SPLK
$94.80
Splunk
($6.47)
(6.39%)
Earnings Details
2nd Quarter July 2018
Thursday, August 23, 2018 4:02:00 PM
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Summary

Splunk Misses

Splunk (SPLK) reported 2nd Quarter July 2018 earnings of $0.07 per share on revenue of $388.3 million. The consensus earnings estimate was $0.05 per share on revenue of $358.2 million. The Earnings Whisper number was $0.07 per share. Revenue grew 38.7% on a year-over-year basis.

The company said it expects third quarter revenue of $430.0 million to $432.0 million and now expects fiscal year revenue of approximately $1.685 billion. The company's previous guidance was fiscal year revenue of approximately $1.645 billion. The current consensus estimate is revenue of $427.5 million for the quarter ending October 31, 2018 and revenue of $1.65 billion for the year ending January 31, 2019.

Splunk Inc Splunk Inc provides software products. Its lagship product is Splunk Enterprise and at its core is a proprietary machine data engine, comprised of collection, indexing, search, reporting analysis and data management capabilities.

Results
Reported Earnings
$0.07
Earnings Whisper
$0.07
Consensus Estimate
$0.05
Reported Revenue
$388.3 Mil
Revenue Estimate
$358.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Splunk Inc. Announces Fiscal Second Quarter 2019 Financial Results

Software Revenues Up 43%; Total Revenues Grew 39%

SAN FRANCISCO--(BUSINESS WIRE)-- Splunk Inc. (NASDAQ: SPLK), first in delivering “aha” moments from machine data, today announced results for its fiscal second quarter ended July 31, 2018.

Second Quarter 2019 Financial Highlights

  • Total revenues were $388.3 million, up 39% year-over-year.
  • Software revenues were $239.7 million, up 43% year-over-year.
  • GAAP operating loss was $103.9 million; GAAP operating margin was negative 26.7%.
  • Non-GAAP operating income was $11.4 million; non-GAAP operating margin was 2.9%.
  • GAAP loss per share was $0.71; non-GAAP income per share was $0.08.
  • Operating cash flow was $33.5 million with free cash flow of $28.0 million.

“The rapid digitization of every organization, coupled with Splunk’s increasing innovation, is driving our continued momentum,” said Doug Merritt, President and CEO, Splunk. “Every organization needs to monitor, analyze and investigate data to make faster decisions and take action, and I am pleased that Splunk is the platform of choice. I am looking forward to .conf18 where we’ll reveal the next generation of product innovations to help our customers succeed during this exciting time in their digital evolution.”

Second Quarter 2019 and Recent Business Highlights:

Customers:

  • Signed more than 550 new enterprise customers.
  • New and Expansion Customers Include: ADP, Dartmouth College, California Department of Technology, Grab (Singapore), Nordea (Sweden), Sheetz, SMSGlobal (Australia), Southwestern Energy Company Inc., UK Ministry of Defence, UNC Greensboro, University Hospitals Bristol (UK), U.S. Department of Defense, Worldpay

Products:

Corporate:

  • Acquired VictorOps, a leader in DevOps incident management, to help modern development teams innovate faster.
  • Announced the speaker and presentation lineup for .conf18, which takes place from October 1-4 at the Walt Disney World Swan and Dolphin Resort in Orlando, Florida.
  • Celebrated Pride globally and sponsored San Francisco’s 2018 Pride Parade, in which over 500 Splunkers participated, aligning with Splunk’s commitment to diversity and inclusion.

Strategic and Channel Partners:

  • BAE Systems announced a new collaboration with Splunk to use machine learning to help secure U.S. Government cloud infrastructures and respond to security threats. Federated Secure Cloud, developed by BAE Systems and Dell EMC, integrates Splunk Enterprise into its government cloud solution.
  • Announced Splunk Connect for Kubernetes, a new Splunk integration with Amazon Web Services that makes it easy for Splunk customers to deploy, manage and scale containerized applications Kubernetes on AWS.

