Thought the board would be interested.
My take is during 2017 as the company transitions from a on premises seat licensing business to a monthly subscription based business with a cloud product there will be two factors negatively effecting results.
Year over year revenue recognition results will take a hit as monthly subscriptions pushes upfront license fees and maintenance fees out in time.
The sales force will have to adapt to the new business model which may slow growth a bit.
Bottom line is you have to be patient in 2017 with Splunk.
Frank - long SPLK, see profile for all holdings
It seems to me it’s crucial to distinguish the recurring revenue from the one time revenue. I just look at the income statement:
Apr17 Jan17 Oct16 Jul16 Apr16 Jan16 Oct15 Jul15 Apr15
License 116,726 190,513 139,725 115,695 100,992 141,403 104,164 87,960 71,872
15.58% 34.73% 34.14% 31.53% 40.52%
M&S 125,722 115,948 105,064 97,058 84,960 78,621 70,256 60,366 53,793
47.98% 47.48% 49.54% 60.78% 57.94%
It’s very encouraging to see the second line still growing at near-50%. I assume that’s all recurring, as it’s been up every month.
Likewise the “License” revenue growth really fell off a cliff in the April quarter (Fiscal 18 Q1). I think this must be do to the business model change. It’s kind of hard to care, though, since the much more steady recurring revenue has already become a very large piece of the pie (the majority, even, in this quarter).
I assume that’s all recurring, as it’s been up every month.
And of course I mean every quarter