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Splunk
Inc. (NASDAQ: SPLK), the leading software platform for real-time
operational intelligence, today announced results for its fiscal third
quarter ended October 31, 2012.
“We are pleased to welcome more than 350 new Enterprise customers to the
Splunk family and also want to recognize the many customers who expanded
their use of Splunk software during the quarter,” said Godfrey Sullivan,
Chairman and CEO. “Our license revenues were the result of broad
adoption by our customers in financial services, technology,
telecommunications and government sectors.”
Third Quarter 2013 Financial Highlights
Total revenue was $52.0 million, up 67% year-over-year.
License revenue was $34.6 million, up 56% year-over-year.
GAAP operating loss was $5.4 million; GAAP operating margin was
negative 10.3%. Non-GAAP operating loss was $0.7 million;
non-GAAP operating margin was negative 1.3%.
GAAP net loss was $5.5 million and included $4.7 million in non-cash,
stock-based compensation expenses; non-GAAP net loss was $0.8 million.
GAAP loss per share was $0.06 based on a 96.7 million weighted-average
share count; non-GAAP loss per share was $0.01.
Operating cash flow was $6.5 million with free cash flow of $4.2
million.
A reconciliation of GAAP to non-GAAP results is provided in the
accompanying table.
Third Quarter 2013 and Recent Business
Highlights
Customers:
New license customers include: Bureau of Alcohol, Tobacco,
Firearms and Explosives, China Mobile, Churchill Downs, Daimler AG,
Eldorado (Russia), Getty Images, Hyundai Kia (Korea), Kohl's Department
Stores, Newell Rubbermaid, PCCW Now (Hong Kong), South Australia Police,
TCS Bank (Russia), U.S. Department of Agriculture, U.S. Department of
Education and Vodafone Australia.
Expansion customers include: Adobe, Ceryx Inc., Cisco, Comcast,
Commercial Bank of Qatar, Defense Information Systems Agency (DISA),
Interactive Data, Major League Baseball, Moody's, Purdue University,
UniCredit Business Integrated Solutions (UBIS – Italy), University of
Connecticut, U.S. Department of Energy and Vattenfall Europe Information
Services GmbH.
Product:
Announced the general availability (GA) of Splunk®
Enterprise 5, the fastest, most resilient version of the company's
flagship product. The latest release also includes additional
developer tools for building big data applications.
Released the GA version of Splunk
Storm™, a cloud service for organizations that develop and run
applications in the public cloud.
Announced the GA of the Splunk
App for PCI Compliance 2.0 for organizations looking for a simple,
intuitive reporting and analysis solution that satisfies the
requirements for Payment Card Industry (PCI) compliance.
Released the GA version of the JavaScript
SDK, which includes full JSON support and API versioning, in
Splunk Enterprise 5.
Channel Partners:
Signed a global
reseller agreement with Wipro Technologies, the global information
technology, consulting and outsourcing business of Wipro Ltd
(NYSE:WIT).
Announced astrategic
alliance under which Carahsoft Technology Corp., a government IT
solution provider, will proactively market, sell and distribute Splunk
software to federal, state and local government agencies and the
Splunk reseller partner ecosystem.
Awards:
Recognized as the Best IT Security Product of 2012 by Sweden's
Protection and Safety Newspaper in its third annual security awards.
Named the IT Performance Technology winner at the 2012 Ventana
Research Technology Innovation Awards.
Selected as one of the “40 Vendors We're Watching: 2012” by
Information Management.
Financial Outlook
The company is providing the following guidance for its fiscal 2013
fourth quarter (ending January 31, 2013):
Total revenue is expected to be between $58 million and $60 million.
Non-GAAP operating margin is expected to be between 3% and 4%.
The company is updating its previous guidance for its 2013 full fiscal
year (ending January 31, 2013):
Total revenue is now expected to be between $192 million and $194
million (was previously $183 million to $186 million as of August 30,
2012).
Non-GAAP operating margin is expected to be between negative 1% and
negative 2% (was previously negative 2% to negative 3% as of August
30, 2012).
All forward-looking non-GAAP financial measures contained in this
section “Financial Outlook” exclude estimates for stock-based
compensation expenses. A reconciliation of non-GAAP guidance measures to
corresponding GAAP measures is not available on a forward-looking basis.
Conference Call and Webcast
Splunk’s executive management team will host a conference call today
beginning at 2:00 p.m. PT (5:00 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.cfm.
A replay of the call will be available through December 6, 2012 by
dialing (855) 859-2056 and referencing Conference ID# 59977778.
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 and fiscal year 2013 in the paragraphs under “Financial Outlook”
above, and other statements regarding momentum in the company’s
business, growth in the number of new customers, existing customer usage
and expansion of Splunk software, Splunk Storm and Splunk Enterprise 5.
