![]() ![]() ![]() Splunk has also continued to grow its larger customer base, which generated over $1 million in ARR each. This is also important because management has reported a slowdown in cloud migrations in Q4, driven by the "macro environment". Therefore, it was great to see Splunk continues to offer support for multiple deployments and its Non-Cloud ARR still makes up a substantial (~50%) of the total. However, as the industry stands, a Hybrid cloud environment is prevalent as is on-premises. Splunk also offers an extensive "migration guide" to help those on-premises customers move to the cloud version of the platform. ![]() This wasn't a surprise to me, given the forecasted growth in the cloud industry, which was expected to be worth $1.2 trillion by 2027. This was driven by strong Cloud ARR growth, which increased by 33% to $1.778 billion. Annual Recurring Revenue also increased by a steady 15.5% year over year. Its revenue was $1.25 billion, which beat analyst expectations by $177 million and increased by a rapid 38.84% year over year. Splunk reported strong financial results for the fourth quarter of the fiscal year 2023. ![]() In this post, I'm going to break down its financial report before diving into my valuation model and forecasts for the stock, let's dive in. In Q4 FY23, Splunk continued to execute tremendously and reported a beat on both top and bottom-line growth expectations. Splunk is poised to benefit from these trends and was ranked number one in the Security Information and Event Management industry by both Gartner and IDC. In addition, the Hybrid cloud industry is forecast to grow at an 18.4% compounded annual growth rate, driven by tailwinds across digital transformation. This is especially important given there was a reported 38% increase in Cyber-attacks in 2022, according to Check Point research. This is an essential process in order to ensure the efficient and secure running of operations. Its platform basically enables a CISO or Chief Information Security Officer at an organization to track all the IT logs, alerts, and activities. No cash balance or cash flow is included in the calculation.Splunk ( NASDAQ: SPLK) is a software company that provides an IT Observability platform. Please note all regulatory considerations regarding the presentation of fees must be taken into account. Backtested results are adjusted to reflect the reinvestment of dividends and other income and, except where otherwise indicated, are presented gross-of fees and do not include the effect of backtested transaction costs, management fees, performance fees or expenses, if applicable. Actual performance may differ significantly from backtested performance. Further, backtesting allows the security selection methodology to be adjusted until past returns are maximized. Since trades have not actually been executed, results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity, and may not reflect the impact that certain economic or market factors may have had on the decision-making process. Specifically, backtested results do not reflect actual trading or the effect of material economic and market factors on the decision-making process. Backtested performance is developed with the benefit of hindsight and has inherent limitations. This information is provided for illustrative purposes only. No representations and warranties are made as to the reasonableness of the assumptions. Certain assumptions have been made for modeling purposes and are unlikely to be realized. Changes in these assumptions may have a material impact on the backtested returns presented. General assumptions include: XYZ firm would have been able to purchase the securities recommended by the model and the markets were sufficiently liquid to permit all trading. Backtested results are calculated by the retroactive application of a model constructed on the basis of historical data and based on assumptions integral to the model which may or may not be testable and are subject to losses. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. Backtested performance is not an indicator of future actual results. Disclaimer: The TipRanks Smart Score performance is based on backtested results. ![]()
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