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SPLK (Splunk) has been having trouble turning a profit and their CEO just departed. This after the CTO departed in the spring. However, the business appears to have turned the corner on the turnaround (see this report for an intro to the turnaround) to a cloud based, subscription model.

Key financial metrics such as revenue and free cash flow continue to build the early part of uptrends that bottomed 12-18 months ago. Consider the following chart...

SPLK (Splunk) historical metrics chart from bucketfox.com showing Price to sales, eps, revenue per share, and free cash flow going back to 2012. Arrows highlight the price to sales number hitting an all time low in December.

SPLK (Splunk) historical metrics chart from bucketfox.com showing Price to sales, eps, revenue per share, and free cash flow going back to 2012. Arrows highlight the price to sales number hitting an all time low in December.


We can see the historical price-to-sales of SPLK is getting near it's all time bottom. We can also see that revenue/share and free cash flow have also reversed their downtrends, turning into uptrends....

SPLK (Splunk) historical metrics chart from bucketfox.com showing Price to sales, eps, revenue per share, and free cash flow going back to 2012. Arrows highlight the change in trend from declining revenue, free cash flow and earnings to a resumption of an uptrend in those numbers.

SPLK (Splunk) historical metrics chart from bucketfox.com showing Price to sales, eps, revenue per share, and free cash flow going back to 2012. Arrows highlight the change in trend from declining revenue, free cash flow and earnings to a resumption of an uptrend in those numbers.


The earnings report backs this up as well...

SPLK (Splunk) earnings presentation showing Annual Recurring Revenue growth from the past 5 quarters. The trend is up.

SPLK (Splunk) earnings presentation showing Annual Recurring Revenue growth from the past 5 quarters. The trend is up.

SPLK (Splunk) earnings presentation showing transition to subscription model during the cloud-based turnaround accelerating.

SPLK (Splunk) earnings presentation showing transition to subscription model during the cloud-based turnaround accelerating.

After the earnings report the company has sold off. But so has the entire growth market. With the deluge of growth stocks (see SE above) some babies are being thrown out with the bathwater. Not saying this is a great deal yet but it's worth putting on a short list.

ARK had completely closed out SPLK back in June only to reopen it two days after the company announced (see SPLK section) a new security product. They've since acquired 929k shares and built it up to the 56th largest position in the portfolio and the 15th largest position in ARKW.