Total ARR Grew 32% to $3.1B; Full Year Cloud Revenue up 70%
Names Gary Steele Chief Executive Officer
Splunk Inc. (NASDAQ: SPLK), the data platform leader for security and observability, today announced results for its fiscal fourth quarter and full year ended January 31, 2022.
Fourth Quarter 2022 Financial Highlights
- Cloud ARR was $1.34 billion, up 65% year-over-year.
- Total ARR was $3.12 billion, up 32% year-over-year.
- Cloud revenue was $289 million, up 69% year-over-year.
- Total revenues were $901 million, up 21% year-over-year.
- 317 customers with cloud ARR greater than $1 million, up 70% year-over-year.
- 675 customers with total ARR greater than $1 million, up 32% year-over-year.
Full Year 2022 Financial Highlights
- Cloud revenue was $944 million, up 70% year-over-year.
- Total revenues were $2.67 billion, up 20% year-over-year.
- Operating cash flow was $128 million with free cash flow of $117 million.
“Q4 was an excellent finish to a strong year for Splunk,” said Graham Smith, interim CEO and chair of Splunk. “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.”
“We reached a significant milestone as we surpassed $3 billion in total ARR last year, with cloud revenue growing 70%,” said Jason Child, CFO of Splunk. “The impact of our business transformation on our financials is normalizing, and we’re well positioned for strong growth in revenue and cash flow.”
Leadership Changes
In a separate release issued today, Splunk announced the appointment of Gary Steele as Chief Executive Officer and a member of the company’s Board of Directors, effective April 11, 2022. Graham Smith, who has served as Interim CEO since November 2021, will return to his role as Chair of the Splunk Board when Steele joins the company. In addition, Teresa Carlson, President and Chief Growth Officer, will be stepping down to pursue other career opportunities.
Q4 2022 Business Highlights:
New, Expansion and Renewal Customers Include: Box, Inc., CVS Health, Fred Loya Insurance, Intel Corporation and Papa John’s International, Inc.
- Splunk Security Innovation: Splunk’s latest Enterprise Security release is now generally available and features enhanced threat detection with advanced security analytics, an executive summary dashboard, and a new user experience.
- Splunk Observability Enhancements: Splunk Application Performance Monitoring (APM)’s AlwaysOn Profiling is now generally available with continuous visibility of code-level performance, a new AutoDetect feature with out-of-the-box detectors and alerts to help users get started in minutes as well as Log Observer Connect functionality that allows users to explore the data already being sent to existing Splunk instances.
- Splunk Joins the U.S. Cybersecurity and Infrastructure Security Agency’s Joint Cyber Defense Collaborative: This industry-government partnership focuses on planning, threat analysis and defensive operations to combat cyberthreats.
- Splunk Wins Naval Information Warfare Systems Command (NAVWAR) Award: Splunk SOAR won the NAVWAR’s Artificial Intelligence Applications to Autonomous Cybersecurity Challenge (AI ATAC) series at the U.S. Navy-hosted HACKtheMACHINE Unmanned event.
- Splunk Announces Net Zero Commitment and Releases 2021 Global Impact Report: Splunk revealed its intent to achieve net zero greenhouse gas emissions by 2050 and released its 2021 Global Impact Report to detail its approach and engagement with the societal and environmental issues that matter most to its stakeholders and business.
Financial Outlook
The company is providing the following guidance for its fiscal first quarter 2023 (ending April 30, 2022):
- Total revenues are expected to be between $615 million and $635 million.
- Non-GAAP operating margin is expected to be between negative 20% and negative 25%.
The company is providing the following guidance for its fiscal year 2023 (ending January 31, 2023):
- Cloud ARR is expected to be at least $2 billion.
- Total ARR is expected to be approximately $3.9 billion.
- Total revenues are expected to be between $3.25 billion and $3.3 billion.
- Non-GAAP operating margin is expected to be between 0% and 2%.
- Operating cash flow is expected to be at least $400 million.
Conference Call and Webcast
Splunk’s executive management team will host a conference call beginning at 1:30 p.m. PT (4:30 p.m. ET) to discuss financial results and business highlights. Interested parties may access the call by dialing (866) 501-1535 in the U.S. or (216) 672-5582 from international locations. 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 March 9, 2022 by dialing (855) 859-2056 and referencing Conference ID 2073649.
Safe Harbor Statement
This press release contains forward-looking statements that involve risks and uncertainties, including statements regarding Splunk’s guidance for revenue and non-GAAP operating margin targets for the company’s fiscal first quarter 2023, and cloud ARR, total ARR, revenue, non-GAAP operating margin and operating cash flow for the company’s fiscal year 2023; statements regarding our market opportunity, including trends in the pace of customer digital and cloud transformation; our global presence and trends in customer demand and engagement; the growth of our cloud business; the market for data-related products and the importance of data and our ability to leverage these trends; our strategy, technology and product innovation; expectations for our industry, business and products, such as our business model, customer demand and trust, 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 the company’s business, including product and service innovations and through acquisitions; Splunk’s shift from sales of licenses to sales of cloud services which impacts the timing of revenue and margins; a shift from generally invoicing multi-year contracts upfront to invoicing on an annual basis, which impacts cash collections; Splunk’s transition to a multi-product software and services business; Splunk’s inability to successfully integrate acquired businesses and technologies; Splunk’s inability to service its debt obligations or other adverse effects related to the company’s convertible notes; the emergence and impact of new COVID-19 variants and related public health measures on our business, as well as the impact of new variants on the overall economic environment, including customer buying capacity, urgency and patterns; 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 October 31, 2021, 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.
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