:
Weighted-average shares used in computing
basic and diluted GAAP net loss per share 28,679 19,185
Conversion of convertible preferred stock
upon initial public offering 52,502 56,730
Securities issued in connection with
initial public offering C 13,402 -
----------- -----------
Shares used in computing non-GAAP basic and
diluted net loss per share 94,583 75,915
=========== ===========

Notes:

(A) To eliminate stock-based compensation expense.

(B) To eliminate warrant expense related to the change in the fair value
of our outstanding preferred stock warrants. The final measurement of the
warrants was recorded upon the closing of Splunk's initial public
offering during the three months ended April 30, 2012.

© This amount represents the shares issued in the initial public
offering not included in the weighted-average shares used in computing
basic and diluted GAAP net loss per share.
Contact:
Media Contact Information:
Sherry Lowe
Splunk Inc.
415.852.5529
slowe@splunk.com
Investor Contact Information:
Ken Tinsley
Splunk Inc.
415.848.8476
ktinsley@splunk.com

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