Splunk Inc. Announces Fiscal Fourth Quarter and Full Year 2013 Financial Results

  Splunk Inc. Announces Fiscal Fourth Quarter and Full Year 2013 Financial
  Results

  Company Surpasses 5,000 Customer Mark; Full Year Revenue Grows 64 percent

Business Wire

SAN FRANCISCO -- February 28, 2013

Splunk Inc. (NASDAQ: SPLK), the leading software platform for real-time
operational intelligence, today announced results for its fiscal fourth
quarter and full year ended January 31, 2013.

“We are thrilled to cross the 5,000 customer mark worldwide by adding another
400-plus new Enterprise customers,” said Godfrey Sullivan, Chairman and CEO.
“It is gratifying to see our customer relationships evolve to enterprise-wide
deployments as organizations choose to standardize on the Splunk platform for
their machine-generated data.”

Fourth Quarter 2013 Financial Highlights

  *Total revenue was $65.2 million, up 51% year-over-year.
  *License revenue was $46.8 million, up 43% year-over-year.
  *GAAP operating loss was $5.9 million; GAAP operating margin was negative
    9.1%.
  *Non-GAAP operating income was $3.2 million; non-GAAP operating margin was
    5.0%.
  *GAAP loss per share was $0.06; non-GAAP income per share was $0.03.
  *Operating cash flow was $24.8 million with free cash flow of $21.4
    million.

Full Year 2013 Financial Highlights

  *Total revenue was $198.9 million, up 64% from prior year.
  *License revenue was $135.9 million, up 54% from prior year.
  *GAAP operating margin was negative 11.1%; non-GAAP operating margin was
    negative 0.7%.
  *Operating cash flow was $46.6 million with free cash flow of $37.6
    million.

A reconciliation of GAAP to non-GAAP financial measures has been provided in
the financial statement tables included in this press release.

Fourth Quarter 2013 and Recent Business Highlights

Customers:
New license customers include: DuPont, LAN Airlines,GOME Electrical
Appliances (China),Idealo Internet GmbH (Germany), United States Computer
Emergency Readiness Team (US-CERT), Palo Alto Networks, Poste Italiane
SPA,City and County of San Francisco – Security Services,City of Chandler
Police Department,City of Dayton, the Korea Music Copyright Association, NEC
Australia,Nexon (APAC), Parallax Fund, RailCorp,Sacramento Regional
Transit,Savvis,Siemens Energy,State of Nevada, Svyaznoy Bank (Russia),
State of Montana,T-Mobile Poland, TriZetto Corporation and University of
South Australia.

Expansion customers include: U.S. Coast Guard, Aviva (UK), Monster
Worldwide,China Construction Bank,Comcast Corporation, U.S. Environmental
Protection Agency,Genentech, Boingo Wireless, SKY
Italia,Homes.com,Kaspersky Lab (Russia), Meeza (Qatar), Moody's, Robert
Bosch GmbH,Row Sham Bow, State of Vermont, Symantecand Telenor Norway.

Product:

  *Released the Splunk App for Enterprise Security 2.2 to take advantage of
    Splunk Enterprise 5 features, enablingimproved scalability for large
    deployments, faster performance and easier third-party threat intelligence
    feeds. It also contains new and improved technology add-ons and is more
    tablet-friendly.
  *Released the Splunk App for VMware 2.0 to enable deep operational
    visibility into granular performance metrics, logs, tasks, events and
    topology from hosts, virtual machines and virtual centers.
  *Released the Splunk App for Palo Alto Networks 3.0 to enable users to
    leverage their machine-generated big data to analyze risk, improve
    security posture and compliance and address a number of additional
    operational and regulatory concerns.
  *Announced the general availability (GA) of new software development kits
    (SDKs) for Java and Python. The Splunk SDK for PHP is in public preview.
  *Released the GA version of Splunk DB Connect to deliver real-time
    integration between Splunk Enterprise and relational databases.
  *Released Splunk Shuttl to give customers several backend options to
    archive their data, whether in Amazon S3, Hadoop HDFS or NFS. It allows
    data to move automatically and, via the user interface, locate and restore
    data with just a few clicks.

Awards

  *Fast Company named Splunk one of the World's Most Innovative Companies.
    Splunk is ranked fourth overall for “bringing big data to the masses.”
    Fast Company also ranked Splunk the number one innovator in Big Data.
  *Splunk Enterprise won the gold medal for the Best Security Product in the
    “2012 Editors' Best Awards” by Penton Media's Windows IT Pro. Splunk
    Enterprise was also awarded the silver medal for Best Free Tool and the
    bronze medal for Best Systems Monitoring Product.
  *Named the 2012 Big Data Winner by Enterprise Strategy Group.

