SAN FRANCISCO--(BUSINESS WIRE)--Splunk Inc. (NASDAQ: SPLK), provider of the Data-to-Everything Platform, today announced results for its fiscal third quarter ended October 31, 2020.

Third Quarter 2021 Financial Highlights

Cloud ARR was $630 million, up 71% year-over-year.
Total ARR was $2.07 billion, up 44% year-over-year.
Cloud revenue was $145 million, up 80% year-over-year.
Total revenues were $559 million, down 11% year-over-year.
444 customers with ARR greater than $1 million.

“Even in the face of uncertain market conditions, Splunk remains one of the fastest growing companies in the history of enterprise software,” said Doug Merritt, President and CEO, Splunk. “We crossed an important milestone during the quarter as continued demand for data-driven insights across our global customer-base drove our total ARR to over $2 billion. Today, there’s no better strategic partner to help organizations turn their data into action and accelerate their journey to the cloud than Splunk.”

“Our cloud momentum continued in the third quarter, we exceeded our cash flow target significantly and we ended with Cloud ARR up 71% year-over-year — among the highest growth rates in the industry,” said Jason Child, chief financial officer, Splunk. “While the environment was a challenge in the quarter, we are enthusiastic about the large and growing opportunity ahead and remain confident in our long-term growth trajectory.”

Recent Business Highlights:

New and Expansion Customers Include: Bass Pro Shops, Carvana, Clemson University, E.ON (Germany), Founders Federal Credit Union (FIT CUSO), Herbalife Nutrition, HSBC Group (United Kingdom), Idaho National Laboratory, Intrado, James Paget University Hospitals - NHS Foundation Trust (United Kingdom), National University of Singapore, Nu Skin, Ocado Group (United Kingdom), Toyota Systems Corporation (Japan), TripActions

The Data Age Is Here: New Splunk Cloud Innovations Unveiled at .conf20: New innovations across Splunk Cloud and Splunk Enterprise help customers achieve faster time to value with immediate access to the latest features. The new Splunk Machine Learning Environment (SMLE) makes it easier to build and operationalize machine learning models and algorithms and helps get value from data at scale in Splunk; while the new Data Stream Processor 1.2 helps customers expand their data streaming capabilities and access, process and route data across multiple cloud services, such as Google Cloud Platform and Azure Event Hub.
Splunk Launches the World’s Most Comprehensive Observability Suite: The new Splunk Observability Suite brings together Splunk’s best-in-class solutions for infrastructure monitoring, application performance monitoring, digital experience monitoring, log investigation and incident response into a single, tightly integrated suite of products. Splunk also announced Splunk Log Observer, which brings the power of Splunk logs to site reliability engineers, DevOps engineers and developers; and Splunk Real User Monitoring, which extends its monitoring capabilities to help organizations understand and optimize the digital experiences of their customers.
Splunk Accelerates Its Observability Vision with Three Acquisitions: Building on its newly launched Observability Suite, Splunk announced the acquisition of Plumbr, an application performance monitoring (APM) company offering auto-instrumentation, Real User Monitoring and deep application performance insights. Splunk also announced the acquisition of Rigor, a digital experience monitoring (DEM) company; and the intent to acquire Flowmill, a cloud network observability company with expertise in network performance monitoring (NPM). Together, these additions will accelerate Splunk’s vision to deliver a comprehensive Observability Suite with best-in-class DEM, APM and NPM for all applications.
Expanded AIOps and Multicloud Monitoring Capabilities Transform IT Modernization: Splunk continues to innovate on its industry-leading IT Operations platform. The newly announced Splunk Service Intelligence for SAP® solutions provides Splunk IT Service Intelligence (ITSI) customers with end-to-end visibility across both the SAP solution-based and entire IT environment. Splunk also unveiled enhancements to Splunk ITSI, providing customers with operational efficiency and business intelligence to predict incidents before they happen; and the Splunk Infrastructure Monitoring Add-On allows organizations to seamlessly collect and integrate Splunk Infrastructure Monitoring metrics data.
New Splunk Security Solutions Help Customers Secure and Accelerate the Cloud Journey: Splunk’s Security Operations suite enables security teams to modernize and unify their security operations in the cloud. With Splunk Mission Control, customers can plug in Splunk SIEM, SOAR, UBA and other third-party security technologies for real-time, contextual visibility and control across their entire security infrastructure. Splunk also launched the new Mission Control Plug-In Framework, which accelerates the value customers get from combining their Splunk security tools and non-Splunk security tools.
Splunk Names New Chief Customer and Chief Revenue Officers: As customers continue to take action on data across their organization with Splunk’s Data-to-Everything Platform, the company announced two new executive appointments to best position the company for its next phase of growth and category leadership. Splunk welcomes John Sabino, Chief Customer Officer, and Christian Smith, Chief Revenue officer, to its executive team. John and Christian both previously served as senior vice president, Customer Success and senior vice president, Global Sales at Splunk.

