Splunk (SPLK) is set to report Q4 results tonight after the close with a conference call to follow at 5pm ET. Current Capital IQ consensus stands at EPS of $0.08 on Revenue of $203 mln.

Shares of SPLK have had a difficult start to 2016. SPLK opened up the new year trading at $59 but the stock is down nearly 40%. Valuation has been a key driver of the selling as the stock is trading at a very lofty 162x earnings. Even its sales valuation is frothy as it trades at 8x 2015 sales.

These high valuation, big data names were at the forefront when peer Tableau Software (DATA) reported results on February 4.

One of the primary areas of weakness for DATA was License Revenues so keep an eye on that for SPLK. 

One thing that the co has done well in and that is quarterly performance. SPLK has steadily beaten on the top and bottom line and raised its outlook. In fact, Q3 saw an acceleration of revenue growth to 50% compared to 46% in Q2 and it marked its best top line growth in four quarters. The co will need to repeat this performance in order to help offset fears of an industry spend slow down.

SPLK Earnings Trading Activity

  • 4Q14 report- Stock rallied from $51 to $69 in the four weeks ahead of earnings before rolling back over and dropping back to $57;
  • Q1 report- Stock ran from $66 to $71 ahead of the report and then would see a dip back to $64 in the week that followed;
  • Q2 report- Stock bounced from the Aug 24 flush low of $55 back to $66 when it reported four days lower. The stock would be rejected at its 200 sma and eventually slide to $51 on September 29;
  • Q3 report- Stock saw a steady grind higher form $54 to $63 ahead of the report. Another beat and raise but yet another round of profit taking following the report...
  • Ahead of Q4- A little more unique this time around given the hefty selling. We did see a steady decline ahead of the Q3 report but not to the degree we have seen over the past two months. The stock has rallied approx 20% since February 11.

Key Metrics

  • Revenue Growth- Q3 revenue growth was 50%; Q2 was 46%;
  • License Revenues- Q3 grew 45% (License revenues was one of the biggest shortfalls in the DATA report); Q2 was 42%.


  • Q4: Total revenues are expected to be between $200 million and $202 million. Non-GAAP operating margin is expected to be between 5% and 6%.
  • FY17: Total revenues are expected to be approximately $850 million.

Q3 Recap

SPLK reported Q3 (Oct) earnings of $0.05 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.02. Revenues rose 50.3% year/year to $174.4 mln vs the $160.31 mln Capital IQ Consensus.

  • Co issued upside guidance for Q4, seeing Q4 revs of $200-202 mln vs. $198.27 mln Capital IQ Consensus Estimate. Non-GAAP operating margin is expected to be between 5% and 6%.
  • Co raised its guidance for FY16, seeing revs of approx $650 mln (Prior $628-632 mln) vs. $632.52 mln Capital IQ Consensus Estimate. Non-GAAP operating margin is expected to be approximately 3% (was previously between 2% and 3% per prior guidance provided on August 27, 2015).
  • Co issued upside guidance for FY17, seeing FY17 revs of approx $850 mln vs. $832.26 mln Capital IQ Consensus Estimate.