Splunk: Earnings Preview  (115.20 -1.44)

• Splunk (SPLK) is set to report Q1 earnings tonight after the close with a conference call to follow at 4:30pm ET; SPLK reported Q4 results at 4:02pm.
• Current Capital IQ consensus stands at a Loss of $0.009 per share, Revenues at $297.58 mln; Q3 Capital IQ consensus stands at EPS of $0.09, Revenues at $354 mln; FY19 Capital IQ consensus stands at EPS of $1.01, Revenues of $1.629 bln
• Software solutions provider that enable users to collect, index, search, explore, monitor, correlate, and analyze data regardless of format or source. Company has been moving into the security market and is being viewed as a security play as much as a data play. Billings will remain a key metric to follow as it helps provide forward guidance on revenue expectations. 
• Shares of SPLK hit an all time high of $119 on May 21but have receded a little ahead of tonight's report. The stock has nearly doubled since it's Q2 results released back in August of 2017. SPLK has been trading ain a relatively narrow channel of $111-119 int he two weeks ahead of the results. 
• SPLK has not missed revenue estimates in at least five years and has beaten EPS every quarter since 4Q14. 
• Revenue growth has accelerated over the past three quarters hitting 31.6%, 34.3%, and 37.0% last quarter. Channel checks have been positive according to analysts which will have investors looking for another beat. 
• There have been some customers who have voiced concerns over pricing and with expectations of increased competition look for this to be a key theme during Q&A. 
• Comments around the large market opportunity will be closely monitored. SPLK projected the opportunity to be $62 bln at its Analyst Day and noted that it intends to penetrate this market in a number of ways, most notably by leaning into its IoT and Business Analystics segment. 
• Piper raised its tgt to $130 from $115 on 5/21; Raymond James raised its tgt to $127 from $106 today.
• SPLK is changing over to accounting standard ASC 606 which could impact headline and guidance. 
• Guidance
  • Q1
    • Revenues in the range of $295-297 mln
    • Non-GAAP Operating margin of approx -6.0%
  • FY19
    • Revenues to be approx $1.625 bln
    • Non-GAAP operating margin expected to be approx 11.5%
  • FY20 Targets- SPLK reiterate its expectations of $2 bln in revenue by 2020 at its 3/28 Analyst Day. 
• Q4 Results
  • Revenues of $419 mln, +37% y/y
  • Total Billings $622 mln, +44% y/y
  • Non-GAAP Operating Margins 17.4%
  • Operating cash flow $146 mln, Free Cash Flow $139 mln.
• SPLK has a market cap of $16.7 bln; Float 143 mln, Short Interest ~8%; Forward P/E 78.7x; Price/Sales 13.2x; TEV/Total Revenues 12.4x (Peer Avg 8.8x)
• Peers include:DATA, NOW, WDAY, PANW, FEYE, NTNX, CTXS