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Can Splunk Meet Its Revenue Guidance in Fiscal Q2 2019?

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Aug. 17 2018, Published 8:33 a.m. ET

Revenue trends and outlook

Splunk (SPLK) has maintained stable revenue growth in the last five quarters driven by higher order wins, increased customer additions, and increased demand for its innovative products.

These key factors have prompted the company to project revenue in the range of $356 million–$358 million for the fiscal second quarter of 2019. The company also expects its fiscal 2019 revenue to be $1.65 billion.

In the graph above, we can see Splunk’s total revenue growth in the last five quarters. During the period, its revenue grew at a CAGR (compound annual growth rate) of 8.3%. In the fiscal first quarter of 2019, its total revenue came in at nearly $312 million, up 37.4% year-over-year.

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Analyzing the key drivers

Splunk continues to gain from the launch of new products such as Splunk Insights for Infrastructure, saving both time and costs for its customers. Moreover, the company has also integrated AI features into its products, improving business performance for its clients through operational intelligence and real-time business insights from machine data. Splunk Enterprise and Splunk Cloud 7.1 are the best examples of such AI-based products.

In addition, the company’s latest acquisitions of VictorOps and Phantom may not only boost its service platform but also drive its customer additions. The company exited the fiscal first quarter of 2019 with 460 new enterprise clients. The growing popularity of Splunk’s subscription-based business model compared to its traditional perpetual-based payment model is also improving its customer renewal rate.

Furthermore, Splunk’s strategic partnership with Amazon’s (AMZN) AWS (Amazon Web Services) Cloud and Palo Alto Networks (PANW) could help it to boost its presence globally.

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