Splunk Inc. Announces Fiscal Third Quarter 2013 Financial Results

  Splunk Inc. Announces Fiscal Third Quarter 2013 Financial Results

      Company Achieves Record Revenues, License Revenue Grows 56 Percent

Business Wire

SAN FRANCISCO -- November 29, 2012

Splunk Inc. (NASDAQ: SPLK), the leading software platform for real-time
operational intelligence, today announced results for its fiscal third quarter
ended October 31, 2012.

“We are pleased to welcome more than 350 new Enterprise customers to the
Splunk family and also want to recognize the many customers who expanded their
use of Splunk software during the quarter,” said Godfrey Sullivan, Chairman
and CEO. “Our license revenues were the result of broad adoption by our
customers in financial services, technology, telecommunications and government
sectors.”

Third Quarter 2013 Financial Highlights

  *Total revenue was $52.0 million, up 67% year-over-year.
  *License revenue was $34.6 million, up 56% year-over-year.
  *GAAP operating loss was $5.4 million; GAAP operating margin was negative
    10.3%.
    Non-GAAP operating loss was $0.7 million; non-GAAP operating margin was
    negative 1.3%.
  *GAAP net loss was $5.5 million and included $4.7 million in non-cash,
    stock-based compensation expenses; non-GAAP net loss was $0.8 million.
  *GAAP loss per share was $0.06 based on a 96.7 million weighted-average
    share count; non-GAAP loss per share was $0.01.
  *Operating cash flow was $6.5 million with free cash flow of $4.2 million.

A reconciliation of GAAP to non-GAAP results is provided in the accompanying
table.

Third Quarter 2013 and Recent Business Highlights

Customers:

New license customers include: Bureau of Alcohol, Tobacco, Firearms and
Explosives, China Mobile, Churchill Downs, Daimler AG, Eldorado (Russia),
Getty Images, Hyundai Kia (Korea), Kohl's Department Stores, Newell
Rubbermaid, PCCW Now (Hong Kong), South Australia Police, TCS Bank (Russia),
U.S. Department of Agriculture, U.S. Department of Education and
VodafoneAustralia.

Expansion customers include: Adobe, Ceryx Inc., Cisco, Comcast, Commercial
Bank of Qatar, Defense Information Systems Agency (DISA), Interactive Data,
Major League Baseball, Moody's, Purdue University, UniCredit Business
Integrated Solutions (UBIS–Italy), University of Connecticut, U.S.
Department of Energy and Vattenfall Europe Information Services GmbH.

Product:

  *Announced the general availability (GA) of Splunk® Enterprise 5, the
    fastest, most resilient version of the company's flagship product. The
    latest release also includes additional developer tools for building big
    data applications.
  *Released the GA version of Splunk Storm™,a cloud service for
    organizations that develop and run applications in the public cloud.

Developers and Content:

  *Announced the GA of Splunk Hadoop Connect and the Splunk App for HadoopOps
    to address the common challenges of deploying and running Hadoop.
  *Announced the GA of the Splunk App for PCI Compliance 2.0 for
    organizations looking for a simple, intuitive reporting and analysis
    solution that satisfies the requirements for Payment Card Industry (PCI)
    compliance.
  *Released the Splunk App for Server Virtualization which supports Microsoft
    Hyper-V and Citrix XenServer.
  *Upgraded the Splunk App for Microsoft Windows Server Active Directory and
    the Splunk App for Microsoft Exchange to support Windows Server 2012 and
    Exchange Server 2013.
  *Released the GA version of the JavaScript SDK, which includes full JSON
    support and API versioning, in Splunk Enterprise 5.

Channel Partners:

  *Signed a global reseller agreement with Wipro Technologies, the global
    information technology, consulting and outsourcing business of Wipro Ltd
    (NYSE:WIT).
  *Announced a  strategic alliance under which Carahsoft Technology Corp., a
    government IT solution provider, will proactively market, sell and
    distribute Splunk software to federal, state and local government agencies
    and the Splunk reseller partner ecosystem.

