Splunk Shares Rise After Mixed Earnings Report

Splunk, the data analytics firm withdrew its full fiscal year guidance but guided for $520 million in revenue for the fiscal second quarter.
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Splunk shares dropped in after-hours trading on Thursday after the data analytics firm posted lower-than-expected revenue. 

For the first quarter, Splunk  (SPLK) - Get Report reported total sales of $434 million, up 2% year-over-year, and a non-GAAP loss of 56 cents per share. Analysts polled by FactSet were expecting a loss of 57 cents per share on quarterly sales of $443 million. 

Splunk shares were down 4.9% to $155.50 in after-hours trading Thursday.

“COVID-19 has transformed the world into one that requires rapidly accelerated digital transformation to keep organizations moving -- we are seeing some resilient customers complete three-to-five year projects in just months," said Doug Merritt, CEO of Splunk. "As customers continue to adapt to this new normal, data matters more than ever, evidenced by our continued strong momentum this quarter.”

Splunk's ARR (annual recurring revenue) was $1.775 billion, up 52% year over year, the company said. Cloud revenue came in at $112 million, up 81% year-over-year.

Along with many other firms, Splunk withdrew its guidance for the full fiscal year. But for its fiscal second quarter, ending on July 31 this year, the company guided for $520 million in revenue and a non-GAAP operating margin between negative 10% and negative 15%. 

Splunk, which sells products for monitoring and analyzing large data sets, has been undertaking a shift to a software-as-a-service model. Wall Street analysts are mixed on the implications for Splunk's overall outlook. 

In late April, Cowen analyst J. Derrick Wood lowered his price target for Splunk to $140 a share from $165. 

Wood wrote that Splunk faces headwinds outside of the coronavirus pandemic, such as a dependence on new deal generation and the impact of absorbing an influx of new business.

Earlier in May, the company announced a partnership with Alphabet  (GOOGL) - Get Report that will make Splunk available on Google Cloud, which triggered a rally in shares

Shares of Splunk were up 7.5% year to date heading into earnings, and ended Thursday's trading session at $163.45.