Splunk shares trade lower after hours despite better than expected results for the fiscal second quarter ended July 31.
For the quarter, the network analytics software provider posted revenue of $606 million, ahead of the $550 million to $570 million it forecast. Splunk (ticker: SPLK) said its annual recurring revenue, or ARR, was $2.63 billion, up 37%, and slightly above the $2.59 billion to $2.61 billion it forecast.
That includes ARR for cloud software of $976 million, ahead of $950 million to $960 million. Cloud revenue was $217 million, up 73%. Adjusted, the company lost 62 cents a share in the quarter.
The Wall Street consensus had requested revenue of $562.8 million and a loss of 69 cents per share.
“Our team delivered another strong quarter, confirming the high strategic value we deliver to the world’s largest and most dynamic organizations,” said Splunk CEO Doug Merritt in a statement. “We have doubled the number of customers with Cloud ARR of $1 million or more as workloads and data continue to shift to the cloud.”
He added that the company had better-than-expected results in every major geographic region.
Splunk has transitioned to its business model, pushing customers to cloud-based versions of its software, while also changing its revenue model to focus on subscriptions rather than perpetual licenses. That process has created some complications for reported earnings.
CFO Jason Child said in an interview that last quarter’s results show clear progress in the transition. For example, he noted that billing was up 29% from a year ago, accelerating from 5% in the April quarter. The growth follows four negative quarters in the January 2021 fiscal year.
For the October quarter, Splunk sees revenue of between $625 million and $650 million, with aggregate ARR of $2.8 billion to $2.825 million, cloud ARR of $1.1 billion to $1.11 billion, and non-GAAP operating margin between -15% and -20%. The Street expects revenue of $637 million and a loss of 28 cents per share.
For fiscal January 2022, the company expects revenue of between $2.53 billion and $2.60 billion, total ARR of $3.085 billion to $3.135 billion, cloud ARR of $1.305 billion to $1.33 billion and a non-GAAP operating margin between -14% and -17%. It said operating cash flow for the full year is expected to be about $100 million.
The Street consensus calls for revenue of $2.53 billion and a loss of $1.50 per share. In late trading, Splunk lost 1.5%, to $152.56.
Write to Eric J. Savitz at email@example.com