Recognition:

Financial Outlook

The company is providing the following guidance for its fiscal third quarter 2019 (ending October 31, 2018):

  • Total revenues are expected to be between $430 million and $432 million.
  • Non-GAAP operating margin is expected to be approximately 13%.

The company is updating its previous guidance provided on May 24, 2018 for its fiscal year 2019 (ending January 31, 2019):

  • Total revenues are expected to be approximately $1.685 billion (was approximately $1.645 billion).
  • Non-GAAP operating margin is expected to be approximately 11.5% (unchanged from prior guidance).

All forward-looking non-GAAP financial measures contained in this section “Financial Outlook” exclude estimates for stock-based compensation and related employer payroll tax, amortization of acquired intangible assets, adjustments related to a financing lease obligation and acquisition-related adjustments.

A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, many of these costs and expenses that may be incurred in the future. The company has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for its fiscal second quarter 2019 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-presentations. A replay of the call will be available through August 30, 2018 by dialing (855) 859-2056 and referencing Conference ID 1282768.

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 third quarter and fiscal year 2019 in the paragraphs under “Financial Outlook” above and other statements regarding our market opportunity, future growth, current momentum, strategy, innovation, expectations for our industry and business, customer demand and penetration, our partner relationships, customer success, expanding use of Splunk by customers, and expected benefits of new products, product innovations and acquisitions, in particular VictorOps. 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 and experience developing and introducing new products, including its cloud offerings; risks associated with Splunk’s rapid growth, particularly outside of the United States; Splunk’s inability to realize value from its significant investments in its business, including product and service innovations and through acquisitions; Splunk’s shift from sales of perpetual licenses in favor of sales of term licenses and subscription agreements for our cloud services; Splunk’s transition to a multi-product software and services business; Splunk’s inability to successfully integrate acquired businesses and technologies; and general market, political, economic, business and competitive market 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 fiscal quarter ended April 30, 2018, which is on file with the U.S. Securities and Exchange Commission (“SEC”) and Splunk’s other filings with the SEC. 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) turns machine data into answers. Organizations use market-leading Splunk solutions with machine learning to solve their toughest IT, Internet of Things and security challenges. Join millions of passionate users and discover your “aha” moment with Splunk today: http://www.splunk.com.

Social Media: Twitter | LinkedIn | YouTube | Facebook

Splunk, Splunk>, Listen to Your Data, The Engine for Machine Data, Splunk Cloud, Splunk Light and SPL are trademarks and registered trademarks of Splunk Inc. in the United States and other countries. All other brand names, product names, or trademarks belong to their respective owners. © 2018 Splunk Inc. All rights reserved.

 
SPLUNK INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
       
 
Three Months Ended July 31, Six Months Ended July 31,
2018

2017
*As Adjusted

  2018

2017
*As Adjusted

Revenues
License $ 200,668 $ 147,231 $ 339,643 $ 249,793
Maintenance and services   187,635     132,993     360,299     257,199  
Total revenues   388,303     280,224     699,942     506,992  
 
Cost of revenues
License 5,671 3,159 10,795 6,087
Maintenance and services   78,077     56,717     150,923     111,952  
Total cost of revenues   83,748     59,876     161,718     118,039  
Gross profit   304,555     220,348     538,224     388,953  
 
Operating expenses
Research and development 106,739 71,774 193,096 143,072
Sales and marketing 243,830 186,637 461,866 360,098
General and administrative   57,844     39,139     108,586     75,635  
Total operating expenses   408,413     297,550     763,548     578,805  
Operating loss   (103,858 )   (77,202 )   (225,324 )   (189,852 )
 
Interest and other income (expense), net
Interest income (expense), net 1,506 (164 ) 2,620 (692 )
Other income (expense), net   (336 )   (874 )   (471 )   (1,482 )

Total interest and other income (expense), net

  1,170     (1,038 )   2,149     (2,174 )
Loss before income taxes (102,688 ) (78,240 ) (223,175 ) (192,026 )
Income tax provision (benefit)   811     353     (1,177 )   1,691  
Net loss $ (103,499 ) $ (78,593 ) $ (221,998 ) $ (193,717 )
 
 
Basic and diluted net loss per share $ (0.71 ) $ (0.57 ) $ (1.54 ) $ (1.40 )
 

Weighted-average shares used in computing basic and diluted net loss per share

  145,030     139,063     144,306     138,436  
 

* Prior-period information has been adjusted to reflect the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which Splunk adopted on February 1, 2018.

