Splunk Inc. reports 38.7% revenue growth in FY2018 and 21.1 pp EBITDA Margin growth from -32.1% to -11.0%
03/01/2018 • About Splunk Inc. (
$SPLK) • By InTwits
Splunk Inc. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Splunk Inc. is a fast growth stock: FY2018 revenue growth was 38.7%, 5 year revenue CAGR was 45.8% at FY2018 ROIC -19.1%
- The company operates at negative EBITDA Margin: -11.0%
- Splunk Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 35.6% while average EBITDA Margin was -26.9% for the sames years
- Splunk Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.0%. At the same time it's a lot of higher than industry average of 7.6%.
- CAPEX is quite volatile: $21m in FY2018, $45m in FY2017, $51m in FY2016, $14m in FY2015, $9m in FY2014
- The company has unprofitable business model: ROIC is -19.1%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.4x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 38.7%. Revenue growth showed acceleration in FY18Q4 - it increased 53.2% YoY. Revenue decline was accelerating on average at -3.5 pp per annum in FY2014-FY2018. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.4 pp from 23.1% to 30.6% in 2018. During FY2014-FY2018 EBITDA Margin bottomed in FY2015 at -44.9% and was growing since that time.
Gross Margin increased slightly on 0.66 pp from 79.8% to 80.4% in FY2018. Gross Margin stuck to a declining trend at -2.1 pp per annum in FY2014-FY2018. SG&A as a % of Revenue dropped on 12.4 pp from 84.0% to 71.6% in FY2018. During FY2014-FY2018 SG&A as a % of Revenue topped in FY2015 at 99.3% and was declining since that time. Stock Based Compensation (SBC) as a % of Revenue dropped on 12.6 pp from 40.0% to 27.4% in FY2018. During the last 5 years SBC as a % of Revenue topped in FY2015 at 47.3% and was declining since that time.
Net Income margin surged on 22.3 pp from -36.8% to -14.5% in FY2018. During FY2014-FY2018 Net Income margin bottomed in FY2015 at -48.2% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 1.6%. The company's CAPEX/Revenue decreased slightly on 1.5 pp from 3.1% in FY2015 to 1.6% in FY2018. It's average CAPEX/Revenue for the last three years was 4.7%. During the last 5 years CAPEX as a % of Revenue topped in FY2016 at 7.7% and was declining since that time.
Accounts receivable as a % of Revenue increased on 5.0 pp from 25.3% to 30.3% in FY2018. Accounts payable as a % of Revenue showed almost no change in FY2018.
Splunk Inc. has spent
$59m on M&A in FY2018 which accounts for 4.5% of revenue.
Return on investment
The company operates at negative ROIC (-19.1%) and ROE (-19.6%). ROIC surged on 21.3 pp from -40.4% to -19.1% in FY2018. ROE jumped on 22.1 pp from -41.7% to -19.6% in FY2018. During the last 5 years ROIC bottomed in FY2017 at -40.4%. During FY2014-FY2018 ROE bottomed in FY2017 at -41.7%.
Leverage (Debt)
The company has no debt. Cash jumped on 29.6%.
Management team
Splunk Inc.'s CEO is Douglas Merritt "Doug". Douglas Merritt "Doug" is a founder and has 3 years tenure with the company. CEO total compensation was
$9,162,342 in FY2018 which included
$475,000 salary.
The company has 0.89% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 3,200 employees. The number of employees surged on 18.5%. Average revenue per employee in FY2018 was
$409,104 and it surged on 17.1%.
