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Splunk Leaps on $1 Billion Silver Lake Investment, Share Buyback Plans

“We have long admired Splunk’s world-class team and technology, and we believe the company is now at an important inflection point,” said Silver Lake chairman Kenneth Hao

Splunk Inc  (SPLK) - Get Report shares jumped higher Tuesday after the data-focused cloud computing group unveiled a $1 billion investment from private equity group Silver Lake Partners.

Splunk said the cash injection, which came from the sale of senior convertible notes to Silver Lake with a conversion price of $160.00 per share, will be used to help manage its capital structure and fund new investments and growth initiatives. Splunk also authorized the purchase of 1 billion worth of its common shares in the open market.

Silver Lake's chairman and managing director Ken Hao will also join Splunk's eleven-member board of directors, the companies said.

“We’ve significantly evolved our business since we began our transformation to become a cloud-first company over two years ago, and today’s announcement reaffirms the strength of our business fundamentals, cloud strategy and high-growth trajectory,” said CEO Doug Merritt. “Silver Lake has a strong reputation and track record of investing in innovative technology companies, and with their support, we are accelerating toward our goals as we deliver the most scalable and powerful data platform in the cloud.”  

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Splunk shares were marked 9.8% higher in early trading Tuesday to change hands at $137.80 each, a move that would trim the stock's year-to-date decline to around 18%.

Earlier this month, Splunk posted a wider-than-expected first quarter loss of $471 million, or $2.89 per share, on revenues of just over $502 million. Splunk added that average recurring revenues in its cloud business exceeded 70% for the sixth consecutive quarter, noting that more than 200 customers are linked to ARRs of more than $1 million.