 
SPLUNK INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
   
 
July 31, 2018

January 31, 2018
*As Adjusted

 
Assets
 
Current assets
Cash and cash equivalents $ 419,681 $ 545,947
Investments, current 471,902 619,203
Accounts receivable, net 247,827 396,413
Prepaid expenses and other current assets 65,837 70,021
Deferred commissions, current   57,419     52,451  
Total current assets   1,262,666     1,684,035  
 
Investments, non-current 9,750 5,375
Property and equipment, net 156,409 160,880
Intangible assets, net 105,865 48,142
Goodwill 503,388 161,382
Deferred commissions, non-current 43,435 37,920
Other assets   70,004     41,711  
Total assets $ 2,151,517   $ 2,139,445  
 
Liabilities and Stockholders' Equity
 
Current liabilities
Accounts payable $ 14,470 $ 11,040
Accrued compensation 133,015 145,365
Accrued expenses and other liabilities 99,251 84,631
Deferred revenue, current   494,610     489,913  
Total current liabilities   741,346     730,949  
 
Deferred revenue, non-current 166,976 178,792
Other liabilities, non-current   96,359     98,383  
Total non-current liabilities   263,335     277,175  
Total liabilities   1,004,681     1,008,124  
 
Stockholders' equity
Common stock 146 143
Accumulated other comprehensive income (loss) (2,730 ) 156
Additional paid-in capital 2,327,885 2,086,893
Accumulated deficit   (1,178,465 )   (955,871 )
Total stockholders' equity   1,146,836     1,131,321  
Total liabilities and stockholders' equity $ 2,151,517   $ 2,139,445  
 

* Prior-period information has been adjusted to reflect the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which Splunk adopted on February 1, 2018.

 
SPLUNK INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
       
 
Three Months Ended July 31, Six Months Ended July 31,
2018

2017
*As Adjusted

2018

2017
*As Adjusted

 
Cash flows from operating activities
Net loss $ (103,499 ) $ (78,593 ) $ (221,998 ) $ (193,717 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 12,751 10,813 24,167 19,916
Amortization of deferred commissions 17,089 10,336 32,877 20,653
Amortization of investment premiums (accretion of discounts) (361 ) 125 (537 ) 342
Stock-based compensation 105,043 92,367 199,664 182,422
Deferred income taxes 114 (967 ) (125 ) (866 )
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net (39,214 ) (34,350 ) 156,362 31,706
Prepaid expenses and other assets 1,362 (826 ) (21,937 ) (7,883 )
Deferred commissions (28,644 ) (14,046 ) (43,360 ) (24,322 )
Accounts payable 4,068 1,249 2,990 1,963
Accrued compensation 32,602 4,724 (11,833 ) (6,264 )
Accrued expenses and other liabilities 20,599 16,012 6,259 8,107
Deferred revenue   11,614     16,344     (12,518 )   32,489  
Net cash provided by operating activities   33,524     23,188     110,011     64,546  
 
Cash flows from investing activities
Purchases of investments (175,756 ) (218,224 ) (198,631 ) (340,697 )
Maturities of investments 173,051 175,200 347,176 338,265
Acquisitions, net of cash acquired (110,740 ) (17,223 ) (394,910 ) (17,223 )
Purchases of property and equipment (5,562 ) (2,908 ) (7,858 ) (8,513 )
Other investment activities   -     -     (4,375 )   -  
Net cash used in investing activities   (119,007 )   (63,155 )   (258,598 )   (28,168 )
 
