![]() Long-term, these use cases could be worth billions to the company. While other real-time data processing methods are possible to construct without violating SPLK's patents, SPLK's technique works particularly well and is proven," Freeman writes in his report.Īs a result of this competitive advance, CFRA sees hundreds of new use cases being developed that combine Splunk's data processing engine with machine learning apps, providing the company with near-term opportunities in the hundreds of millions. " Patented underlying software engine that can truly process streaming data in real time. Should You Buy the Mobileye Self-Driving Car IPO? The analyst believes that Splunk has a significant competitive advantage against many of its peers. That's expected to continue, Freeman says. Splunk Has a Competitive Advantageīut over the past two years, its overall revenue growth has accelerated thanks to its Cloud ARR. By 2021, overall revenue fell by 6% as more of its traditional customers stopped doing business with the company. In its first year of transitioning, overall revenue growth fell to 30% from 42% in 2019 as traditional customers disappeared, replaced by cloud-based ones. It began its cloud-based subscription model in 2020. That's based on the company's transition to a cloud-based business model, continuing unabated for three years. While that's down from 130% seen in Q1 2023, it remains above 120%, which is considered excellent by industry standards.ĬFRA's three-year revenue CAGR (compound annual growth rate) forecast for Splunk is 23%. This means it's generating 29% more revenue in a given year from its existing customers. ![]() Its cloud dollar-based net retention rate (Cloud DBNRR) in its fiscal second quarter was 129%. ![]() The company continues to maintain loyal cloud-based customers. That's 640 basis points higher than in 2022 (a basis point is 1/100th of a percentage point). Meanwhile, Splunk's total annual recurring revenue (ARR) is expected to be $3.65 billion in 2023, with its cloud ARR accounting for 49.3% of its total ARR. That's up from 35.9% of overall revenue in Q2 2022. The company's most recent Q2 2023 earnings report saw cloud revenue grow by 59% year-over-year to $346 million, or 43.3% of its overall revenue. You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself.Can Stocks Picked by Artificial Intelligence Beat the Market? 3 Stocks to Watch Simply Wall St has no position in any stocks mentioned. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. We aim to bring you long-term focused analysis driven by fundamental data. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. This article by Simply Wall St is general in nature. Alternatively, email editorial-team (at). Have feedback on this article? Concerned about the content? Get in touch with us directly. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges. ![]() If you would prefer to check out another company - one with potentially superior financials - then do not miss this free list of companies that have proven they can grow earnings. Every company has them, and we've spotted 2 warning signs for Splunk you should know about. But to truly gain insight, we need to consider other information, too. I find it very interesting to look at share price over the long term as a proxy for business performance. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Longer term investors wouldn't be so upset, since they would have made 3%, each year, over five years. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. ![]() However, it could simply be that the share price has been impacted by broader market jitters. Unfortunately, that's worse than the broader market decline of 8.8%. We regret to report that Splunk shareholders are down 14% for the year. You can see what analysts are predicting for Splunk in this interactive graph of future profit estimates. Splunk is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. ![]()
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