Splunk (SPLK) Financial Report Summaries

Risks

• Our business model may not be successful and may not accomplish our business and financial objectives, which could negatively impact our operating results.
• Our operating results may fluctuate significantly and our past operating results may not be a good indication of future performance.
• If we fail to effectively manage our growth, our business and operating results could be adversely affected.
• Actions that we are taking to restructure our business in alignment with our strategic priorities may not be as effective as anticipated.
• We have a history of losses, and we may not be profitable in the future.
• Our cloud services require costly and continual infrastructure investments, and if our cloud services are not successful, our business could be adversely affected.
• If we are unable to attract and retain leadership and key personnel, our business could be adversely affected.
• We have in the past made and may in the future make acquisitions, strategic investments, divestitures and other transactions that could require significant management attention, disrupt our business, fail to achieve our strategic objectives, dilute stockholder value or negatively impact our results of operations.
• Economic uncertainties or downturns could materially adversely affect our business.
• We face intense competition in our markets, and we may be unable to compete effectively against our current and future competitors.
• If our new and existing offerings and product enhancements do not achieve sufficient market acceptance, our financial results and competitive position will suffer.
• The extent to which the ongoing COVID-19 pandemic will continue to impact our business, results of operations and cash flows will depend on future developments, which are highly uncertain and difficult to predict.
• We are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate the controls.
• If customers do not expand their use of our offerings beyond the current predominant use cases, our ability to grow our business and operating results may be adversely affected.
• Our business and growth depend substantially on customers entering into, renewing, upgrading and expanding their term licenses, agreements for cloud services and maintenance and support agreements with us. Any decline in our customer renewals, upgrades or expansions could adversely affect our future operating results.
• We employ multiple and evolving pricing models, which subject us to various pricing and licensing challenges that could make it difficult for us to derive value from our customers and may adversely affect our operating results.
• Our sales cycle is long and unpredictable, particularly with respect to large customers, and our sales efforts require considerable time and expense.
• Our international sales and operations subject us to additional risks and challenges that can adversely affect our business operations and financial results.
• Our sales to public sector customers are subject to a number of additional challenges and risks.
• Incorrect or improper implementation or use of our software could result in customer dissatisfaction, customer data loss or corruption and negatively affect our business, operations, financial results and growth prospects.
• If we or our third-party service providers experience a security breach or incident, including supply chain attacks, or unauthorized parties otherwise obtain access to our customers’ data, our data, or our cloud services, our offerings may be perceived as not being secure, our reputation may be harmed, demand for our offerings may be reduced, and we may incur significant liabilities.
• Interruptions or performance problems associated with our technology and infrastructure, and our reliance on Software-as-a-Service (“SaaS”) technologies from third parties, may adversely affect our business operations and financial results.
• Real or perceived errors, failures or bugs in our offerings could adversely affect our financial results and growth prospects.
• We are subject to a number of legal requirements, contractual obligations and industry standards regarding security, data protection, and privacy, and any failure to comply with these requirements, obligations or standards could have an adverse effect on our reputation, business, financial condition and operating results.
• Failure to protect our intellectual property rights could adversely affect our business and our brand.
• We have been, and may in the future be, subject to intellectual property rights claims by third parties, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies.
• If we are not able to maintain and enhance our brand, our business and operating results may be adversely affected.
• Our use of “open source” software could negatively affect our ability to sell our offerings and subject us to possible litigation, and our participation in open source projects may impose unanticipated burdens or restrictions.
• We increasingly rely on third-party providers of cloud infrastructure services to deliver our offerings to users on our platform, and any disruption of or interference with our use of these services could adversely affect our business.
• If we are unable to maintain successful relationships with our partners, and to help our partners enhance their ability to independently sell and deploy our offerings, our business operations, financial results and growth prospects could be adversely affected.
• Our future performance depends in part on proper use of our community website, Splunkbase, expansion of our developer network, and support from third-party software developers.
• If poor advice or misinformation is spread through our community website, Splunk Answers, users of our offerings may experience unsatisfactory results from using our offerings, which could adversely affect our reputation and our ability to grow our business.
• Servicing our debt, including the Notes, requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.
• Our current and future indebtedness, including the Notes, may limit our operating flexibility or otherwise affect our business.
• Transactions relating to the Notes may affect the trading price of our common stock.
• We are subject to counterparty risk with respect to the Capped Calls.
• We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.
• Our ability to use our net operating losses and tax credits to offset future taxable income and tax may be subject to certain limitations.
• Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added, withholding, or similar taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our financial results.
• We could be subject to additional tax liabilities.
• Our stock price has been volatile, may continue to be volatile and may decline regardless of our financial performance.
• Natural disasters, climate change and other events beyond our control could harm our business.
• Changes in accounting pronouncements and other financial and nonfinancial reporting standards may negatively impact our financial results.
• The requirements of being a public company and a growing and increasingly complex organization may strain our resources, and divert management’s attention.
• Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.