Financial and operational results
FY ended 01/31/2018
Splunk Inc. ($SPLK) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 303 | 451 | 668 | 944 | 1,309 | 38.7% |
| Gross Profit | 267 | 382 | 554 | 753 | 1,053 | 39.9% |
| SG&A | 269 | 448 | 627 | 793 | 937 | 18.2% |
| EBITDA | -72 | -203 | -267 | -303 | -144 | |
| EBIT | -78 | -216 | -288 | -336 | -185 | |
| Interest expence | | | | 9 | 9 | 2.9% |
| Tax | 0 | 2 | -8 | 6 | 1 | -75.4% |
| Net Income | -79 | -217 | -279 | -347 | -190 | |
| Stock Based Compensation | 69 | 213 | 291 | 377 | 358 | -5.0% |
Balance Sheet
|
|---|
| Cash | 897 | 387 | 425 | 421 | 546 | 29.6% |
| Accounts Receivable | 83 | 128 | 182 | 238 | 396 | 66.4% |
| Accounts Payable | 2 | 4 | 5 | 8 | 11 | 47.1% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 9 | 14 | 51 | 45 | 21 | -54.8% |
| Acquisitions | 30 | 3 | 143 | | 59 | |
Ratios
|
|---|
| Revenue growth | 52.1% | 49.0% | 48.3% | 41.2% | 38.7% | |
| EBITDA growth | 312.6% | 182.8% | 31.9% | 13.5% | -52.4% | |
|
|---|
| Gross Margin | 88.2% | 84.8% | 82.9% | 79.8% | 80.4% | 0.7% |
| EBITDA Margin | -23.7% | -44.9% | -40.0% | -32.1% | -11.0% | 21.1% |
| EBIT Margin | -25.9% | -47.9% | -43.1% | -35.6% | -14.2% | 21.5% |
| SG&A, % of revenue | 89.0% | 99.3% | 93.8% | 84.0% | 71.6% | -12.4% |
| SBC, % of revenue | 22.8% | 47.3% | 43.6% | 40.0% | 27.4% | -12.6% |
| Net Income Margin | -26.1% | -48.2% | -41.7% | -36.8% | -14.5% | 22.3% |
| CAPEX, % of revenue | 3.1% | 3.1% | 7.7% | 4.8% | 1.6% | -3.2% |
|
|---|
| ROIC | -15.3% | -27.0% | -34.4% | -40.4% | -19.1% | 21.3% |
| ROE | -15.5% | -27.2% | -33.3% | -41.7% | -19.6% | 22.1% |
People
|
|---|
| Insider ownership | 0.9% | 0.9% | 0.9% | 0.9% | 0.9% | 0.0% |
| Employees | 1,000 | 1,400 | 2,100 | 2,700 | 3,200 | 18.5% |
| Revenue/Employee, th. $ | 303 | 322 | 318 | 349 | 409 | 17.1% |
Splunk Inc. ($SPLK) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 227 | 280 | 342 | 460 | | 21.9% | 31.7% | 39.9% | 53.2% |
| EBITDA | -103 | -66 | -20 | 45 | | | | | |
| Net Income | -115 | -79 | -30 | 33 | | | | | |
Balance Sheet
|
|---|
| Cash | 466 | 420 | 393 | 546 | | 8.9% | 2.4% | 7.6% | 29.6% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 74.4% | 78.6% | 81.3% | 83.9% | | -4.4% | -0.4% | 1.1% | 3.3% |
| EBITDA Margin | -45.6% | -23.6% | -5.8% | 9.8% | | 3.6% | 11.7% | 27.9% | 27.8% |
| Net Income Margin | -50.8% | -28.0% | -8.7% | 7.2% | | 3.5% | 12.7% | 29.5% | 29.4% |
Peers in Application Software
Below you can find Splunk Inc. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (150 companies) | 27.9% | 13.5% | 13.6% | 14.8% | 15.2% |
|---|
| Splunk Inc. ($SPLK) | | 49.0% | 48.3% | 41.2% | 38.7% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (149 companies) | 62.8% | 61.7% | 63.8% | 64.4% | 65.3% |
|---|
| Splunk Inc. ($SPLK) | 88.2% | 84.8% | 82.9% | 79.8% | 80.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (151 companies) | -10.1% | -9.4% | -4.7% | -3.3% | -3.1% |
|---|
| Splunk Inc. ($SPLK) | -23.7% | -44.9% | -40.0% | -32.1% | -11.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (152 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Splunk Inc. ($SPLK) | 3.1% | 3.1% | 7.7% | 4.8% | 1.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (178 companies) | -14.2% | -11.2% | -9.2% | -10.2% | -9.1% |
|---|
| Splunk Inc. ($SPLK) | -15.3% | -27.0% | -34.4% | -40.4% | -19.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (70 companies) | -1.4x | -1.0x | -0.9x | -0.8x | -0.7x |
|---|
