The issue is they are spending more than they should on marketing and sales. There will be no safe havens in general.ĭDOG, SPLK etc are not profitable because they are NOT giving away the products for free. For example, Amazon was barely profitable for much of the last decade. You can make lots of money on stocks that barely make any profits. With respect to investing - thats a personal preference. It is better use of engineers time to solve more pressing problems than reinvent some technology that will save you few $. I have spoke to many companies, once a system works, they rarely want to change. Everything can be replaced, but the question is the cost/benefit analysis. Once companies put their architecture in place, they rarely want to change. As an engineer, you know how busy you are and how little time you have. With all respect to your views, there are couple of things here i would like to comment. Obviously insightful comments are always a learning experience for everyone involved. We expect Splunk to announce a new CEO in the next few months, providing the catalyst for the Thank you again for taking time to comment. We expect a majority of the customers will continue to remain with Splunk and expand its use within their enterprise stack. We also believe many customers like Splunk's cloud strategy and want to buy these products as needed. Many customers use the APIs to build applications on top of the Splunk platform, and these applications are mission-critical in the enterprise. The market reaction to preliminary results and news of the departure of the CEO is overkill in our view.Ĭustomer like the products, and many customers we talk to note that they have standardized on the Splunk platform. And Splunk also announced the fourth consecutive quarter of solid results. The company rolled out new pricing models that make it competitive with other players in the market. Much of the hard work in transitioning the company to cloud and cloud-first strategy is now complete.
#Splunk stock twits install
There is a lot to like in Splunk's story - large markets, first-mover advantage, large install base, and a story that is improving each quarter.
The following charts illustrate Splunk's valuation relative to its peer group. We believe Splunk's discounted valuation is not warranted, and we expect Splunk's valuation multiple to expand as the company continues to execute on its go-to-market strategy. On a growth adjusted, Splunk is trading at 0.34x versus the peer group at 0.66x.
Splunk is expected to grow 22% in C2023, in line with the peer group average. Splunk is trading at 7.4x EV/C2023 sales versus the peer group average of 15.4x. The following chart illustrates consensus estimates. The company previously guided operating margin in the range of -15% to -20%. The operating margin was -14% and was also ahead of estimates. Cloud ARR grew to $1.1 billion and was up 75% Y/Y, and total ARR was $2.8 billion and was up 37% Y/Y. Total revenue is expected to be around $660 million, up 19% Y/Y, versus a consensus of $646 million. Splunk pre-announced strong F3Q22 results. With the arrival of Silver Lake investment earlier this year, we expected the CEO change, which was more or less a foregone conclusion. The stock sank to a 52-week low of around $110 and almost 50% off its highs of $220. Since then, Splunk stock has been in the doldrums. In our view, Splunk's CEO began losing credibility with investors after the company missed estimates badly last year, just two weeks after the company had a very BULLISH analyst day. Splunk also lost its CFO, CTO, Head of Sales in quick succession, and the company had to build back its management team. Splunk's former CEO, Doug Merritt, dealt with product and business model transitions, leading to some execution challenges. Therefore, we continue to remain bullish on Splunk and are buying shares here. We are also confident in the new management team Splunk assembled, with Shawn Bice running the products and Teresa Carlson running the sales. We are highly confident in Splunk's position within the industry, the strength of its products, and the roadmaps. Splunk's multiple is already pricing in a lot of bad news, making the risk-reward favorable to investors. We believe the stock sell-off following the announcement is a great time to buy shares. Graham Smith, Chairman of Splunk's Board of Directors and former CFO of Salesforce ( CRM ), is appointed interim CEO. In conjunction, the company also announced that CEO Doug Merritt has stepped down. This morning Splunk ( NASDAQ: SPLK) pre-announced positive F3Q22 results. Sundry Photography/iStock Editorial via Getty Images
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