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Splunk Inc SPLK

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Narrow-Moat Splunk Continues to See Cloud-Transition-Linked Uncertainty; Lowering FVE to $164

Nupur Balain Equity Analyst

Analyst Note

| Nupur Balain |

Narrow-moat Splunk reported better-than-expected first-quarter results that beat our expectations and guidance on a top-line basis. While our long-term thesis on Splunk facing a healthy growth runway remains intact, we see greater uncertainty regarding the bottom-line as the cloud transition wraps up. As a result, we are lowering our fair value estimate for Splunk to $164 from $212, but continue to view shares as undervalued at the moment. In spite of increased uncertainty, the cloud transition continues at a solid pace, with over 50% of software bookings coming from the cloud. We expect sustained cloud penetration, a growing robust product suite, and strong execution to lead to healthy long-term growth.

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Company Profile

Business Description

Splunk provides software for machine log analysis. Its flagship solution, Splunk Enterprise, is employed across a multitude of use cases, including application management, IT operations, and security. The company has historically deployed its solutions on-premises, but the software-as-a-service delivery model is growing in popularity with Splunk Cloud. The company derives revenue from software licenses, as well as cloud subscriptions, maintenance, and support.

Contact
270 Brannan Street
San Francisco, CA, 94107
T +1 415 848-8400
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Apr 30, 2021
Fiscal Year End Jan 31, 2022
Stock Type Speculative Growth
Employees 6,500

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