Splunk Inc. Announces Fiscal First Quarter 2014 Financial Results

  Splunk Inc. Announces Fiscal First Quarter 2014 Financial Results

      Total Revenue Grows 54%; Company Raises Full Year Revenue Guidance

Business Wire

SAN FRANCISCO -- May 30, 2013

Splunk Inc. (NASDAQ: SPLK), the leading software platform for real-time
operational intelligence, today announced results for its fiscal first quarter
ended April 30, 2013.

  *Total revenue was $57.2 million, up 54% year-over-year.
  *License revenue was $36.2 million, up 48% year-over-year.
  *GAAP operating loss was $15.7 million or negative 27.4% of revenues.
  *Non-GAAP operating loss was $5.3 million or negative 9.2% of revenues.
  *GAAP loss per share was $0.16; non-GAAP loss per share was $0.06.
  *Operating cash flow was $19.9 million with free cash flow of $18.6
    million.

“We are off to a strong start in the first quarter and I’m pleased with our
new customer acquisition and financial performance,” said Godfrey Sullivan,
Chairman and CEO. “Years of investment and product innovation have resulted in
recognition that Splunk is disrupting the enterprise software space. In the
security market, Splunk was recognized as a leader in the 2013
GartnerSecurity Information and Event Management (SIEM)Magic Quadrant andSC
Magazine named Splunk Enterprise Best SIEM solution in North America and Best
Enterprise Security Solution for Europe. In IT operations management, Gartner
recognized Splunk as one of the fastest growing vendors in the category. And
Fast Company named Splunk one of the world’s most innovative companies and
ranked Splunk as the number one innovator in big data.We will continue to
invest heavily in our data platform, content and SaaSofferings to deliver
customer success.”

First Quarter 2014 and Recent Business Highlights

Customers:

  *Signed more than 350 new enterprise customers, ending the quarter with
    approximately 5,600 customers worldwide. Signed more than 70 new Splunk
    Storm® customers, ending the quarter with more than 200 Splunk Storm
    customers worldwide.
  *New license customers include: Allconnect, Altstoff Recycling Austria AG,
    Arizona Department of Transportation, The Bank of New York Mellon
    Corporation, Baylor University, Department of Energy, Idaho State Tax
    Commission, Genesis Energy (ANZ), Kordia (ANZ), Level 3 Communications,
    Inc., Ministry of Presidential Affairs (UAE), Mission Australia, Mitsui
    Bussan Secure Directions, Inc. (APAC), NBNCo Limited (APAC), Nomura
    Securities CO LTD (APAC), Oregon State Lottery, The Qatar Computer
    Emergency Response Team (QCERT), Transaction Solutions (ANZ), VicTrack
    (APAC), Winn-Dixie.

  *Expansion customers include: Arizona State University, Bank of New
    Zealand, Box, Inc., Blackrock Inc., Comcast Corporation, D. Swarovski &
    Co., Major League Baseball, Nanyang Technological University, NASA Johnson
    Space Center, Nordstrom, Novagalicia (NCG) Banco (Spain),  Oregon Army
    National Guard, Orange France, Penn State Hershey Medical Center, Riverbed
    Technology, ServiceNow, State of Texas – Health and Human Services,
    University of California Irvine, U.S. Department of Health and Human
    Services, U.S. Army.

Product:

  *Announced the general availability (GA) of version 2.4 of the Splunk App
    for Enterprise Security. Splunk® Enterprise and the Splunk App for
    Enterprise Security are a security intelligence platform that helps
    organizations discover unknown threats in real time with out-of-the-box
    content, including searches, dashboards and visualizations that enable
    rich statistical analysis of machine data.
  *Announced the GA of 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.
  *Released the GA version of Splunk DB Connect to deliver real-time
    integration between Splunk Enterprise and relational databases.
  *Released version 5.0 of the Splunk App for Windows, which delivers
    enterprise-class monitoring for Microsoft® Windows Server.
  *Released the latest version of the Splunk App for HadoopOps to improve the
    ability to collect Hadoop metrics.
  *Released the Splunk App for NetApp ONTAP to enable users to gain
    visibility into the NetApp storage system with Splunk.
  *Released a new Splunk App for Symantec allowing users of Splunk Enterprise
    and Symantec to better monitor, investigate and eliminate endpoint threats
    as reported by Symantec Endpoint Protection (SEP). This app contains
    real-time dashboards, panels and search fields to easily view and
    investigate SEP data.
  *Released an update to the Splunk App for Blue Coat ProxySG which enables
    users of Splunk Enterprise and Blue Coat to better monitor, investigate
    and secure their Internet traffic as reported by Blue Coat ProxySG. This
    app contains real-time dashboards, panels and search fields to easily view
    and investigate ProxySG data.

