Splunk Inc (NASDAQ:SPLK)
Information Technology - Software | Reports May 26, After Market Closes
Key Takeaways
- The Estimize consensus is calling for flat profits on $178.97 million in revenue, 2 cents higher than Wall Street on the bottom and $4 million on the top
- Splunk has gained traction in the enterprise space specifically with its advanced security solutions
- Despite robust growth, the company must compete in a heavily concentrated industry against companies like Amazon (NASDAQ:AMZN), IBM (NYSE:IBM) and Microsoft (NASDAQ:MSFT)
Enterprise technology has been one of the more volatile stocks in the market recently. Despite robust year over year growth, many of these companies have gotten stuck in the market malaise. This had largely been the case for Splunk but recently they have started to buck the trend. In the past 3 months shares are up nearly 50% with earnings still going strong. Investor’s hope Splunk can continue this upward momentum when it reports Q1 results tomorrow afternoon.
The Estimize consensus is calling for flat profits on $178.97 million in revenue, 2 cents higher than Wall Street on the bottom and $4 million on the top. Compared to a year earlier this represents a 105% increase in earnings with sales expected to grow as much as 42%. Since its last report, per share estimates have increased nearly 100%, reflecting analyst’s positive sentiment towards Splunk. 
Splunk’s industry lead as a real time operational intelligence and analytics platform should bode well. As the analytics market continues to gain strength, especially in the enterprise space, Splunk has no doubt benefitted, becoming especially popular within financial services as the company offers advanced security analytics data. Splunk has been expanding these cybersecurity offerings, acquiring two companies in the industry, Caspida and Metaphor Software, last year.
Meanwhile, Splunk has signed more than 600 new customers in the fourth quarter and ended the year with more than 11,000 customers worldwide. Some of its most notable customers include Bloomberg, Expedia (NASDAQ:EXPE) and Nasdaq, to name a few. The company has quickly attracted new clients through frequent updates of its current platform and strategic partnerships. Last quarter Splunk release new versions of products that partner with notable tech giants in Amazon.com Inc (NASDAQ:AMZN), Cisco Systems Inc (NASDAQ:CSCO), and Verizon Communications Inc (NYSE:VZ).
Despite the upward trajectory, Splunk has some stiff competition. The company’s rival, ELK Stack, an open source stack company, has been gaining massive global traction and is starting to become a threat. Even bigger players such as Amazon, IBM and Microsoft are fighting for more marketshare. Investments into R&D in order to compete with these players may suppress profitability in the near-term.
Do you think SPLK can beat estimates?