Awards:

  *Recognized as the Best IT Security Product of 2012 by Sweden's Protection
    and Safety Newspaper in its third annual security awards.
  *Named the IT Performance Technology winner at the 2012 Ventana Research
    Technology Innovation Awards.
  *Selected as one of the “40 Vendors We're Watching: 2012” by Information
    Management.

Financial Outlook

The company is providing the following guidance for its fiscal 2013 fourth
quarter (ending January 31, 2013):

  *Total revenue is expected to be between $58 million and $60 million.
  *Non-GAAP operating margin is expected to be between 3% and 4%.

The company is updating its previous guidance for its 2013 full fiscal year
(ending January 31, 2013):

  *Total revenue is now expected to be between $192 million and $194 million
    (was previously $183 million to $186 million as of August 30, 2012).
  *Non-GAAP operating margin is expected to be between negative 1% and
    negative 2% (was previously negative 2% to negative 3% as of August 30,
    2012).

All forward-looking non-GAAP financial 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/events.cfm. A replay
of the call will be available through December 6, 2012 by dialing (855)
859-2056 and referencing Conference ID# 59977778.

Safe Harbor Statement

This press release contains forward-looking statements that involve risks and
uncertainties, including statements regarding Splunk’s revenue and non-GAAP
operating margin targets for the company’s fiscal fourth quarter and fiscal
year 2013 in the paragraphs under “Financial Outlook” above, and other
statements regarding momentum in the company’s business, growth in the number
of new customers, existing customer usage and expansion of Splunk software,
Splunk Storm and Splunk Enterprise 5. 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 Quarterly Report on Form 10-Q
for the quarter ended July 31, 2012 which is on file with the U.S. Securities
and Exchange Commission. 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 machine-generated big data coming
from 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 4,800 enterprises, universities, government agencies
and service providers in over 80 countries use Splunk Enterprise to gain
Operational Intelligence that deepens business and customer understanding,
improves service and uptime, reduces cost and mitigates cyber-security risk.
Splunk Storm, a cloud-based subscription service, is used by organizations
developing applications in the cloud.

To learn more, please visit www.splunk.com/company.

Splunk, Splunk Storm and the engine for machine data are registered trademarks
or trademarks of Splunk Inc., and/or its subsidiaries and/or affiliates in the
United States and/or other jurisdictions. All other brand names, product names
or trademarks belong to their respective holders. © 2012 Splunk Inc. All
rights reserved.


SPLUNK INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
                                                              
                                                                   
                         Three Months Ended          Nine Months Ended
                         October 31,   October 31,   October 31,   October 31,
                         2012          2011          2012          2011
Revenues
License                  $  34,557     $  22,182     $ 89,146      $  55,494
Maintenance and            17,488      8,991      44,573       22,267 
services
Total revenues             52,045      31,173     133,719      77,761 
                                                                   
Cost of revenues
License                     62            153          283            712
Maintenance and            5,817       3,040      14,506       7,458  
services
Total cost of              5,879       3,193      14,789       8,170  
revenues^1
Gross profit               46,166      27,980     118,930      69,591 
                                                                   
Operating expenses
Research and                11,074        6,475        28,568         16,227
development^1
Sales and marketing^1       32,847        19,179       84,753         48,337
General and                7,625       5,370      21,718       13,108 
administrative^1
Total operating            51,546      31,024     135,039      77,672 
expenses
Operating loss             (5,380 )     (3,044 )    (16,109 )     (8,081 )
                                                                   
Other income
(expense), net
Interest income             31            (27    )     115            (70    )
(expense), net
Change in fair value
of preferred stock         -           (439   )    (14,087 )     (1,515 )
warrants
Total other income         31          (466   )    (13,972 )     (1,585 )
(expense), net
Loss before income          (5,349 )      (3,510 )     (30,081 )      (9,666 )
taxes
Provision for income       125         50         438          50     
taxes
Net loss                 $  (5,474 )   $  (3,560 )   $ (30,519 )   $  (9,716 )
                                                                   
