SOURCE: Splunk Inc.

Splunk Inc.

May 31, 2012 16:35 ET

Splunk Inc. Announces Fiscal First Quarter 2013 Financial Results

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

SAN FRANCISCO, CA--(Marketwire - May 31, 2012) - Splunk Inc. (NASDAQ: 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. (NASDAQ: 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                
  License1     129       136  
  Maintenance and services1     4,136       1,868  
Total cost of revenues     4,265       2,004  
Gross profit     32,926       18,635  
                 
Operating expenses                
  Research and development1     8,103       4,338  
  Sales and marketing1     24,166       12,768  
  General and administrative1     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 initial 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.  
   
(C) 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 Information