There are a significant number of factors that could cause actual
results to differ materially from statements made in this press release,
including: Splunk’s limited operating history, particularly as a new
public company; risks associated with Splunk’s rapid growth,
particularly outside of the U.S.; and general market, political,
economic and business 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 quarter ended July 31, 2012 which is on file with the U.S.
Securities and Exchange Commission. 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) provides the engine for machine data™.
Splunk® software collects, indexes and harnesses the machine-generated big
data coming from the websites, applications, servers, networks and
mobile devices that power business. Splunk software enables
organizations to monitor, search, analyze, visualize and act on massive
streams of real-time and historical machine data. More than 4,800
enterprises, universities, government agencies and service providers in
over 80 countries use Splunk Enterprise to gain Operational
Intelligence that deepens business and customer understanding,
improves service and uptime, reduces cost and mitigates cyber-security
risk. Splunk
Storm, a cloud-based subscription service, is used by organizations
developing applications in the cloud.
Weighted-average shares used in computing basic and diluted net
loss per share
96,671
21,220
73,951
20,069
1 Includes stock-based compensation expense as follows:
Cost of revenues
$
322
$
37
$
697
$
83
Research and development
1,560
229
3,722
531
Sales and marketing
2,093
405
4,456
829
General and administrative
710
370
2,348
824
$
4,685
$
1,041
$
11,223
$
2,267
SPLUNK INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
October 31,
January 31,
2012
2012
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents
$
273,324
$
31,599
Accounts receivable, net
40,178
34,495
Prepaid expenses and other current assets
5,694
4,261
Total current assets
319,196
70,355
Restricted cash
-
514
Property and equipment, net
10,758
8,919
Other assets
281
2,435
Total assets
$
330,235
$
82,223
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable
$
1,195
$
1,455
Accrued payroll and compensation
25,715
16,142
Accrued expenses and other liabilities
4,672
7,711
Deferred revenue, current portion
61,964
42,923
Term debt, current portion
-
982
Total current liabilities
93,546
69,213
Deferred revenue, non-current
12,002
9,742
Preferred stock warrant liability
-
2,133
Other liabilities, non-current
322
561
Term debt, non-current
-
1,307
Total non-current liabilities
12,324
13,743
Total liabilities
105,870
82,956
Convertible preferred stock
-
40,913
Stockholders' equity (deficit):
Common stock
97
23
Accumulated other comprehensive loss
(15
)
(24
)
Additional paid-in capital
308,820
12,373
Accumulated deficit
(84,537
)
(54,018
)
Total stockholders' equity (deficit)
224,365
(41,646
)
Total liabilities and stockholders' equity
$
330,235
$
82,223
SPLUNK INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
Nine Months Ended
October 31,
October 31,
October 31,
October 31,
2012
2011
2012
2011
Cash Flows From Operating Activities
Net loss
$
(5,474
)
$
(3,560
)
$
(30,519
)
$
(9,716
)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization
1,208
584
3,357
1,429
Change in fair value of preferred stock warrants
-
439
14,087
1,515
Stock-based compensation
4,685
1,041
11,223
2,267
Changes in operating assets and liabilities
Accounts receivable, net
(6,497
)
699
(5,683
)
(7,379
)
Prepaid expenses, other current and non-current assets
(108
)
390
(1,280
)
(2,230
)
Accounts payable
(568
)
(2,052
)
(268
)
(289
)
Accrued payroll and compensation
7,010
2,141
9,573
2,749
Accrued expenses and other liabilities
(74
)
733
81
2,006
Deferred revenue
6,298
6,286
21,301
14,263
Net cash provided by operating activities
6,480
6,701
21,872
4,615
Cash Flow From Investing Activities
Change in restricted cash
514
-
514
-
Purchases of property and equipment
(2,246
)
(2,186
)
(5,720
)
(6,096
)
Net cash used in investing activities
(1,732
)
(2,186
)
(5,206
)
(6,096
)
Cash Flow From Financing Activities
Repayments of financing obligation under sale leaseback
-
(50
)
-
(142
)
Repayments of term debt
-
(234
)
(2,289
)
(475
)
Proceeds from term debt
-
-
-
3,000
Proceeds from initial public offering, net of offering costs
-
-
225,225
-
Proceeds from early exercise of employee stock options
-
-
-
735
Issuance of common stock from exercise of stock options
298
983
2,123
1,623
Net cash provided by financing activities
298
699
225,059
4,741
Net increase in cash and cash equivalents
5,046
5,214
241,725
3,260
Cash and cash equivalents at beginning of period
268,278
17,783
31,599
19,737
Cash and cash equivalents at end of period
$
273,324
$
22,997
$
273,324
$
22,997
SPLUNK INC. Non-GAAP financial measures and
reconciliations
To supplement Splunk’s consolidated financial statements, which are
prepared and presented in accordance with generally accepted accounting
principles in the United States (“GAAP”), Splunk provides investors with
certain non-GAAP financial measures, including non-GAAP operating loss,
non-GAAP net loss, non-GAAP operating margin, and non-GAAP loss per
share (collectively the “non-GAAP financial measures”). These non-GAAP
financial measures exclude stock-based compensation expense and the
change in fair value of certain preferred stock warrants previously
issued by Splunk. In addition, non-GAAP financial measures include free
cash flow, which represents cash from operations less purchases of
property and equipment. The presentation of the non-GAAP financial
measures is not intended to be considered in isolation or as a
substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP. Splunk uses these non-GAAP financial
measures for financial and operational decision-making purposes and as a
means to evaluate period-to-period comparisons. Splunk believes that
these non-GAAP financial measures provide useful information about
Splunk’s operating results, enhance the overall understanding of past
financial performance and future prospects, and allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision making. In addition, these non-GAAP
financial measures facilitate comparisons to competitors’ operating
results.