Basic and diluted net    $  (0.06  )   $  (0.17  )   $ (0.41   )   $  (0.48  )
loss per share
                                                                   
Weighted-average
shares used in
computing basic and        96,671      21,220     73,951       20,069 
diluted net loss per
share
                                                                   

^1 Includes
stock-based
compensation expense
as follows:
Cost of revenues         $  322        $  37         $ 697         $  83
Research and                1,560         229          3,722          531
development
Sales and marketing         2,093         405          4,456          829
General and                710         370        2,348        824    
administrative
                         $  4,685     $  1,041     $ 11,223     $  2,267  
                                                                             


SPLUNK INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
                                                        
                                                           
                                             October 31,   January 31,
                                             2012          2012
                                             (Unaudited)
ASSETS
                                                           
Current assets
Cash and cash equivalents                    $ 273,324     $ 31,599
Accounts receivable, net                       40,178        34,495
Prepaid expenses and other current assets     5,694       4,261   
Total current assets                           319,196       70,355
                                                           
Restricted cash                                -             514
Property and equipment, net                    10,758        8,919
Other assets                                  281         2,435   
Total assets                                 $ 330,235    $ 82,223  
                                                           
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                           
Current liabilities
Accounts payable                             $ 1,195       $ 1,455
Accrued payroll and compensation               25,715        16,142
Accrued expenses and other liabilities         4,672         7,711
Deferred revenue, current portion              61,964        42,923
Term debt, current portion                    -           982     
Total current liabilities                     93,546      69,213  
                                                           
Deferred revenue, non-current                  12,002        9,742
Preferred stock warrant liability              -             2,133
Other liabilities, non-current                 322           561
Term debt, non-current                        -           1,307   
Total non-current liabilities                 12,324      13,743  
Total liabilities                             105,870     82,956  
                                                           
                                                           
Convertible preferred stock                    -             40,913
                                                           
Stockholders' equity (deficit):
Common stock                                   97            23
Accumulated other comprehensive loss           (15     )     (24     )
Additional paid-in capital                     308,820       12,373
Accumulated deficit                           (84,537 )    (54,018 )
Total stockholders' equity (deficit)          224,365     (41,646 )
Total liabilities and stockholders' equity   $ 330,235    $ 82,223  
                                                                     

                                                              
SPLUNK INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                                                   
                                                                   
                         Three Months Ended          Nine Months Ended
                         October 31,   October 31,   October 31,   October 31,
                          2012         2011       2012         2011   
                                                                   
Cash Flows From
Operating Activities
Net loss                 $ (5,474  )   $  (3,560 )   $ (30,519 )   $  (9,716 )
Adjustments to
reconcile net loss to
net cash provided by
operating activities:
Depreciation and           1,208          584          3,357          1,429
amortization
Change in fair value
of preferred stock         -              439          14,087         1,515
warrants
Stock-based                4,685          1,041        11,223         2,267
compensation
Changes in operating
assets and liabilities
Accounts receivable,       (6,497  )      699          (5,683  )      (7,379 )
net
Prepaid expenses,
other current and          (108    )      390          (1,280  )      (2,230 )
non-current assets
Accounts payable           (568    )      (2,052 )     (268    )      (289   )
Accrued payroll and        7,010          2,141        9,573          2,749
compensation
Accrued expenses and       (74     )      733          81             2,006
other liabilities
Deferred revenue          6,298        6,286      21,301       14,263 
Net cash provided by      6,480        6,701      21,872       4,615  
operating activities
                                                                   
Cash Flow From
Investing Activities
Change in restricted       514            -            514            -
cash
Purchases of property     (2,246  )     (2,186 )    (5,720  )     (6,096 )
and equipment
Net cash used in          (1,732  )     (2,186 )    (5,206  )     (6,096 )
investing activities
                                                                   
