Will Higher Revenues Benefit Splunk's (SPLK) Q1 Earnings?

·3 min read

Splunk Inc. SPLK is scheduled to report first-quarter fiscal 2024 results on May 24, after market close. In the last reported quarter, the company delivered an earnings surprise of 260.9%. It pulled off a trailing four-quarter earnings surprise of 222%, on average. The San Francisco, CA-based software solutions company is expected to have recorded year-over-year higher revenues backed by positive demand trends.

Factors at Play

During the quarter, Splunk introduced unified security and observability solutions to enhance cybersecurity. The newly introduced unified security solution improves Splunk Mission Control’s ability to detect, investigate and nullify a threat from a single unified work surface. Splunk’s innovation also enables organizations to troubleshoot faster with increased visibility and a unified incident response approach. This is likely to have generated incremental revenues in the quarter.

Splunk’s software offerings enable users to have deep insight into their data on a real-time basis, thereby making the operational decision-making process faster. The company’s software is increasingly being used in a broad range of applications, including security analytics, business analytics and IT operations. Splunk is benefiting from healthy customer engagement, evident from the consistently high net retention and competitive win rates alongside solid momentum with large orders overall. The company’s top line is likely to have gained from the high demand for its cloud solutions.

For the April quarter, the Zacks Consensus Estimate for total revenues is pegged at $719 million, which indicates growth from $674 million reported in the year-ago quarter. Adjusted loss per share is pegged at 17 cents, suggesting an improvement from a loss of 32 cents recorded in the year-earlier quarter.

Earnings Whispers

Our proven model predicts an earnings beat for Splunk for the fiscal first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is perfectly the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +12.16%, with the former pegged at a loss of 15 cents and the latter at a loss of 17 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Splunk Inc. Price and EPS Surprise

Splunk Inc. Price and EPS Surprise
Splunk Inc. Price and EPS Surprise

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

Zacks Rank: Splunk currently has a Zacks Rank #3.

Other Stocks to Consider

Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:

HP Inc. HPQ is set to release quarterly numbers on May 30. It has an Earnings ESP of +2.29% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Agilent Technologies, Inc. A is +0.40% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on May 23.

The Earnings ESP for Jabil Inc. JBL is +3.38% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Jun 15.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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