Bearish stock to watch: Splunk Inc (NASDAQ: SPLK)

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Splunk Inc (NASDAQ: SPLK) stock lost over 9.1% on 5th March, 2020 (Source: Google finance) after the company posted mixed results for the fourth quarter of FY 19. The company reported a fourth-quarter loss of $22.7 million compared to net income of $2.1 million, in the year-ago period. The company has ended the period with total ARR of $1.68 billion, which represents an increase of 54% over last year. ARR was comprised of $442 million from cloud and $1.238 billion from term license and maintenance contracts. In Q4, 99% of software bookings were either term or cloud and the transition into a renewable model is complete. The company has ended Q4 with total RPO of $1.8 billion, which represents an increase of 43% over Q4 of last year. The portion of RPO, which the company expects to recognize as revenue over the next 12 months, was $1 billion at period end, up 23% year-over-year. RPO bookings were $1.145 billion, which represents an increase of 23% from Q4 last year, and full-year RPO bookings were $2.9 billion, up 28%. The accelerating cloud contribution in Q4 had led to a slower pace of growth in current RPO bookings compared to total RPO bookings. This is due to the out years of a multi-year cloud contract being classified as non-current, whereas the majority of a term contract is captured in current RPO bookings immediately. Further, In Q4, the company has recorded 221 orders greater than $1 million in total contract value, up from 179 in Q4 last year. Over the course of the year, the company has booked 35 orders greater than $10 million compared to 24 in the prior year.

SPLK in the fourth quarter of FY 19 has reported the adjusted earnings per share of 96 cents, missing the analysts’ estimates for the adjusted earnings per share of 97 cents, according to analysts surveyed by FactSet. The company had reported the adjusted revenue growth of 27 percent to $791.2 million in the fourth quarter of FY 19, beating the analysts’ estimates for revenue of $782.7 million. Cloud revenue was $99 million, which is an increase of 86% over last year. Q4 software revenues, which is the total of license and cloud were $617 million, grew by 33% year-over-year.

Splunk expects revenue to be of about $450 million for the first quarter, and about $2.6 billion for the year. Analysts surveyed by FactSet had forecast on revenue of $526 million for the first quarter and $2.88 billion for the year.

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