Splunk Inc (NASDAQ:SPLK) stock rose 1.16% (As on May 25, 11:59:21 AM UTC-4, Source: Google Finance) after the company surprised investors with stronger-than-expected earnings and revenue in its fiscal first quarter. Splunk’s annual recurring revenue grew 16% year-over-year, to $3.725 billion, and the number of customers with an ARR of over $1 million 120 year-over-year, to 810. The company’s cloud revenue rose 30%, to $419 million, operating cash flow jumped 243%, to $492 million, and free cash leaped 253%, to $486 million.

SPLK in the first quarter of FY 24 has reported the adjusted earnings per share of 18 cents, beating the analysts’ estimates for the adjusted loss per share of 14 cents. The company had reported the adjusted revenue growth of 11 percent to $751.5 million in the first quarter of FY 24, beating the analysts’ estimates for revenue of $722.9 million.

For its fiscal second quarter, Splunk expects revenue of between $880 million to $895 million, higher than an expected $868 million. for its fiscal second quarter 2024 (ending July 31, 2023), total ARR is expected to be approximately $3.825 billion, Non-GAAP operating margin is expected to be between 10% and 12% and Free cash flow is expected to be approximately negative $15 million which implies trailing twelve months free cash flow of $785 million.

For its full fiscal year, Splunk said it expects revenue of about $3.9 billion, total ARR is expected to be between $4.125 billion and $4.175 billion, Non-GAAP operating margin is expected to be between 18% and 18.5% (was previously between 16.5% and 17.5%) and Free cash flow is expected to be between $805 million and $825 million (was previously between $775 million and $795 million).

Highlights from the quarter included Splunk beefing up its observability and incident response tools in March. The updates include new features for its Observability Cloud and Mission Control and the launch of a new service called Edge Processor. The enhancements to Observability Cloud and Mission Control, alongside the introduction of Edge Processor, were aimed at bolstering resilience against cyberattacks and infrastructure issues.

Splunk also received an “In Process” status from the Federal Risk and Authorization Management Program and a “Pending” status from the State Risk and Authorization Management Program during the quarter. The designations are part of an effort by Splunk to secure authorization to offer attested versions of the Splunk Cloud Platform to governmental entities.