Cash flows from financing activities
Proceeds from the exercise of stock options 241 486 1,354 1,973
Proceeds from employee stock purchase plan 24,201 19,282 24,201 19,282
Taxes paid related to net share settlement of equity awards - (26,647 ) (779 ) (59,109 )
Repayment of financing lease obligation   (629 )   (485 )   (1,218 )   (802 )
Net cash provided by (used in) financing activities   23,813     (7,364 )   23,558     (38,656 )
 
Effect of exchange rate changes on cash and cash equivalents   (475 )   714     (1,237 )   742  
Net decrease in cash and cash equivalents (62,145 ) (46,617 ) (126,266 ) (1,536 )
Cash and cash equivalents at beginning of period   481,826     466,427     545,947     421,346  
Cash and cash equivalents at end of period $ 419,681   $ 419,810   $ 419,681   $ 419,810  
 

* Prior-period information has been adjusted to reflect the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which Splunk adopted on February 1, 2018.

 

SPLUNK INC.

Non-GAAP Financial Measures and Reconciliations

To supplement Splunk’s condensed 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 cost of revenues, non-GAAP gross margin, non-GAAP research and development expense, non-GAAP sales and marketing expense, non-GAAP general and administrative expense, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss) and non-GAAP net income (loss) per share (collectively the “non-GAAP financial measures”). These non-GAAP financial measures exclude all or a combination of the following (as reflected in the following reconciliation tables): expenses related to stock-based compensation and related employer payroll tax, amortization of acquired intangible assets, adjustments related to a financing lease obligation and acquisition-related adjustments, including the partial release of the valuation allowance due to acquisitions. The adjustments for the financing lease obligation are to reflect the expense Splunk would have recorded if its build-to-suit lease arrangement had been deemed an operating lease instead of a financing lease and is calculated as the net of actual ground lease expense, depreciation and interest expense over estimated straight-line rent expense. The non-GAAP financial measures are also adjusted for Splunk's estimated tax rate on non-GAAP income (loss). To determine the annual non-GAAP tax rate, Splunk evaluates a financial projection based on its non-GAAP results. The annual non-GAAP tax rate takes into account other factors including Splunk's current operating structure, its existing tax positions in various jurisdictions and key legislation in major jurisdictions where Splunk operates. The non-GAAP tax rate applied to the three and six months ended July 31, 2018 was 20%. Splunk will utilize this annual non-GAAP tax rate in fiscal 2019 and will provide updates to this rate on an annual basis, or more frequently if material changes occur. In addition, non-GAAP financial measures includes 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 because it is non-cash in nature and excluding this expense provides meaningful supplemental information regarding Splunk’s operational performance and 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 stock-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 amortization of acquired intangible assets, acquisition-related costs, including the partial release of the valuation allowance due to acquisitions, and makes adjustments related to a financing lease obligation from its non-GAAP financial measures because these are considered by management to be outside of Splunk’s core operating results. 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 tables reconcile Splunk’s GAAP results to Splunk’s non-GAAP results included in this press release.

 
SPLUNK INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
   
 
 

Reconciliation of Cash Provided by Operating Activities to Free Cash Flow

           
Three Months Ended Six Months Ended
July 31, July 31, July 31, July 31,
2018 2017 2018 2017
Net cash provided by operating activities $ 33,524 $ 23,188 $ 110,011 $ 64,546
Less purchases of property and equipment   (5,562 )   (2,908 )   (7,858 )   (8,513 )
Free cash flow (non-GAAP) $ 27,962   $ 20,280   $ 102,153   $ 56,033  
Net cash used in investing activities $ (119,007 ) $ (63,155 ) $ (258,598 ) $ (28,168 )
Net cash provided by (used in) financing activities $ 23,813   $ (7,364 ) $ 23,558   $ (38,656 )
 
 
 

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended July 31, 2018

GAAP

Stock-based
compensation and
related employer
payroll tax

Amortization of
acquired
intangible assets

Adjustments
related to
financing lease
obligation

Acquisition-
related
adjustments

Income tax
effects related to
non-GAAP
adjustments (3)