Appointments

  *Announced Tim Mather as the company’s first Vice President ofSecurity and
    Compliance Markets and Chief Information Security Officer (CISO).

Splunk4Good

  *Launched the Federal Election Commission Campaign Contribution Explorer to
    examine who gives the most to political campaigns by occupation, location
    and other criteria.
  *Partnered with Rock the Vote to help young voters, who get a majority of
    their news via social media, better follow and understand the online
    conversation around the 2012 U.S. election campaign. Rock the Vote and
    Splunk4Good worked together to build a visualization that displayed sets
    of real-time political data to build a unique social media view to track
    the issues that young voters were discussing online.
  *Selected to participate in the FEMA Innovation Think Tank to deliver
    social media metrics around the impact of Hurricane Sandy.

Financial Outlook

The company is providing the following guidance for its fiscal 2014 first
quarter (ending April 30, 2013):

  *Total revenue is expected to be between $52 million and $54 million.
  *Non-GAAP operating margin is expected to be between negative 10% and
    negative 12%.

The company is providing the following guidance for its fiscal 2014 full year
(ending January 31, 2014):

  *Total revenue is expected to be between $260 million and $270 million.
  *Non-GAAP operating margin is expected to be approximately zero.

All forward-looking non-GAAP financial measures contained in this section
“Financial Outlook” exclude estimates for stock-based compensation expenses
and employer payroll tax expense related to employee stock plans. 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 1:30 p.m. PT (4:30 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 March 7, 2013 by dialing (855) 859-2056
and referencing Conference ID# 93605971.

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 first quarter and fiscal
year 2014 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, expansion of Splunk software and
product developments. 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
relatively 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 October 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 5,200 enterprises, universities, government agencies
and service providers in over 90 countries use Splunk Enterprise to gain
Operational Intelligence that deepens business and customer understanding,
improves service and uptime, reduces cost and mitigates cybersecurity 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. © 2013 Splunk Inc. All
rights reserved.

                                                              
SPLUNK INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
                                                                   
                                                                   
                         Three Months Ended          Fiscal Year Ended
                         January 31,   January 31,   January 31,   January 31,
                         2013          2012          2013          2012
Revenues
License                  $  46,776     $  32,814     $ 135,922     $ 88,308
Maintenance and            18,449      10,385     63,022      32,652  
services
Total revenues             65,225      43,199     198,944     120,960 
                                                                   
Cost of revenues
License                     444           178          727           890
Maintenance and            6,191       3,257      20,697      10,715  
services
Total cost of revenues     6,635       3,435      21,424      11,605  
^1, 2
Gross profit               58,590      39,764     177,520     109,355 
                                                                   
Operating expenses
Research and                13,285        7,334        41,853        23,561
development ^1, 2
Sales and marketing         40,345        26,445       125,098       74,782
^1, 2
General and                10,884      6,590      32,602      19,698  
administrative ^1, 2
Total operating            64,514      40,369     199,553     118,041 
expenses
Operating loss             (5,924 )     (605   )    (22,033 )    (8,686  )
                                                                   
Other income
(expense), net
Interest income             37            (24    )     152           (94     )
(expense), net
Change in fair value
of preferred stock         -           (519   )    (14,087 )    (2,034  )
warrants
Total other income         37          (543   )    (13,935 )    (2,128  )
(expense), net
Loss before income          (5,887 )      (1,148 )     (35,968 )     (10,814 )
taxes
Provision for income       275         128        713         178     
taxes
Net loss                 $  (6,162 )   $  (1,276 )   $ (36,681 )   $ (10,992 )
                                                                   
                                                                   
Basic and diluted net    $  (0.06  )   $  (0.06  )   $ (0.46   )   $ (0.53   )
loss per share
                                                                   

Weighted-average
shares used in
computing basic and        98,996      22,403     80,246      20,646  
diluted net loss per
share
                                                                   

^1 Includes
stock-based
compensation expense
as follows:
Cost of revenues         $  520        $  51         $ 1,217       $ 134
Research and                2,448         310          6,170         841
development
Sales and marketing         3,637         659          8,093         1,488
General and                1,652       473        4,000       1,297   
administrative
                         $  8,257     $  1,493     $ 19,480     $ 3,760   
                                                                   
^2 Includes employer
payroll tax on
employee stock plans
as follows:
Cost of revenues         $  7          $  -          $ 7           $ -
Research and                180           -            180           -
development
Sales and marketing         458           -            506           -
General and                248         -          462         -       
administrative
                         $  893       $  -         $ 1,155      $ -       
                                                                             

                                                        
SPLUNK INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                           
                                                           
                                             January 31,   January 31,
                                             2013          2012
                                                           
