Splunk Inc. revenue surged on 30.8% and EBITDA Margin increased on 3.7 pp from -11.3% to -7.6%
03/04/2020 • About Splunk Inc. (
$SPLK) • By InTwits
Splunk Inc. reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Splunk Inc. is a fast growth stock: FY2020 revenue growth was 30.8%, 5 year revenue CAGR was 39.2% at FY2020 ROIC -7.6%
- The company operates at negative EBITDA Margin: -7.6%
- Splunk Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 was 14.5% while average EBITDA Margin was -15.5% for the sames years
- Splunk Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.9%. At the same time it's a lot of higher than industry average of 3.0%.
- CAPEX is quite volatile: $101m in FY2020, $23m in FY2019, $21m in FY2018, $45m in FY2017, $51m in FY2016
- The company has unprofitable business model: ROIC is -7.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Splunk Inc.'s Revenue jumped on 30.8%. Revenue growth showed slowdown in FY20Q4 - it was 27.2% YoY. Revenue decline was accelerating on average at -3.8 pp per annum in FY2016-FY2020. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 3.7 pp from -11.3% to -7.6% in FY2020. EBITDA Margin followed a growing trend at 8.6 pp per annum in FY2016-FY2020.
Gross Margin increased slightly on 0.90 pp from 80.9% to 81.8% in FY2020. During FY2016-FY2020 Gross Margin bottomed in FY2017 at 79.8% and was growing since that time. SG&A as a % of Revenue decreased on 2.6 pp from 70.3% to 67.7% in FY2020. SG&A as a % of Revenue followed a declining trend at -6.6 pp per annum in FY2016-FY2020.
Net Income margin increased slightly on 1.0 pp from -15.3% to -14.3% in FY2020. Net Income margin followed a growing trend at 7.6 pp per annum in FY2016-FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 4.3%. The company showed small CAPEX/Revenue decline of 0.52 pp from 4.8% in FY2017 to 4.3% in FY2020. It's average CAPEX/Revenue for the last three years was 2.4%. During FY2016-FY2020 CAPEX as a % of Revenue bottomed in FY2019 at 1.3%.
Return on investment
The company operates at negative ROIC (-7.6%) and ROE (-19.1%). ROIC increased on 4.1 pp from -11.7% to -7.6% in FY2020. ROE increased slightly on 1.7 pp from -20.8% to -19.1% in FY2020. ROIC stuck to a growing trend at 8.2 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 2.8x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in FY2020. Debt jumped on 21.6% while cash dropped on 58.5%.
Splunk Inc. has no short term refinancing risk: cash is higher than short term debt (2,060.0%).
Management team
Splunk Inc.'s CEO Douglas Merritt "Doug" has spent 5 years with the company. Splunk Inc.'s CFO Jason E Child has spent 1 year with the company.
