Splunk Article

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.

  1. Year over year revenue recognition results will take a hit as monthly subscriptions pushes upfront license fees and maintenance fees out in time.

  2. 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