Author Archives: Scalper1

Spunky Big Data stock Splunk ( SPLK ) popped as much as 16% Friday, after the company late Thursday posted better-than-expected earnings and sales, comforting investors in software stocks that had been battered in recent weeks. Earnings minus items for Splunk’s fiscal Q4 ended Jan. 31 rose 22% to 11 cents per share, where Wall Street analysts had expected 8 cents. Revenue rose 49% to $220 million, $17 million more than analysts expected. The company also forecast Q1 revenue higher than Wall Street estimates. Splunk stock eased off its session high but was still up nearly 10% in early afternoon trading in the stock market today , near 42, and still 45% off a 16-month high set July 23 at 76.29. The IBD Computer Software-Database group, which includes Splunk, rose as much as 3% Friday and was up more than 1% in early afternoon trading. Enterprise stocks got a boost not just from Splunk, but also from No. 1 customer relationship management software maker  Salesforce.com ( CRM ), which offered upbeat guidance after the close Wednesday. Salesforce rose 11% Thursday and was down a fraction Friday afternoon. Splunk stock had fallen 23% on Feb. 5, the day after high-flyer Tableau Software ( DATA ) stunned Wall Street with decelerating sales growth and weak guidance for 2016. Following Tableau’s lead, software issues fell by such a sizeable margin that analysts started calling it a software sector correction. “The Splunk (Q4) results were better than anticipated, given the recent disappointing quarters in fast-growth software, particularly SPLK’s Big Data cousin, Tableau,” wrote Needham analyst Scott Zeller in a Friday research note. “Splunk has faced growth deceleration over the past year, yet the company finished fiscal 2016 with a respectable 45% (year to year) billings growth and 48% revenue growth. “It is our belief (Q4) was driven by big deals (not disclosed), suggested by the ASPs  (average sale prices) of $80,000 in the quarter vs. typical $40,000-$50,000 range. The challenge will be to convince investors that SPLK can reaccelerate billings and revenue growth, rather than maintain consistent growth.” Zeller reiterated a hold rating on Splunk stock. More positive, with a buy rating and a 67 price target, Evercore ISI analyst Kirk Materne put Splunk’s historical average sale price at $50,000 per software license and $70,000 in Q3, compared with $80,000 in Q4. “Big-deal metrics highlight growing momentum across Splunk’s product suite,” Materne said in a research note. For the year, he says Splunk customers signed 1,447  six-figure deals, up from 1,112 in fiscal 2015, and 102 seven-figure transactions, up from 68 such biggies in 2015. It also penned three eight-figure deals last year vs. two in the company’s entire previous history. “Splunk continued its strong customer-count trajectory as well, adding 621 net new customers in the quarter and bringing its total customer count to over 11,000,” Materne noted. “Combined, we believe the fact that Splunk continues to accelerate customer additions while also growing its average contract size is a clear indication of the high level of demand for the company’s solutions and its growing strategic value in the enterprise.” Splunk guided the current Q1 ending April 30 to a non-GAAP operating margin loss of 1% to 2%, on sales of $172 million to $174 million. Analysts polled by Thomson Reuters expect a 1-cent loss minus items on revenue of $171 million, which would compare to a similar 1-cent loss on $125.7 million in the year-earlier quarter. For Q4, Splunk posted a fully reported loss of 61 cents per share, up from a 47-cent loss in the year-earlier quarter.