Big Data Company Splunk (SPLK) Gains on Solid Q3 Financials

Splunk Inc (NASDAQ:SPLK) released its fiscal 2017 third-quarter financial results after the market close yesterday, and the big data software developer’s share price is up nearly four percent today. The company’s revenue was posted at $245 million, 40 percent higher than the same quarter last year. Wall Street analysts were expecting $230 million.

The San Francisco-based tech company told its shareholders that its adjusted earnings from the three-month period, which ended on October 31, came out to $16.2 million – or 12 cents per share of its common stock. Analysts had projected just eight cents per share. Compared to the same quarter of fiscal 2016, earnings grew by a staggering 140 percent.

Splunk’s software solutions help tech managers keep an eye on – and analyze – massive volumes of complex data that so many companies and organizations are collecting in our rapidly changing digital age. In other words, Splunk provides “Big Data” services to its huge customer base.

“Splunk provides the market leading platform that powers Operational Intelligence to enable customers to cost effectively get value from machine data,” said Splunk’s President and Chief Executive Officer, Doug Merritt. “We want to make it easier to collect and analyze even larger volumes and varieties of data to help our customers gain more insights and value from Splunk solutions.”

The company certainly had a successful third quarter this year. Apart from the huge gains it saw in license revenues, which grew 34 percent year-over-year, Splunk signed almost 500 new enterprise clients. Some of its freshest customers include Dow Jones, Florida State University, Progressive Insurance, the State of Maine, and the Department of Homeland Security – to name a few.

Splunk also updated investors with its new revenue outlook for the fiscal year – which officially ends on January 31. The company now anticipates net revenues will be somewhere between $930 million and $932 million – up from the previous range of $910 million to $914 million. Splunk has, rather impressively, managed to achieve double-digit revenue growth for five consecutive years.

Following the company’s earnings release, a number of Wall Street firms have updated their ratings on its common stock. Wedbush Securities reiterated its “Outperform” rating on Splunk’s stock, and lifted its price target from $72.00 to $75.00. FB Securities kept its “Outperform” rating as well, bumping its 12-month price target from $70.00 to $75.00.

Analysts at Raymond James restated an “Outperform” rating, upping its target to $69.00 from $67.00 – and UBS reiterated the same rating while raising its price target from $68.00 to $70.00.

Mathew Hedberg, an analyst with RBC Capital Markets, maintained an “Outperform” rating on Splunk’s stock – and also has a $70.00 price target.

“We are bullish on Splunk’s ability to grow and take share in a new market that we call operational intelligence, which is more than just analyzing Big Data,” Hedberg said in an analyst note. “It’s about gaining actionable insight to make better business decisions across an entire organization by harnessing the full power of data.”

The author has no positions in the above mentioned companies.

Tim is a contributing analyst for and specializes in equities trading and public offerings. He is a graduate of UCLA and began his career doing capital markets research for a top investment banking software provider.