Recognition:

  *Splunk has been named a leader in the 2013 Gartner Magic Quadrant for
    SIEM. For the report, Gartner evaluated Splunk Enterprise and the Splunk
    App for Enterprise Security. Splunk Enterprise is used as a big data
    security intelligence platform by more than 2,000 organizations around the
    world.
  *SC Magazine named Splunk Enterprise best SIEM solution in North America
    and Best Enterprise Security Solution for Europe.
  *Fast Company named Splunk one of the World's Most Innovative Companies.
    Splunk is ranked fourth overall and also ranked the number one innovator
    in Big Data for “bringing big data to the masses.”
  *Splunk was named to the CRN Big Data 100 in the Business Analytics
    category.
  *Received the 2013 North American New Product Innovation Award for Big Data
    Security Intelligence Solutions from Frost and Sullivan.
  *Named as one of the San Francisco Bay Area's “Best Places to Work” by The
    San Francisco Business Times and Silicon Valley / San Jose Business
    Journal for a sixth consecutive year.

Appointments

  *Named Patricia B. Morrison to the company's Board of Directors. Ms.
    Morrison has been Executive Vice President of Customer Care Shared
    Services and Chief Information Officer for Cardinal Health since 2009.
  *Named Declan Morris as vice president of IT and cloud operations and Dejan
    Deklich as vice president of cloud engineering.

Financial Outlook

The company is providing the following guidance for its fiscal second quarter
2014 (ending July 31, 2013):

  *Total revenue is expected to be between $61 million and $63 million.
  *Non-GAAP operating margin is expected to be between negative 4% and
    negative 6%.

The company is updating its previous guidance for its fiscal year 2014 (ending
January 31, 2014):

  *Total revenue is expected to be between $266 million and $274 million (was
    previously expected to be between $260 million and $270 million as of Feb.
    28, 2013).
  *Non-GAAP operating margin is expected to be approximately zero (unchanged
    from Feb. 28, 2013).

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.

While a reconciliation of non-GAAP guidance measures to corresponding GAAP
measures is not available on a forward-looking basis, the company has provided
a reconciliation of GAAP to non-GAAP financial measures in the financial
statement tables for its fiscal first quarter 2014 non-GAAP results included
in this press release.

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 June 6, 2013 by dialing (855) 859-2056
and referencing Conference ID# 57800854.

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 second 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 use
cases and product investments and 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 Annual Report on Form 10-K for
the year ended January 31, 2013, 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, sensors 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. 5,600 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 cyber-security risk. Splunk
Storm™, a cloud-based subscription service, is used by organizations
developing and running 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. Windows is a registered
trademark of Microsoft Corporation in the United States and other countries. ©
2013 Splunk Inc. All rights reserved.

                                                               
SPLUNK INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
                                                                   
                                                                   
                                                   Three Months Ended
                                                   April 30,       April 30,
                                                   2013            2012
Revenues
License                                            $ 36,172        $ 24,386
Maintenance and services                            21,035        12,805  
Total revenues                                      57,207        37,191  
                                                                   
Cost of revenues
License                                              69              129
Maintenance and services                            6,612         4,136   
Total cost of revenues ^1, 2                        6,681         4,265   
Gross profit                                        50,526        32,926  
                                                                   
Operating expenses
Research and development ^1, 2                       14,464          8,103
Sales and marketing ^1, 2                            41,313          24,166
General and administrative ^1, 2                    10,446        6,846   
Total operating expenses                            66,223        39,115  
Operating loss                                      (15,697 )      (6,189  )
                                                                   
Interest and other income (expense), net
Interest income (expense), net                       61              (19     )
Other income (expense), net                          (94     )       2
Change in fair value of preferred stock warrants    -             (14,087 )
Total interest and other income (expense), net      (33     )      (14,104 )
Loss before income taxes                             (15,730 )       (20,293 )
Provision for income taxes                          404           177     
Net loss                                           $ (16,134 )     $ (20,470 )
                                                                   
Basic and diluted net loss per share               $ (0.16   )     $ (0.71   )

Weighted-average shares used in computing basic     102,015       28,679  
and diluted net loss per share

^1 Includes stock-based compensation expense as
follows:
Cost of revenues                                   $ 705           $ 108
Research and development                             3,043           895
Sales and marketing                                  4,322           858
General and administrative                          1,765         811     
                                                   $ 9,835        $ 2,672   
                                                                   
^2 Includes employer payroll tax on employee
stock plans as follows:
Cost of revenues                                   $ 22            $ -
Research and development                             142             -
Sales and marketing                                  278             -
General and administrative                          138           -       
                                                   $ 580          $ -       


SPLUNK INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                            
                                                                  
                                                 April 30,        January 31,
                                                 2013             2013
                                                                  
ASSETS
                                                                  
Current assets
Cash and cash equivalents                        $ 331,252        $ 305,939
Accounts receivable, net                           37,916           63,948
Prepaid expenses and other current assets         7,191          6,861   
Total current assets                              376,359        376,748 
                                                                  
Property and equipment, net                        12,695           13,205
Other assets                                      460            492     
Total assets                                     $ 389,514       $ 390,445 
                                                                  
