Will Top-Line Expansion Boost Splunk's (SPLK) Q2 Earnings?
Splunk Inc. SPLK is set to release second-quarter fiscal 2024 results on Aug 23, after market close. In the last reported quarter, the company delivered an earnings surprise of 205.88%. It pulled off a trailing four-quarter earnings surprise of 168.71% on average. The company is expected to report higher revenues year over year. The upside will likely be driven by healthy demand for its security and business analytics solutions. The collaboration with Microsoft will likely boost its cloud solution portfolio and accelerate business expansion.
Factors at Play
During the quarter, Splunk announced that it has collaborated with Microsoft Corp. to support organizations with advanced digital resilience capabilities. The strategic partnership intends to develop Splunk’s cloud solutions by utilizing Microsoft Azure. This will enrich customers with a comprehensive cloud and hybrid visibility on a large scale and facilitate seamless innovation, modernization and expansion of their business environment. The hybrid approach will support businesses with flexible deployment options and best-in-class security. This is likely to have a positive impact on the company’s top-line performance.
In the quarter-under-review, the company announced that Splunk Security for SAP solutions received SAP endorsement and is listed on the SAP store. SAP Endorsed Apps are premium certified by SAP, ensuring enhanced security measures, extensive testing and measurements against benchmark results. It protects enterprises’ business-critical SAP applications and data by mitigating risks with greater security, visibility, accurate detection and quick response to potential threats. The company also introduced an AI-assistant and machine learning toolkit to strengthen its unified security and observability platform and augment digital resiliency. This is likely to have generated incremental revenues in the quarter.
In the second quarter, Splunk announced that Carnival Corporation, a prominent cruise company, has deployed a Splunk software solution. The aim was to secure shipboard systems and customer data across an expansive fleet of over 90 worldwide ships. This is expected to have boosted Splunk’s earnings during the quarter.
For the July quarter, the Zacks Consensus Estimate for total revenues is pegged at $888 million, which indicates growth from $799 million reported in the year-ago quarter. Adjusted income per share is pegged at 42 cents, suggesting an improvement from 9 cents recorded in the prior year quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for Splunk for the fiscal second 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 not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.00%, with both pegged at 42 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-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:
NVIDIA Corporation NVDA has an Earnings ESP of +2.39% and sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Aug 23. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dycom Industries Inc. DY has an Earnings ESP of +0.12% and a Zacks Rank of 3. The company is set to report its quarterly numbers on Aug 23.
PagSeguro Digital Ltd. PAGS has an Earnings ESP of +6.93% and carries a Zacks Rank of 2. The company is set to report its quarterly numbers on Aug 24.
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