Splunk excludes stock-based compensation expense from its non-GAAP
operating loss, non-GAAP net loss, non-GAAP operating margin and
non-GAAP loss per share because such expense is non-cash in nature.
Splunk excludes expense attributable to the change in fair value of
certain preferred stock warrants from its non-GAAP financial measures
because it is a non-recurring, non-cash expense. Splunk considers free
cash flow to be a liquidity measure that provides useful information to
management and investors about the amount of cash generated by the
business that can be used for strategic opportunities, including
investing in Splunk’s business, making strategic acquisitions, and
strengthening Splunk’s balance sheet.
There are limitations in using non-GAAP financial measures because the
non-GAAP financial measures are not prepared in accordance with GAAP,
may be different from non-GAAP financial measures used by Splunk’s
competitors, and exclude expenses that may have a material impact upon
Splunk’s reported financial results. Further, stock-based compensation
expense has been and will continue to be for the foreseeable future a
significant recurring expense in Splunk’s business and an important part
of the compensation provided to Splunk’s employees. The non-GAAP
financial measures are meant to supplement, and be viewed in conjunction
with, GAAP financial measures.
The following table reconciles Splunk’s non-GAAP results to Splunk’s
GAAP results included in this press release.
SPLUNK INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
Three Months Ended
Nine Months Ended
October 31,
October 31,
October 31,
October 31,
2012
2011
2012
2011
Reconciliation of cash provided by
operating activities to free cash flow:
Net cash provided by operating activities
$
6,480
$
6,701
$
21,872
$
4,615
Less purchases of property and equipment
(2,246
)
(2,186
)
(5,720
)
(6,096
)
Free cash flow (Non-GAAP)
$
4,234
$
4,515
$
16,152
$
(1,481
)
Net cash used in investing activities
$
(1,732
)
$
(2,186
)
$
(5,206
)
$
(6,096
)
Net cash provided by financing activities
$
298
$
699
$
225,059
$
4,741
Operating loss reconciliation:
GAAP operating loss
$
(5,380
)
$
(3,044
)
$
(16,109
)
$
(8,081
)
Stock-based compensation expense
A
4,685
1,041
11,223
2,267
Non-GAAP operating loss
$
(695
)
$
(2,003
)
$
(4,886
)
$
(5,814
)
Operating margin reconciliation:
GAAP operating margin
(10.3
)
%
(9.8
)
%
(12.0
)
%
(10.4
)
%
Stock-based compensation expense
A
9.0
3.3
8.4
2.9
Non-GAAP operating margin
(1.3
)
%
(6.5
)
%
(3.6
)
%
(7.5
)
%
Net loss reconciliation:
GAAP net loss
$
(5,474
)
$
(3,560
)
$
(30,519
)
$
(9,716
)
Stock-based compensation expense
A
4,685
1,041
11,223
2,267
Change in fair value of preferred stock warrants
B
-
439
14,087
1,515
Non-GAAP net loss
$
(789
)
$
(2,080
)
$
(5,209
)
$
(5,934
)
Net loss per share reconciliation:
GAAP net loss per share
$
(0.06
)
$
(0.17
)
$
(0.41
)
$
(0.48
)
Stock-based compensation expense
A
0.05
0.05
0.15
0.11
Change in fair value of preferred stock warrants
B
-
0.02
0.19
0.07
Non-GAAP basic and diluted loss per share
$
(0.01
)
$
(0.10
)
$
(0.07
)
$
(0.30
)
Weighted-average shares used in computing basic and diluted net
loss per share
96,671
21,220
73,951
20,069
Notes:
(A)
To eliminate stock-based compensation expense.
(B)
To eliminate warrant expense related to the change in the fair value
of our outstanding preferred stock warrants. The final measurement
of the warrants was recorded upon the closing of Splunk's initial
public offering during the three months ended April 30, 2012.
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