Non-GAAP
 
Cost of revenues $ 83,748 $ (9,438 ) $ (5,353 ) $ 304 $ - $ - $ 69,261
Gross margin 78.4 % 2.5 % 1.4 % (0.1 )% - % - % 82.2

%

 

 
Research and development 106,739 (34,518 ) (268 ) 507 - - 72,460
Sales and marketing 243,830 (47,020 ) (652 ) 1,147 - - 197,305
General and administrative 57,844 (17,440 ) - 248 (2,730 ) - 37,922
Operating income (loss) (103,858 ) 108,416 6,273 (2,206 ) 2,730 - 11,355
Operating margin (26.7 )% 27.9 % 1.6 % (0.6 )% 0.7 % - % 2.9

%

 

 
Income tax provision 811 - - - - 2,105 2,916
Net income (loss) $ (103,499 ) $ 108,416 $ 6,273 $ (151 )(2) $ 2,730 $ (2,105 ) $ 11,664
Net income (loss) per share(1) $ (0.71 ) $ 0.08
 
(1) GAAP net loss per share calculated based on 145,030 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 151,441 diluted weighted-average shares of common stock, which includes 6,411 potentially dilutive shares related to employee stock awards. GAAP to non-GAAP net income (loss) per share is not reconciled due to the difference in the number of shares used to calculate basic and diluted weighted-average shares of common stock.
(2) Includes $2.1 million of interest expense related to the financing lease obligation.
(3) Represents the tax effect of the non-GAAP adjustments based on the estimated annual effective tax rate of 20%.
 
 

Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended July 31, 2017

GAAP
*As Adjusted

Stock-based
compensation and
related employer
payroll tax

Amortization of
acquired
intangible assets

Adjustments
related to
financing lease
obligation

Partial release
of the valuation
allowance due to
acquisition

Income tax
effects related to
non-GAAP
adjustments (3)

Non-GAAP
*As Adjusted

 
Cost of revenues $ 59,876 $ (8,687 ) $ (2,870 ) $ 309 $ - $ - $ 48,628
Gross margin 78.6 % 3.1 % 1.0 % (0.1 )% - % - %

82.6

%

 

 
Research and development 71,774 (26,550 ) (55 ) 495 - - 45,664
Sales and marketing 186,637 (43,837 ) (1,316 ) 1,174 - - 142,658
General and administrative 39,139 (15,691 ) - 227 - - 23,675
Operating income (loss) (77,202 ) 94,765 4,241 (2,205 ) - - 19,599
Operating margin (27.6 )% 33.9 % 1.5 % (0.8 )% - % - %

7.0

%

 

 
Income tax provision 353 - - - 546 4,681 5,580
Net income (loss) $ (78,593 ) $ 94,765 $ 4,241 $ (99 )(2) $ (546 ) $ (4,681 ) $ 15,087
Net income (loss) per share(1) $ (0.57 ) $ 0.11
 

* Prior-period information has been adjusted to reflect the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which Splunk adopted on February 1, 2018.

 
(1) GAAP net loss per share calculated based on 139,063 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 142,852 diluted weighted-average shares of common stock, which includes 3,789 potentially dilutive shares related to employee stock awards. GAAP to non-GAAP net income (loss) per share is not reconciled due to the difference in the number of shares used to calculate basic and diluted weighted-average shares of common stock.
(2) Includes $2.1 million of interest expense related to the financing lease obligation.
(3) Represents the tax effect of the non-GAAP adjustments based on the estimated annual effective tax rate of 27%.
 
