Splunk SPLK is set to report second-quarter fiscal 2021 results on Aug 26.
For the quarter, the Zacks Consensus Estimate for loss has remained steady at 32 cents over the past 30 days, indicating a decline from earnings of 30 cents per share reported in the year-ago quarter.
For second-quarter fiscal 2021, Splunk expects revenues of roughly $520 million, indicating an increase of 0.6% from the year-ago reported figure. The consensus mark for revenues currently stands at $520.9 million, suggesting an increase of 0.85% from the year-ago quarter’s reported figure.
Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 40.8%.
Let’s see how things have shaped up for this announcement.
Splunk Inc. Price and EPS Surprise
Key Factors to Consider
Splunk’s portfolio strength has not only helped it win new customers but also expanded its existing customer base. Solid demand for the company’s enterprise, security and cloud solutions is expected to have driven the top line in the to-be-reported quarter.
Additionally, Splunk’s solid partner base, comprising the likes of Amazon Web Services (AWS), Accenture, and Cisco has been a key catalyst. Integration of its products in partner solutions is expected to have enhanced the company’s exposure, particularly among enterprise customers.
The top line is expected to reflect the impact of an expanded customer base, courtesy of growth in its partner ecosystem. As of Apr 30, the company’s customers included more than 90 of the Fortune 100 companies.
Cloud revenues soared 80.7% from the year-ago quarter to $112.2 million in the last-reported quarter. The momentum is expected to have continued in the second quarter on the back of increased utilization of cloud-based services.
Moreover, Splunk has been transitioning to a renewable model, which is expected to have driven the top line. Management discontinued new perpetual license offerings for fiscal year 2021.
However, the transition is expected to have negatively impacted operating cash flow. Additionally, increasing cloud revenues in the product mix are expected to have kept margins under pressure in the to-be-reported quarter.
Q2 Development
On May 5, Splunk announced a new strategic partnership with Alphabet GOOGL owned Google to help organizations drive actionable insights from their data and enable fast decisions with real-time visibility across the enterprise.
Splunk Cloud will soon be available on Google Cloud to help customers unlock the value of their data and provide increased flexibility for harnessing the power of the Splunk Data-to-Everything Platform.
What Our Model Says
According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Splunk has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming release.
Ambarella, Inc. AMBA has an Earnings ESP of +100.00% and sports a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bill.com Holdings, Inc. BILL has an Earnings ESP of +10.45% and a Zacks Rank #3.
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