This means that current customers are upping their spend with Splunk substantially more than customer churn. The company claims a dollar-based net retention rate of 130% at last report. There are many bright spots for Splunk as well. In fiscal 2020, Splunk's best year on record, the company lost just $263 million from operations on a -11% margin, and appeared to be headed in the right direction in terms of profitability. Over the last 12 months, Splunk has lost over $1 billion from operations and posted an operating margin of -43%. Because of this, operating income and operating margins are much lower than in recent years. This is concerning and shows that much of the top-line growth is simply Splunk paying higher prices which are passed on to the customer, rather than organic growth. Gross profit over the trailing 12 months has actually declined compared to fiscal 2020, even though revenues are higher. This is very tepid growth, especially considering the drop in the previous year. In the current fiscal year, which will end January 31, 2022, revenues are expected to grow 14% year-over-year. The next year, fiscal 2021, revenues declined 5% in what was largely attributed to a pandemic influenced slowdown, coupled with changing to a subscription model. Revenue Growth Returns, Caution Warrantedįor fiscal year ended January 31, 2020, Splunk grew revenues at a brisk rate of 31%. Finally, there seems to be some sentiment change from "growth at any cost" to a more nuanced approach to valuations.Īll of this adds up to a difficult market for Splunk stock. Investors are also concerned that inflation may cause the Federal Reserve to raise interest rates sooner and faster than previously thought. Growth stocks have seen a sharp reversal over the past week as investors weigh multiple market conditions.įirst, the Federal Reserve has begun the process of tapering its asset purchases. The stock is down nearly 32% year-to-date and 27% over the past 30 days. Splunk stock currently trades under $114. (See Analysts’ Top Stocks on TipRanks) Splunk Stock Price Decline
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