 

Reconciliation of GAAP to Non-GAAP Financial Measures

Six Months Ended July 31, 2018

GAAP

Stock-based
compensation and
related employer
payroll tax

Amortization of
acquired
intangible assets

Adjustments
related to
financing lease
obligation

Acquisition-
related
adjustments

Partial release
of the valuation
allowance due to
acquisition

Income tax
effects related to
non-GAAP
adjustments (3)

Non-GAAP

 
Cost of revenues $ 161,718 $ (18,987 ) $ (9,603 ) $ 616 $ - $ -

-

$

133,744

Gross margin 76.9 % 2.7 % 1.4 % (0.1 )% - % - % -

%

80.9

%

 
Research and development 193,096 (62,756 ) (546 ) 996 - -

-

130,790

Sales and marketing 461,866 (92,860 ) (830 ) 2,317 - -

-

370,493

General and administrative 108,586 (34,727 ) - 482 (6,034 ) -

-

68,307

Operating loss (225,324 ) 209,330 10,979 (4,411 ) 6,034 -

-

 

(3,392

)

Operating margin (32.2 )% 29.8 % 1.6 % (0.6 )% 0.9 % - % -

%

(0.5

)%

 
Income tax provision (benefit) (1,177 ) - - - - 3,313 (1,560

)

576

Net income (loss) $ (221,998 ) $ 209,330 $ 10,979 $ (287 )(2) $ 6,034 $ (3,313 )

1,560

$

2,305

Net income (loss) per share(1) $ (1.54 )

 

$

0.02

 
(1) GAAP net loss per share calculated based on 144,306 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 150,537 diluted weighted-average shares of common stock, which includes 6,231 potentially dilutive shares related to employee stock awards. GAAP to non-GAAP net income (loss) per share is not reconciled due to the difference in the number of shares used to calculate basic and diluted weighted-average shares of common stock.
(2) Includes $4.1 million of interest expense related to the financing lease obligation.
(3) Represents the tax effect of the non-GAAP adjustments based on the estimated annual effective tax rate of 20%.
 
 

Reconciliation of GAAP to Non-GAAP Financial Measures

Six Months Ended July 31, 2017

GAAP
*As Adjusted

Stock-based
compensation and
related employer
payroll tax

Amortization of
acquired
intangible assets

Adjustments
related to
financing lease
obligation

Partial release
of the valuation
allowance due to
acquisition

Income tax
effects related to
non-GAAP
adjustments (3)

Non-GAAP
*As Adjusted

 
Cost of revenues $ 118,039 $ (17,320 ) $ (5,519 ) $ 615 $ - $ - $ 95,815
Gross margin 76.7 % 3.4 % 1.1 % (0.1 )% - % - % 81.1

%

 

 
Research and development 143,072 (54,598 ) (83 ) 1,026 - - 89,417
Sales and marketing 360,098 (86,252 ) (1,332 ) 2,344 - - 274,858
General and administrative 75,635 (30,791 ) - 464 - - 45,308
Operating income (loss) (189,852 ) 188,961 6,934 (4,449 ) - - 1,594
Operating margin (37.4 )% 37.2 % 1.4 % (0.9 )% - % - % 0.3

%

 

 
Income tax provision 1,691 - - - 546 (1,254 ) 983
Net income (loss) $ (193,717 ) $ 188,961 $ 6,934 $ (229 )(2) $ (546 ) $ 1,254 $ 2,657
Net income (loss) per share(1) $ (1.40 ) $ 0.02
 

* Prior-period information has been adjusted to reflect the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which Splunk adopted on February 1, 2018.

 
(1) GAAP net loss per share calculated based on 138,436 weighted-average shares of common stock. Non-GAAP net income per share calculated based on 142,602 diluted weighted-average shares of common stock, which includes 4,166 potentially dilutive shares related to employee stock awards. GAAP to non-GAAP net income (loss) per share is not reconciled due to the difference in the number of shares used to calculate basic and diluted weighted-average shares of common stock.
(2) Includes $4.2 million of interest expense related to the financing lease obligation.
(3) Represents the tax effect of the non-GAAP adjustments based on the estimated annual effective tax rate of 27%.

Media Contact
Splunk Inc.
Tom Stilwell, 415-852-5561
tstilwell@splunk.com
or
Investor Contact
Splunk Inc.
Ken Tinsley, 415-848-8476
ktinsley@splunk.com

Source: Splunk Inc.