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Splunk Gains on Surprise Profit, Stronger Growth Forecast

Published 03/03/2022, 05:33 AM
Updated 03/03/2022, 05:35 AM
© Reuters

© Reuters

By Dhirendra Tripathi

Investing.com – Splunk Inc. (NASDAQ:SPLK) stock traded 2.5% higher in premarket Thursday after the company surprised the Street with an adjusted profit and followed that up with a forecast for revenue growth, higher than last year.

Total revenue in 2021 grew 20% to $2.7 billion. The company expects this to rise to at least $3.25 billion as demand for security software continues to be elevated in a world still acclimatizing to a hybrid work model. Heightened geopolitical risks is only accentuating demand for such solutions from corporates and institutions.  

On the higher side, annual revenue could even touch $3.3 billion, almost 25% up, according to the company.

“Our team delivered across our platform, observability and security businesses as organizations around the world turned to Splunk to monitor and secure their business-critical infrastructure and applications,” Interim CEO and Chair Graham Smith said in a statement.

Total revenue in the fourth quarter jumped 21% to $901 million with the company counting CVS Health (NYSE:CVS), Intel (NASDAQ:INTC), and Papa John's (NASDAQ:PZZA) among clients who either boarded for the first time or enhanced their orders. Some of them were renewals.

The company expects a further shift toward a higher margin cloud model to drive its subscription revenue this year. It substantially grew its cloud gross margin in the fourth quarter though total gross margin fell 1.1 percentage point.

The company today named Gary Steele as its new CEO. Steele was the CEO of Portera before he founded his own firm Proofpoint (NASDAQ:PFPT). He has also held various leadership roles at Sybase, Sun Microsystems, and Hewlett-Packard, Splunk said.

On a per share basis, adjusted profit was 66 cents.

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