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Splunk Continues to Witness Growth in Large Orders

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May. 30 2018, Updated 7:30 a.m. ET

Factors driving large contract wins

Splunk (SPLK) has continued to sign high-value contracts, buoyed by demand for the company’s data analytics products due to enterprises’ growing need for proper data analysis and collection. To tap this growing market, the company has launched new products such as Splunk Enterprise Security 5.0, Splunk Enterprise Security Content (which helps clients discover cybersquatting, phishing, and corporate espionage), and Splunk Add-on for Google (GOOGL) Cloud Platform (which helps enterprises collect, index, and analyze Google Cloud Platform events, logs, performance metrics, and billing data).

Moreover, Splunk’s policy to focus more on a subscription-based business model has expanded its customer base and order size. The company also teamed up with Amazon (AMZN) to make its products available on Amazon Web Services’ cloud, offering more flexibility to its customers.

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Customer ticket size

In the last five years, Splunk has won 650 contracts worth more than $1 million at an average of ~130 deals per year. In the last three years, the company has struck a total of 14 deals above $10 million at an average of more than four deals per year.

As shown in the above graph, its average selling price per order has also grown strongly over the last five years, at a compound annual rate of 22%. In the last five years, Splunk has added 10,200 new customers, at an average of ~2,040 clients per year. The company ended fiscal 2018 with 15,400 clients, against 13,400 in fiscal 2017. Higher adoption of its products may boost business going forward.

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