ASSETS
                                                           
Current assets
Cash and cash equivalents                    $ 305,939     $ 31,599
Accounts receivable, net                       63,948        34,495
Prepaid expenses and other current assets     6,861       4,261   
Total current assets                           376,748       70,355
                                                           
Restricted cash                                -             514
Property and equipment, net                    13,205        8,919
Other assets                                  492         2,435   
Total assets                                 $ 390,445    $ 82,223  
                                                           
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                           
Current liabilities
Accounts payable                             $ 1,632       $ 1,455
Accrued payroll and compensation               28,123        16,142
Accrued expenses and other liabilities         7,636         7,711
Deferred revenue, current portion              79,568        42,923
Term debt, current portion                    -           982     
Total current liabilities                     116,959     69,213  
                                                           
Deferred revenue, non-current                  35,144        9,742
Preferred stock warrant liability              -             2,133
Other liabilities, non-current                 798           561
Term debt, non-current                        -           1,307   
Total non-current liabilities                 35,942      13,743  
Total liabilities                             152,901     82,956  
                                                           
                                                           
Convertible preferred stock                    -             40,913
                                                           
Stockholders' equity (deficit):
Common stock                                   101           23
Accumulated other comprehensive loss           (135    )     (24     )
Additional paid-in capital                     328,277       12,373
Accumulated deficit                           (90,699 )    (54,018 )
Total stockholders' equity (deficit)          237,544     (41,646 )
Total liabilities and stockholders' equity   $ 390,445    $ 82,223  
                                                                     

                                                              
SPLUNK INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                                                   
                         Three Months Ended          Fiscal Year Ended
                         January 31,   January 31,   January 31,   January 31,
                         2013          2012          2013          2012
                                                                   
Cash Flows From
Operating Activities
Net loss                 $ (6,162  )   $ (1,276  )   $ (36,681 )   $ (10,992 )
Adjustments to
reconcile net loss to
net cash provided by
operating activities:
Depreciation and           1,317         691           4,674         2,120
amortization
Change in fair value
of preferred stock         -             519           14,087        2,034
warrants
Stock-based                8,257         1,493         19,480        3,760
compensation
Excess tax benefits
from employee stock        (462    )     -             (462    )     -
plans
Changes in operating
assets and liabilities
Accounts receivable,       (23,770 )     (12,968 )     (29,453 )     (20,347 )
net
Prepaid expenses,
other current and          (1,378  )     (1,281  )     (2,658  )     (3,511  )
non-current assets
Accounts payable           455           344           187           55
Accrued payroll and        2,408         5,948         11,981        8,697
compensation
Accrued expenses and       3,380         442           3,446         2,448
other liabilities
Deferred revenue          40,746      16,095      62,047      30,358  
Net cash provided by      24,791      10,007      46,648      14,622  
operating activities
                                                                   
Cash Flow From
Investing Activities
Change in restricted       -             128           514           128
cash
Purchases of property     (3,357  )    (2,084  )    (9,077  )    (8,180  )
and equipment
Net cash used in          (3,357  )    (1,956  )    (8,563  )    (8,052  )
investing activities
                                                                   
Cash Flow From
Financing Activities
Repayments of
financing obligation       -             (31     )     -             (173    )
under sale leaseback
Repayments of term         -             (236    )     (2,289  )     (711    )
debt
Proceeds from term         -             -             -             3,000
debt
Proceeds from initial
public offering, net       -             -             225,225       -
of offering costs
Proceeds from exercise     630           50            630           50
of warrant
Proceeds from early
exercise of employee       -             404           -             1,139
stock options
Issuance of common
stock from exercise of     4,773         364           6,896         1,987
stock options
Excess tax benefits
from employee stock        462           -             462           -
plans
Proceeds from employee    5,311       -           5,311       -       
stock purchase plan
Net cash provided by      11,176      551         236,235     5,292   
financing activities
                                                                   