Financial Outlook

The company is providing the following guidance for its fiscal fourth quarter 2021 (ending January 31, 2021):

Total revenues are expected to be between $650 million and $700 million.
Non-GAAP operating margin is expected to be between negative 4% and positive 3%.

All forward-looking non-GAAP financial measures contained in this section “Financial Outlook” exclude estimates for stock-based compensation and related employer payroll tax, acquisition-related adjustments, amortization of intangible assets and capitalized software costs.

A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, many of these costs and expenses that may be incurred in the future. The company has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for its fiscal third quarter 2021 non-GAAP results included in this press release.

Conference Call and Webcast

Splunk’s executive management team will host a conference call today beginning at 1:30 p.m. PT (4:30 p.m. ET) to discuss the company’s financial results and business highlights. Interested parties may access the call by dialing (866) 501-1535. International parties may access the call by dialing (216) 672-5582. A live audio webcast of the conference call will be available through Splunk’s Investor Relations website at http://investors.splunk.com/events-presentations. A replay of the call will be available through December 9, 2020 by dialing (855) 859-2056 and referencing Conference ID 9424378.

Safe Harbor Statement

This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding Splunk’s revenue and non-GAAP operating margin targets for the company’s fiscal fourth quarter in the paragraphs under “Financial Outlook” above and other statements regarding our market opportunity, including the impact of the COVID-19 pandemic on the business environment, such as the pace of customer digital transformation and the importance of data; statements and benefits regarding the Plumbr and Rigor acquisitions and our intent to acquire Flowmill; the market for data-related products and trends in this market, future growth and related targets, including trends in our cloud software business mix, momentum, growth rate, strategy, technology and product innovation; expectations for our industry and business, such as our business model, customer demand, our partner relationships, customer success and feedback, expanding use of Splunk by customers, and expected benefits and scale of our products. There are a significant number of factors that could cause actual results to differ materially from statements made in this press release, including: risks associated with Splunk’s rapid growth, particularly outside of the United States; Splunk’s inability to realize value from its significant investments in its business, including product and service innovations and through acquisitions; Splunk’s shift from sales of perpetual licenses in favor of sales of term licenses and subscription agreements for our cloud services which impact the timing of revenue, cash collections and margins; Splunk’s transition to a multi-product software and services business; Splunk’s inability to successfully integrate acquired businesses and technologies, such as Plumbr and Rigor; Splunk’s inability to service its debt obligations or other adverse effects related to our convertible notes; the impact of the COVID-19 pandemic and related public health measures on our business, as well as the impact of the COVID-19 pandemic on the overall economic environment; and general market, political, economic, business and competitive market conditions.

Additional information on potential factors that could affect Splunk’s financial results is included in the company’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2020, which is on file with the U.S. Securities and Exchange Commission (“SEC”) and Splunk’s other filings with the SEC. Splunk does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

About Splunk Inc.

Splunk Inc. (NASDAQ: SPLK) turns data into doing with the Data-to-Everything Platform. Splunk technology is designed to investigate, monitor, analyze and act on data at any scale.

Splunk, Splunk>, Data-to-Everything, D2E and Turn Data Into Doing are trademarks and registered trademarks of Splunk Inc. in the United States and other countries. All other brand names, product names, or trademarks belong to their respective owners. © 2020 Splunk Inc. All rights reserved.

Splunk Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended October 31,						Nine Months Ended October 31,
	2020			2019			2020			2019
Revenues
License	$	240,225		$	373,684		$	565,424		$	855,825
Cloud services		144,714			80,439			382,736			212,946
Maintenance and services		173,633			172,213			536,147			498,973
Total revenues		558,572			626,336			1,484,307			1,567,744
Cost of revenues
License		5,009			5,796			16,549			17,414
Cloud services		63,354			41,045			176,572			108,525
Maintenance and services		68,417			60,978			204,328			176,011
Total cost of revenues		136,780			107,819			397,449			301,950
Gross profit		421,792			518,517			1,086,858			1,265,794
Operating expenses
Research and development		190,222			158,887			579,643			422,287
Sales and marketing		323,146			319,023			966,057			896,757
General and administrative		73,941			88,092			234,746			226,118
Total operating expenses		587,309			566,002			1,780,446			1,545,162
Operating loss		(165,517	)		(47,485	)		(693,588	)		(279,368	)
Interest and other income (expense), net
Interest income		2,382			12,612			12,438			45,373
Interest expense		(33,972	)		(24,406	)		(88,557	)		(71,527	)
Other income (expense), net		(710	)		(215	)		4,533			(1,408	)
Total interest and other income (expense), net		(32,300	)		(12,009	)		(71,586	)		(27,562	)
Loss before income taxes		(197,817	)		(59,494	)		(765,174	)		(306,930	)
Income tax provision (benefit)		3,714			(1,855	)

Splunk Inc. Announces Fiscal Third Quarter 2021 Financial Results