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                  
Current liabilities
Accounts payable                                 $ 2,533          $ 1,632
Accrued payroll and compensation                   21,191           28,123
Accrued expenses and other liabilities             9,421            7,636
Deferred revenue, current portion                 84,933         79,568  
Total current liabilities                         118,078        116,959 
                                                                  
Deferred revenue, non-current                      32,404           35,144
Other liabilities, non-current                    1,055          798     
Total non-current liabilities                     33,459         35,942  
Total liabilities                                 151,537        152,901 
                                                                  
                                                                  
Stockholders' equity:
Common stock                                       103              101
Accumulated other comprehensive loss               (149     )       (135    )
Additional paid-in capital                         344,856          328,277
Accumulated deficit                               (106,833 )      (90,699 )
Total stockholders' equity                        237,977        237,544 
Total liabilities and stockholders' equity       $ 389,514       $ 390,445 

                                                            
SPLUNK INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                                                   
                                                 Three Months Ended
                                                 April 30,         April 30,
                                                 2013              2012
                                                                   
Cash Flows From Operating Activities
Net loss                                         $ (16,134 )       $ (20,470 )
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization                      1,425             931
Change in fair value of preferred stock            -                 14,087
warrants
Stock-based compensation                           9,835             2,672
Excess tax benefits from employee stock            (111    )         -
plans
Changes in operating assets and
liabilities
Accounts receivable, net                           26,032            11,015
Prepaid expenses, other current and                (298    )         12
non-current assets
Accounts payable                                   918               1,006
Accrued payroll and compensation                   (6,932  )         (4,457  )
Accrued expenses and other liabilities             2,491             295
Deferred revenue                                  2,625           6,477   
Net cash provided by operating activities         19,851          11,568  
                                                                   
Cash Flow From Investing Activities
Purchases of property and equipment               (1,263  )        (1,877  )
Net cash used in investing activities             (1,263  )        (1,877  )
                                                                   
Cash Flow From Financing Activities
Repayments of term debt                            -                 (2,289  )
Proceeds from initial public offering, net         -                 226,512
of offering costs
Issuance of common stock from exercise of          6,607             546
stock options
Excess tax benefits from employee stock           111             -       
plans
Net cash provided by financing activities         6,718           224,769 
                                                                   
Effect of exchange rate changes on cash           7               18      
and cash equivalents
Net increase in cash and cash equivalents          25,313            234,478
Cash and cash equivalents at beginning of         305,939         31,599  
period
Cash and cash equivalents at end of period       $ 331,252        $ 266,077 
                                                                             

                                 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
                                           April 30,         April 30,
                                          2013              2012
                                                                            
Reconciliation of cash
provided by operating          
activities to free cash flow:
Net cash provided by operating             $  19,851         $  11,568
activities
Less purchases of property and               (1,263   )       (1,877   )
equipment
Free cash flow (Non-GAAP)                  $  18,588        $  9,691    
Net cash used in investing                 $  (1,263   )     $  (1,877   )
activities
Net cash provided by financing            $  6,718         $  224,769  
activities
                                                                            
Operating loss reconciliation:
GAAP operating loss                        $  (15,697  )     $  (6,189   )
Stock-based compensation             A        9,835             2,672
expense
Employer payroll tax on              C       580             -        
employee stock plans
Non-GAAP operating loss                    $  (5,282   )     $  (3,517   )
                                                                            
Operating margin
reconciliation:
GAAP operating margin                         (27.4    )  %     (16.6    )  %
Stock-based compensation             A        17.2              7.1
expense
Employer payroll tax on              C       1.0             -        
employee stock plans
Non-GAAP operating margin                    (9.2     )  %    (9.5     )  %
                                                                            
Net loss reconciliation:
GAAP net loss                              $  (16,134  )     $  (20,470  )
Stock-based compensation             A        9,835             2,672
expense
Change in fair value of              B        -                 14,087
preferred stock warrants
Employer payroll tax on              C       580             -        
employee stock plans
Non-GAAP net loss                          $  (5,719   )     $  (3,711   )
                                                                            
Non-GAAP basic and diluted net             $  (0.06    )     $  (0.04    )
loss per share
                                                                            
Reconciliation of shares used
in computing net loss per
share:
Weighted-average shares used
in computing basic and diluted                102,015           28,679
GAAP net loss per share
Conversion of convertible
preferred stock upon initial                  -                 52,502
public offering
Securities issued in
connection with initial public       D       -               13,402   
offering
Shares used in computing
non-GAAP basic and diluted net               102,015         94,583   
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.
                                                                            
(D) This amount represents the shares issued in the initial public offering
not included in the weighted-average shares used in computing basic and
diluted GAAP net loss per share.

Contact:

Splunk Inc.
Ken Tinsley, 415-848-8476 (Investors)
ktinsley@splunk.com
Sherry Lowe, 415-852-5529 (Press)
slowe@splunk.com
or
for Splunk Inc.
LEWIS PR
Jade Wilkinson, 415-432-2459
jadew@lewispr.com