Management’s plan to increase sales and profits
(Typo in title of previous article)
That’s what happens when posting while I’m still in bed
Last quarter, Splunk management set the stage for what appears to be shaping up as an exciting year for the company. Investors learned that the company would be realigning its sales team to focus on fewer customers and sell more of its cloud-based real-time operational intelligence software throughout more departments within its largest accounts. Smaller accounts would be outsourced to third-party partners for sales coverage. The goal is to make big customers even bigger and the company more profitable by moving them from onsite solutions to cloud-based products with an emphasis on selling software subscriptions in place of perpetual software licenses.
Thanks for pointing out the Splunk article. I like DiPietro’s articles and had already been thinking about commenting on this board about the one you linked to.
Just a friendly tip: I think you’ll find that those on this board (maybe most boards) are typically more responsive if you offer some thoughts of your own to accompany the text.
What I was going to say about it is simple:
He mentions that Splunk may miss on revenue in Q1, but the article doesn’t mention the fact that Splunk already lowered guidance to only 26% or so. I really don’t think they’ll miss this…I wonder if he was looking at old guidance?
What’s very interesting to me is the fact that Splunk breaks down revenue into “License” (which is a bit of a hodgepodge from what I can tell…maybe some is recurring and some is not?) and “Maintenance and Service” (which is all recurring, I assume, as it has increased very steadily sequentially). Depending on where License revenue comes in for Q1, Maint & Serv revenue is probably on pace to be around 50% of all revenue (which sounds good to me since it’s recurring I think). If each revenue category brings in about 120M this quarter, they’ll beat their anemic 26% guidance (something like 234M) handily.
Anyway all that to say I am more optimistic than DiPietro sounds about Q1, and consequently I have been increasing my SPLK position again.