Cash Flow From
Financing Activities
Repayments of
financing obligation       -              (50    )     -              (142   )
under sale leaseback
Repayments of term         -              (234   )     (2,289  )      (475   )
debt
Proceeds from term         -              -            -              3,000
debt
Proceeds from initial
public offering, net       -              -            225,225        -
of offering costs
Proceeds from early
exercise of employee       -              -            -              735
stock options
Issuance of common
stock from exercise of    298          983        2,123        1,623  
stock options
Net cash provided by      298          699        225,059      4,741  
financing activities
                                                                   
Net increase in cash       5,046          5,214        241,725        3,260
and cash equivalents
Cash and cash
equivalents at            268,278      17,783     31,599       19,737 
beginning of period
Cash and cash
equivalents at end of    $ 273,324    $  22,997    $ 273,324    $  22,997 
period
                                                                   

                                 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 the
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            Nine Months Ended
                       October        October        October 31,     October
                       31,            31,                            31,
                       2012           2011           2012            2011
                                                                                
Reconciliation
of cash provided
by operating
activities to
free cash flow:
Net cash
provided by            $ 6,480        $ 6,701        $ 21,872        $ 4,615
operating
activities
Less purchases
of property and         (2,246 )      (2,186 )      (5,720  )      (6,096 )
equipment
Free cash flow         $ 4,234       $ 4,515       $ 16,152       $ (1,481 )
(Non-GAAP)
Net cash used in
investing              $ (1,732 )     $ (2,186 )     $ (5,206  )     $ (6,096 )
activities
Net cash
provided by            $ 298         $ 699         $ 225,059      $ 4,741  
financing
activities
                                                                                
                                                                                
Operating loss
reconciliation:
GAAP operating         $ (5,380 )     $ (3,044 )     $ (16,109 )     $ (8,081 )
loss
Stock-based
compensation       A    4,685        1,041        11,223        2,267  
expense
Non-GAAP               $ (695   )     $ (2,003 )     $ (4,886  )     $ (5,814 )
operating loss
                                                                                
                                                                                
Operating margin
reconciliation:
GAAP operating           (10.3  ) %     (9.8   ) %     (12.0   ) %     (10.4  ) %
margin
Stock-based
compensation       A    9.0          3.3          8.4           2.9    
expense
Non-GAAP                (1.3   ) %    (6.5   ) %    (3.6    ) %    (7.5   ) %
operating margin
                                                                                
                                                                                
Net loss
reconciliation:
GAAP net loss          $ (5,474 )     $ (3,560 )     $ (30,519 )     $ (9,716 )
Stock-based
compensation       A     4,685          1,041          11,223          2,267
expense
Change in fair
value of           B    -            439          14,087        1,515  
preferred stock
warrants
Non-GAAP net           $ (789   )     $ (2,080 )     $ (5,209  )     $ (5,934 )
loss
                                                                                
Net loss per
share
reconciliation:
GAAP net loss          $ (0.06  )     $ (0.17  )     $ (0.41   )     $ (0.48  )
per share
Stock-based
compensation       A     0.05           0.05           0.15            0.11
expense
Change in fair
value of           B    -            0.02         0.19          0.07   
preferred stock
warrants
Non-GAAP basic
and diluted loss       $ (0.01  )     $ (0.10  )     $ (0.07   )     $ (0.30  )
per share
                                                                                
Weighted-average
shares used in
computing basic         96,671       21,220       73,951        20,069 
and diluted net
loss per share
                                                                                

Notes:
     
(A)     To eliminate stock-based compensation expense.
        
        To eliminate warrant expense related to the change in the fair value
(B)     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.

Contact:

Splunk Inc.
Sherry Lowe, 415-852-5529
slowe@splunk.com
or
LEWIS PR
Jade Wilkinson, 415-432-2459
jadew@lewispr.com
or
Investor Contact
Splunk Inc.
Ken Tinsley, 415-848-8476
ktinsley@splunk.com
 
Press spacebar to pause and continue. Press esc to stop.