Plunk Some Money in Splunk?
One of the benefits of the new digital economy is the large amounts of available data that can shed light on what’s happening within an organization’s operations. Companies often need data analytics software to turn that data into actionable insights, and Splunk (Nasdaq: SPLK) is a leader in that field, taking in a hefty $517 million in its last quarter, up 33% over the previous year’s level.
Splunk helps businesses organize and analyze both data locked up in old legacy computer systems and data generated by newer cloudbased operations. Its analytics engine has a broad range of uses, from monitoring equipment connected to a network, to payment processing activity, to coordinating cybersecurity efforts.
Its stock is down from its summer highs, in part because management projected negative operating cash flow of $300 million for fiscal 2020 — driven by a new pricing structure and a faster-than-expected shift from perpetual licenses to cloudbased renewable subscriptions.
Over the longer term, that shift will mean more predictable revenue streams, with Splunk adding more than 400 new enterprise customers in the first quarter of fiscal 2020 alone, including Chipotle Mexican Grill, Cerner and Slack. Risktolerant long-term investors might consider Splunk for their portfolios.