Splunk Inc (NASDAQ:SPLK) stock surges 14.08% (As on August 24, 11:49:35 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the second quarter of FY 24 and raises guidance for full year. The company said total annual recurring revenue rose 16% in the second quarter to $3.858B, beating expectations. The non-GAAP Operating Expenses declined 3% year-over-year. Trailing twelve month operating cash flow was $827 million, up 247% year-over-year. Trailing twelve month free cash flow was $805 million, up 273% year-over-year. 834 customers with total ARR greater than $1 million, an increase of 111 year-over-year.
SPLK in the second quarter of FY 24 has reported the adjusted earnings per share of 71 cents, beating the analysts’ estimates for the adjusted earnings per share of 46 cents. The company had reported the adjusted revenue growth of 35.9 percent to $910.59 million in the second quarter of FY 24, beating the analysts’ estimates for revenue of $889.23 million. Cloud revenue grew 29% to $445 million.
Splunk sees third quarter revenue of $1.020 billion to $1.035B versus the expectation of $982.39M. For its fiscal third quarter 2024, Total ARR is expected to be approximately $3.980 billion, Non-GAAP operating margin is expected to be between 24.7% and 25.3% and free cash flow is expected to be approximately $75 million which implies trailing twelve months free cash flow of $834 million.
It sees full-year revenue of $3.925B to $3.950B, also higher than expected. For its fiscal year 2024, Total ARR is expected to be between $4.150 billion and $4.175 billion (was previously between $4.125 billion and $4.175 billion), Non-GAAP operating margin is expected to be between 21.0% and 21.5% (was previously between 18% and 18.5%) and free cash flow is expected to be between $855 million and $875 million (was previously between $805 million and $825 million).
On the other hand, BTIG analysts highlighted the inflecting ARR growth. “We see signs for further improvement in growth as GTM initiatives on the observability side of the business are gradually building momentum. And we think that SPLK is still in the early stages of driving leverage in FCF margins,” the analysts said. Evercore ISI analysts highlighted that Splunk will be hosting an analyst day in New York in early 2024. “While that is still 4+ months away, we believe that shares could continue to rally off this print and into the a-day as investor circle back to the name.”