A Beat And Raise Quarter From Splunk Should Lift Investor Sentiment

Splunk Inc SPLK delivered a FQ3 2017 beat and raised its revenue guidance for the fourth quarter. “The key take was that despite the P&L distortion from the mix shift from on-premise to hosted/Cloud deployments, SPLK still posted a license revs performance that handily beat the implied guide,” Deutsche Bank’s Karl Keirstead wrote in a report.

Keirstead reiterated a Buy rating on the company, with a price target of $70, saying the latest development should lift investor sentiment.

Positive Signals

Splunk reported its quarterly revenues at $245 million, representing 40 percent year-over-year growth and beating the high-end of the guidance by 6 percent.

License revenues came in at $140 million, reflecting 34 percent growth and handsomely beating the Deutsche Bank estimate of $127 million. The company posted billings of $276 million, representing 37 percent growth and ahead of the Deutsche Bank estimate of $271 million.

“License revs growth accelerated from 2QF17 despite a tougher comp, likely as EAA traction picked up and existing customers continued to expand their data volumes. Combined with the 4QF17 revs guidance lift, there was little to suggest that SPLK's business momentum is slowing,” Keirstead commented.

The analyst raised the billings growth and revenue estimates for FY 2018 from 24 percent to 27 percent and from $1.23 billion to $1.26 billion, respectively.

At last check, Splunk shares were up 3.29 percent at $59.17.