Splunk Inc (NASDAQ: SPLK) stock lost over 10.1% on 22nd August, 2019 (as of 11:39 am GMT-4; Source: Google finance). The firm slashed their FY20E cash flow for the third year, disappointing investors.
SPLK plans to acquire SignalFx, which makes software for the cloud, in a cash and stock deal for about $1.05 billion. The deal is 60% cash and 40% in Splunk common stock. SignalFx is a SaaS leader in real-time monitoring and metrics for cloud infrastructure, microservices and applications. Following the acquisition, Splunk will provide leading solutions in observability and application performance monitoring (APM) for organizations at every stage of their cloud journey, from cloud-native apps to homegrown on-premises applications. The combination of Splunk and signalFx will give application developers and IT departments a unified data platform that allows them to monitor and observe data in real-time, no matter the infrastructure or scale in order to cut costs, boost revenue and improve the customer experience.
SPLK has ended the quarter with total RPO of $1.235 billion dollars, up 47% over Q2 of last year. The portion of RPO, which the company expect to recognize as revenue over the next 12 months was $751 million at quarter end, up 32% year-over-year. RPO bookings was $554 million, up 19% from Q2 last year. In Q2, Operating cash flow was negative $129 million with free cash flow of negative $141 million.
SPLK in the second quarter of FY 20 has reported the adjusted earnings per share of 30 cents while adjusted revenue growth of 33 percent to $516.6 million in the second quarter of FY 20.
Software revenues were $350 million, up 46% year-over-year. In Q2, overall gross margin was 84%, up 2 points on a year-over-year basis.
For the third quarter ending in November, Splunk said it expects revenue in the range of $600 million. Analysts surveyed by Zacks had expected revenue of $589.4 million. For the third quarter, the company expects Non-GAAP operating margin to be approximately 16%.
For fiscal 2020, the total revenues are expected to be approximately $2.30 billion (was approximately $2.25 billion). Non-GAAP operating margin is expected to be approximately 14% (unchanged from previous guidance).
In addition, Deloitte Risk & Financial Advisory and Splunk expanded the strategic relationship as Deloitte’s Fusion Managed Services offerings now incorporate Splunk Phantom, which provides automated security monitoring and response to help clients address evolving cyber threats.