Effect of exchange
rate changes on cash      5           -           20          -       
and cash equivalents
Net increase in cash       32,615        8,602         274,340       11,862
and cash equivalents
Cash and cash
equivalents at            273,324     22,997      31,599      19,737  
beginning of period
Cash and cash
equivalents at end of    $ 305,939    $ 31,599     $ 305,939    $ 31,599  
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 income (loss), non-GAAP net
income (loss), non-GAAP operating margin, and non-GAAP income (loss) per share
(collectively the “non-GAAP financial measures”). These non-GAAP financial
measures exclude stock-based compensation expense, employer payroll tax
expense related to employee stock plans, 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 and employer payroll tax
expense related to employee stock plans from its non-GAAP operating income
(loss,) non-GAAP net income (loss), non-GAAP operating margin and non-GAAP
income (loss) per share. Splunk excludes share-based compensation expense
because it is non-cash in nature, and excluding this expense provides
meaningful supplemental information regarding Splunk’s operational
performance. In particular, because of varying available valuation
methodologies, subjective assumptions and the variety of award types that
companies can use under FASB ASC Topic 718, Splunk believes that providing
non-GAAP financial measures that exclude this expense allows investors the
ability to make more meaningful comparisons between Splunk’s operating results
and those of other companies. Splunk excludes employer payroll tax expense
related to employee stock plans in order for investors to see the full effect
that excluding that share-based compensation expense had on Splunk’s operating
results. These expenses are tied to the exercise or vesting of underlying
equity awards and the price of Splunk’s common stock at the time of vesting or
exercise, which may vary from period to period independent of the operating
performance of Splunk’s business. Splunk also 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.
Accordingly, Splunk believes that excluding these expenses provides investors
and management with greater visibility to the underlying performance of its
business operations, facilitates comparison of its results with other periods,
and may also facilitate comparison with the results of other companies in its
industry. 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 its business, making strategic acquisitions, and
strengthening its 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           Fiscal Year Ended
                      January 31,    January 31,   January 31,    January 31,
                      2013           2012          2013           2012
                                                                  
Reconciliation of
cash provided by
operating
activities to
free cash flow:
Net cash provided
by operating          $ 24,791       $ 10,007      $ 46,648       $ 14,622
activities
Less purchases of
property and           (3,357  )     (2,084 )     (9,077  )     (8,180  )
equipment
Free cash flow        $ 21,434      $ 7,923      $ 37,571      $ 6,442   
(Non-GAAP)
Net cash used in
investing             $ (3,357  )    $ (1,956 )    $ (8,563  )    $ (8,052  )
activities
Net cash provided
by financing          $ 11,176      $ 551        $ 236,235     $ 5,292   
activities
                                                                  
                                                                  
Operating income
(loss)
reconciliation:
GAAP operating        $ (5,924  )    $ (605   )    $ (22,033 )    $ (8,686  )
loss
Stock-based
compensation        A   8,257          1,493         19,480         3,760
expense
Employer payroll
tax on employee     C  893          -           1,155        -       
stock plans
Non-GAAP
operating income      $ 3,226       $ 888        $ (1,398  )    $ (4,926  )
(loss)
                                                                  
                                                                  
Operating margin
reconciliation:
GAAP operating          (9.1    )%    (1.4   )%    (11.1   )%    (7.2    )%
margin
Stock-based
compensation        A   12.7           3.5           9.8            3.1
expense
Employer payroll
tax on employee     C  1.4          -           0.6          -       
stock plans
Non-GAAP               5.0     %    2.1    %    (0.7    )%   (4.1    )%
operating margin
                                                                  
                                                                  
Net income (loss)
reconciliation:
GAAP net loss         $ (6,162  )    $ (1,276 )    $ (36,681 )    $ (10,992 )
Stock-based
compensation        A   8,257          1,493         19,480         3,760
expense
Change in fair
value of            B   -              519           14,087         2,034
preferred stock
warrants
Employer payroll
tax on employee     C  893          -           1,155        -       
stock plans
Non-GAAP net          $ 2,988       $ 736        $ (1,959  )    $ (5,198  )
income (loss)
                                                                  
Net income (loss)
per share
reconciliation:
GAAP net loss per     $ (0.06   )    $ (0.06  )    $ (0.46   )    $ (0.53   )
share - basic
Stock-based
compensation        A   0.08           0.07          0.24           0.18
expense
Change in fair
value of            B   -              0.02          0.18           0.10
preferred stock
warrants
Employer payroll
tax on employee     C  0.01         -           0.02         -       
stock plans
Non-GAAP net
income (loss) per     $ 0.03        $ 0.03       $ (0.02   )    $ (0.25   )
share - basic
                                                                  
Weighted-average
shares used in
computing basic        98,996       22,403      80,246       20,646  
GAAP and Non-GAAP
net income (loss)
per share:
                                                                  
Non-GAAP net
income (loss) per     $ 0.03        $ 0.01       $ (0.02   )    $ (0.25   )
share - diluted
                                                                  
Weighted-average
shares used in
computing diluted      115,615      90,384      80,246       20,646  
Non-GAAP net
income (loss) per
share:
                                                                  
Notes:
                                                                  
(A)To eliminate stock-based compensation expense.
                                                                  
(B)To eliminate warrant expense related to the change in the fair value 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.
                                                                  
(C)To eliminate employer payroll tax expense related to employee stock
plans.
                                                                  

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
 
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