Financial and operational results
FY ended 01/31/2020
Splunk Inc. ($SPLK) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 668 | 944 | 1,309 | 1,803 | 2,359 | 30.8% |
| Gross Profit | 554 | 753 | 1,053 | 1,458 | 1,929 | 32.3% |
| SG&A | 627 | 793 | 937 | 1,268 | 1,596 | 26.0% |
| EBITDA | -267 | -303 | -144 | -203 | -179 | |
| EBIT | -288 | -336 | -185 | | | |
| Interest expence | | 9 | 9 | | | |
| Tax | -8 | 6 | 1 | | | |
| Net Income | -279 | -347 | -190 | -276 | -337 | |
| Stock Based Compensation | 291 | 377 | 358 | | | |
Balance Sheet
|
|---|
| Cash | 425 | 421 | 546 | 1,876 | 779 | -58.5% |
| Accounts Receivable | 182 | 238 | 396 | | | |
| Accounts Payable | 5 | 8 | 11 | | | |
| Short Term Debt | 0 | 0 | 0 | 0 | 38 | |
| Long Term Debt | 0 | 0 | 0 | 1,634 | 1,950 | 19.3% |
Cash flow
|
|---|
| Capex | 51 | 45 | 21 | 23 | 101 | 336.6% |
| Acquisitions | 143 | | 59 | | | |
Ratios
|
|---|
| Revenue growth | 48.3% | 41.2% | 38.7% | 37.7% | 30.8% | |
| EBITDA growth | 31.9% | 13.5% | -52.4% | 41.1% | -11.8% | |
|
|---|
| Gross Margin | 82.9% | 79.8% | 80.4% | 80.9% | 81.8% | 0.9% |
| EBITDA Margin | -40.0% | -32.1% | -11.0% | -11.3% | -7.6% | 3.7% |
| EBIT Margin | -43.1% | -35.6% | -14.2% | | |
| SG&A, % of revenue | 93.8% | 84.0% | 71.6% | 70.3% | 67.7% | -2.6% |
| SBC, % of revenue | 43.6% | 40.0% | 27.4% | | |
| Net Income Margin | -41.7% | -36.8% | -14.5% | -15.3% | -14.3% | 1.0% |
| CAPEX, % of revenue | 7.7% | 4.8% | 1.6% | 1.3% | 4.3% | 3.0% |
|
|---|
| ROIC | -34.4% | -40.4% | -19.1% | -11.7% | -7.6% | 4.1% |
| ROE | -33.3% | -41.7% | -19.6% | -20.8% | -19.1% | 1.7% |
People
|
|---|
| Insider ownership | 0.9% | 0.9% | 0.9% | | | |
| Employees | 2,100 | 2,700 | 3,200 | | | |
| Revenue/Employee, th. $ | 318 | 349 | 409 | | | |
Splunk Inc. ($SPLK) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 425 | 517 | 626 | 791 | | 36.3% | 33.0% | 30.2% | 27.2% |
| EBITDA | -123 | -65 | -18 | 27 | | - | - | - | -25.0% |
| Net Income | -155 | -101 | -58 | -23 | | - | - | - | -1,169.0% |
Balance Sheet
|
|---|
| Cash | 1,835 | 1,672 | 873 | 779 | | 280.9% | 298.4% | -53.2% | -58.5% |
| Short Term Debt | 39 | 20 | 12 | 38 | | - | - | - | - |
| Long Term Debt | 1,833 | 1,865 | 1,941 | 1,950 | | - | - | 20.2% | 19.3% |
Ratios
|
|---|
| Gross Margin | 77.4% | 81.0% | 82.8% | 83.8% | | 2.5% | 2.5% | 1.3% | -1.1% |
| EBITDA Margin | -29.0% | -12.6% | -2.9% | 3.4% | | 6.4% | 11.0% | 4.9% | -2.4% |
| Net Income Margin | -36.6% | -19.5% | -9.2% | -2.9% | | 1.4% | 7.1% | 2.4% | -3.2% |
Peers in Application Software
Below we provide Splunk Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 14.8% | 15.1% | 19.4% | 14.5% |
|---|
| Splunk Inc. ($SPLK) | - | 41.2% | 38.7% | 37.7% | 30.8% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 63.8% | 64.4% | 65.3% | 67.9% | 69.4% |
|---|
| Splunk Inc. ($SPLK) | 82.9% | 79.8% | 80.4% | 80.9% | 81.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -4.7% | -3.3% | -3.3% | 4.5% | 7.7% |
|---|
| Splunk Inc. ($SPLK) | -40.0% | -32.1% | -11.0% | -11.3% | -7.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 2.9% | 2.3% | 2.4% | 3.0% | 2.5% |
|---|
| Splunk Inc. ($SPLK) | 7.7% | 4.8% | 1.6% | 1.3% | 4.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.2% | -10.2% | -9.8% | -4.2% | -1.8% |
|---|
| Splunk Inc. ($SPLK) | -34.4% | -40.4% | -19.1% | -11.7% | -7.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| |
|---|
| Median (54 companies) | -0.9x | -0.8x | -0.7x | 0.4x | 0.2x |
|---|
