Splunk Announces Fiscal Second Quarter 2023 Financial Results
Total Revenues Grow 32%; Cloud Revenue up 59%
Increases Full Year Revenue, Profitability and Cash Flow Outlook
SAN FRANCISCO, August 24, 2022--(BUSINESS WIRE)--Splunk Inc. (NASDAQ: SPLK), the data platform leader for security and observability, today announced results for its fiscal second quarter ended July 31, 2022.
Second Quarter 2023 Financial Highlights
Total revenues were $799 million, up 32% year-over-year.
Cloud revenue was $346 million, up 59% year-over-year.
Cloud Dollar-Based Net Retention Rate was 129%.
723 customers with total ARR greater than $1 million, up 24% year-over-year.
"The value we bring customers is evident in our Q2 results, with total revenues growing 32 percent. We also delivered substantially higher non-GAAP operating margin for the quarter, driven by our laser focus on balancing growth with profitability," said Gary Steele, President and CEO of Splunk. "Splunk is well-positioned to deliver long-term, durable growth and profitability as we help the world’s largest and most innovative enterprises improve their cybersecurity and business resilience. These customers appreciate the unique and unmatched level of visibility we provide into their data and consider Splunk their partner of choice to secure and strengthen their mission critical operations."
"In the face of some headwinds, we had solid execution in Q2, including $346 million in cloud revenue, a 59 percent increase over last year," said Jason Child, CFO of Splunk. "Given the continued normalization of our revenue model, plus good progress on our expense optimization efforts, we substantially outperformed on the top and bottom lines for the quarter, and we’re increasing our revenue, operating profit and cash flow outlook for the second half."
Q2 2023 Business Highlights
Splunk Delivers Advancements Across its Products and Partner Community at .conf22: Over 12,500 attendees, including thousands of partners, came together during Splunk’s annual user conference to discuss how organizations are overcoming the barriers between data and action. Key product announcements included:
The Splunk Platform, including Splunk Cloud Platform and Splunk Enterprise 9.0, allows customers to access more data sources easily, find and operationalize insights even faster, secure and scale deployments, build cloud-ready custom applications, and streamline administration to turn data insights into business outcomes.
Data Manager for Splunk Cloud Platform delivers a scalable data onboarding experience across Amazon Web Services and Microsoft Azure, with Google Cloud Platform support available later this summer, providing an easy-to-manage hybrid cloud control plane of data flowing into Splunk within minutes.
Splunk Log Observer Connect allows customers to visualize all their data in one place. By combining the power of Splunk Cloud Platform and Splunk Observability, site reliability engineers and DevOps engineers can access their metrics, traces, and Splunk Cloud logs in a single interface for faster, in-context debugging.
Splunk Ranks First in Both IT Operations and Security Markets in Gartner® Market Share Report: Splunk leads in market share for IT Operations for Health and Performance Analysis (HPA) segment and in the Security Information and Event Management (SIEM) segment, worldwide in the Gartner Market Share: All Software Markets, Worldwide, 2021 report*. In the report, Splunk once again maintained its highest position in both IT and security operations markets.
Splunk Names New Chief Customer Officer and EMEA General Manager: Splunk appointed Katie Bianchi as its Chief Customer Officer and Petra Jenner as Senior Vice President and General Manager for Europe, Middle East and Africa (EMEA).
The company is providing the following guidance for its fiscal third quarter 2023 (ending October 31, 2022):
Total revenues are expected to be between $835 million and $855 million.
Non-GAAP operating margin is expected to be between 6% and 8%.
The company is providing or updating the following guidance for its fiscal year 2023 (ending January 31, 2023):
Total revenues are expected to be between $3.35 billion and $3.4 billion (was previously between $3.30 billion and $3.35 billion).
Non-GAAP operating margin is expected to be approximately 8% (was previously 2%).
Total ARR is expected to be approximately $3.65 billion; Cloud ARR is expected to be approximately $1.8 billion (was previously $3.9 billion and $2.0 billion respectively).
Operating cash flow is expected to be at least $420 million (was previously $400 million).
Free Cash flow is expected to be at least $400 million.
Conference Call and Webcast
Splunk’s executive management team will host a conference call beginning at 1:30 p.m. PT (4:30 p.m. ET) to discuss financial results and business highlights. Interested parties can register for the conference call through the following link: https://register.vevent.com/register/BIbf790aaaf90848e587b036c45117a877. Registered participants will receive an email containing conference call details with dial-in options. A live audio webcast of the conference call will also be available through Splunk’s Investor Relations website at http://investors.splunk.com/events-presentations. A webcast replay of the call will be available for the next 12 months.
Safe Harbor Statement
This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding Splunk’s long-term prospects, including growth and profitability, Splunk’s guidance for revenue and non-GAAP operating margin targets for the company’s fiscal third quarter 2023 and Total ARR, Cloud ARR, revenue, non-GAAP operating margin, operating cash flow and free cash flow for the company’s fiscal year 2023; statements regarding our market opportunity, including trends in the pace of customer digital and cloud transformation; our global presence and trends in customer demand and engagement; the growth of our cloud business; our products and technologies, including the unique and unmatched level of visibility they provide; the market for data-related products and the importance of data and our ability to leverage these trends; our strategy, technology and product innovation; expectations for our industry, business and products, such as our business model, customer demand and trust, our partner relationships, customer success and feedback, expanding use of Splunk by customers, and expected benefits and scale of our products. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: risks associated with Splunk’s rapid growth, particularly outside of the United States; Splunk’s inability to realize value from its significant investments in the company’s business, including product and service innovations and through acquisitions; Splunk’s shift from sales of licenses to sales of cloud services which impacts the timing of revenue and margins; a shift from generally invoicing multi-year contracts upfront to invoicing on an annual basis, which impacts cash collections; Splunk’s transition to a multi-product software and services business; Splunk’s inability to successfully integrate acquired businesses and technologies; Splunk’s inability to service its debt obligations or other adverse effects related to the company’s convertible notes; the macroeconomic environment, including inflationary pressures and economic uncertainty; COVID-19 and related public health measures on our business and the business of our customers, as well as the impact of new variants on the overall economic environment, including customer buying capacity, urgency and patterns; and general market, political, economic, business and competitive market conditions.
Additional information on potential factors that could affect Splunk’s financial results is included in the company’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022, which is on file with the U.S. Securities and Exchange Commission ("SEC") and Splunk’s other filings with the SEC. 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.
*Gartner, Inc., Market Share: All Software Markets, Worldwide 2021, Neha Gupta et al, April 12, 2022
Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s Research & Advisory organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.
About Splunk Inc.
Splunk Inc. (NASDAQ: SPLK) helps organizations around the world turn data into doing. Splunk technology is designed to investigate, monitor, analyze and act on data at any scale.
Splunk, Splunk>, Data-to-Everything, and Turn Data Into Doing are trademarks and registered trademarks of Splunk Inc. in the United States and other countries. All other brand names, product names, or trademarks belong to their respective owners. © 2022 Splunk Inc. All rights reserved.
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