The San Francisco data-analysis-software company reported a wider-than-expected third-quarter loss.
Here is what Wall Street is saying about the company's quarter.
Piper Sandler (Overweight Rating Affirmed, PT lowered to $200 from $250)
After reiterating guidance at a mid-October analyst meeting, third-quarter results fell short of expectations with large deal delays at quarter's end weighing on bookings. The ongoing transition to cloud now coupled with extending sales cycles lower fourth-quarter expectations and management withdrew previously issued fiscal 2023 annual-recurring-revenue growth and cashf-low guidance as well. Clearly disappointed, but believe there is a longer-term opportunity -- especially given the reaction in the aftermarket (off ~20% to $167).
- Rob Owens
JPMorgan (Rating Cut to Neutral From Overweight, PT Down to $175 From $230)
We had recently mentioned pressure in on-premise spending, and in our Splunk preview we mentioned our expectation for transition-driven pressure on revenue. However, we were blindsided by the magnitude of too many large deals slipping in the final days of October on the heels of an upbeat analyst day 10 days prior to the quarter close, at which the company reaffirmed guidance and stated that it was excited about near-term and long-term growth prospects.
- Mark Murphy
Barclays (Overweight Rating Affirmed, PT Down to $220 From $245)
Splunk's third-quarter performance was subpar all around; there is no other way to look at it. We believe that Splunk made a strategic mistake when it reaffirmed annual annual-recurring-revenue guidance at the start of the year, while all software peers took down guidance, Splunk took the rough road of trying to execute on prepandemic assumptions. Some investors will likely look at the withdrawal of fiscal 2023 ARR and free-cash-flow guidance as a large negative, but we think that this is being done out of an abundance of caution.
- Raimo Lenschow
Morgan Stanley (Overweight Rating Affirmed, PT Down to $213 From $270)
After an upbeat analyst day in late October, third-quarter results materially below management guidance and investor expectations come as a significant negative surprise. Management cited difficulty getting large deals signed at the very end of the quarter, pointing to a volatile macro environment elongating sales cycles. Given the similar difficulty seen in getting very large strategic deals signed in other largely direct models like Salesforce and Workday this quarter, we probably should have seen this elevated risk coming into the print.
- Keith Weiss