Splunk (SPLK) 8-K Condensed Consolidated Statements of Operations

Exhibit 99.1

SPLUNK INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Three Months Ended						Three Months Ended						Three Months Ended
	April 30, 2017						July 31, 2017						October 31, 2017						January 31, 2018
	Restated for ASC 606			Previously Reported			Restated for ASC 606			Previously Reported			Restated for ASC 606			Previously Reported			Restated for ASC 606			Previously Reported
Revenues
License	$	102,562		$	116,726		$	147,231		$	142,851		$	193,810		$	179,829		$	297,699		$	254,298
Maintenance and services	124,206			125,722			132,993			137,113			148,679			148,824			161,952			165,425
Total revenues	226,768			242,448			280,224			279,964			342,489			328,653			459,651			419,723
Cost of revenues
License	2,928			2,928			3,159			3,159			3,013			3,013			4,298			4,298
Maintenance and services	55,235			55,235			56,717			56,717			61,154			61,154			69,905			69,905
Total cost of revenues	58,163			58,163			59,876			59,876			64,167			64,167			74,203			74,203
Gross profit	168,605			184,285			220,348			220,088			278,322			264,486			385,448			345,520
Operating expenses
Research and development	71,298			71,298			71,774			71,774			74,080			74,080			83,962			83,962
Sales and marketing	173,461			173,948			186,637			191,284			198,266			205,364			219,512			237,821
General and administrative	36,496			36,496			39,139			39,139			35,857			35,857			47,651			47,651
Total operating expenses	281,255			281,742			297,550			302,197			308,203			315,301			351,125			369,434
Operating income (loss)	(112,650		)	(97,457		)	(77,202		)	(82,109		)	(29,881		)	(50,815		)	34,323			(23,914		)
Interest and other income (expense), net	(1,136		)	(1,136		)	(1,038		)	(1,038		)	(19		)	(19		)	(1,258		)	(1,258		)
Income (loss) before income taxes	(113,786		)	(98,593		)	(78,240		)	(83,147		)	(29,900		)	(50,834		)	33,065			(25,172		)
Income tax provision (benefit)	1,338			1,338			353			353			(232		)	(232		)	(102		)	(102		)
Net income (loss)	$	(115,124	)	$	(99,931	)	$	(78,593	)	$	(83,500	)	$	(29,668	)	$	(50,602	)	$	33,167		$	(25,070	)
Net income (loss) per share
Basic	$	(0.84	)	$	(0.73	)	$	(0.57	)	$	(0.60	)	$	(0.21	)	$	(0.36	)	$	0.23		$	(0.18	)
Diluted	$	(0.84	)	$	(0.73	)	$	(0.57	)	$	(0.60	)	$	(0.21	)	$	(0.36	)	$	0.23		$	(0.18	)
Weighted-average shares used in computing net income (loss) per share
Basic	137,785			137,785			139,063			139,063			140,413			140,413			142,074			142,074
Diluted	137,785			137,785			139,063			139,063			140,413			140,413			147,047			142,074

Restated results reflect the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on February 1, 2018.

Splunk Inc. | www.splunk.com

SPLUNK INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	April 30, 2017						July 31, 2017						October 31, 2017						January 31, 2018
	Restated for ASC 606			Previously Reported			Restated for ASC 606			Previously Reported			Restated for ASC 606			Previously Reported			Restated for ASC 606			Previously Reported
Assets
Current assets
Cash and cash equivalents	$	466,427		$	466,427		$	419,810		$	419,810		$	393,314		$	393,314		$	545,947		$	545,947
Investments, current	620,805			620,805			663,737			663,737			665,075			665,075			619,203			619,203
Accounts receivable, net	179,404			171,260			213,754			208,082			270,318			264,497			396,413			391,799
Prepaid expenses and other current assets	44,864			44,864			49,412			49,412			44,545			44,545			70,021			70,021
Deferred commissions, current	32,747			—			36,147			—			41,459			—			52,451			—
Total current assets	1,344,247			1,303,356			1,382,860			1,341,041			1,414,711			1,367,431			1,684,035			1,626,970
Investments, non-current	5,000			5,000			5,000			5,000			5,000			5,000			5,375			5,375
Property and equipment, net	165,356			165,356			161,954			161,954			161,249			161,249			160,880			160,880
Intangible assets, net	35,022			35,022			34,577			34,577			52,434			52,434			48,142			48,142
Goodwill	124,642			124,642			138,681			138,681			161,382			161,382			161,382			161,382
Deferred commissions, non-current	27,480			—			27,790			—			30,464			—			37,920			—
Other assets	25,210			25,210			22,901			22,901			28,284			28,284			41,711			41,711
Total assets	$	1,726,957		$	1,658,586		$	1,773,763		$	1,704,154		$	1,853,524		$	1,775,780		$	2,139,445		$	2,044,460
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	8,239		$	8,239		$	8,984		$	8,984		$	12,409		$	12,409		$	11,040		$	11,040
Accrued compensation	89,104			89,104			93,843			93,843			115,733			115,733			145,365			145,365
Accrued expenses and other liabilities	73,761			72,107			89,051			84,002			79,296			74,680			84,631			77,160
Deferred revenue, current	336,101			469,072			351,799			482,196			382,682			516,401			489,913			635,253
Total current liabilities	507,205			638,522			543,677			669,025			590,120			719,223			730,949			868,818
Deferred revenue, non-current	116,470			156,720			117,116			167,004			126,780			185,712			178,792			269,954
Other liabilities, non-current	99,610			99,610			100,163			100,163			99,140			99,140			98,383			98,383
Total non-current liabilities	216,080			256,330			217,279			267,167			225,920			284,852			277,175			368,337
Total liabilities	723,285			894,852			760,956			936,192			816,040			1,004,075			1,008,124			1,237,155
Stockholders’ equity
Common stock	138			138			140			140			141			141			143			143
Accumulated other comprehensive income (loss)	(3,589		)	(3,589		)	(1,349		)	(1,349		)	(2,074		)	(2,074		)	156			156
Additional paid-in capital	1,887,900			1,887,900			1,973,386			1,973,386			2,028,455			2,028,455			2,086,893			2,086,893
Accumulated deficit	(880,777		)	(1,120,715		)	(959,370		)	(1,204,215		)	(989,038		)	(1,254,817		)	(955,871		)	(1,279,887		)
Total stockholders’ equity	1,003,672			763,734			1,012,807			767,962			1,037,484			771,705			1,131,321			807,305
Total liabilities and stockholders’ equity	$	1,726,957		$	1,658,586		$	1,773,763		$	1,704,154		$	1,853,524		$	1,775,780		$	2,139,445		$	2,044,460

Restated results reflect the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on February 1, 2018.

Splunk Inc. | www.splunk.com

SPLUNK INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended						Three Months Ended						Three Months Ended						Three Months Ended
	April 30, 2017						July 31, 2017						October 31, 2017						January 31, 2018
	Restated for ASC 606			Previously Reported			Restated for ASC 606			Previously Reported			Restated for ASC 606			Previously Reported			Restated for ASC 606			Previously Reported
Cash flows from operating activities
Net loss	$	(115,124	)	$	(99,931	)	$	(78,593	)	$	(83,500	)	$	(29,668	)	$	(50,602	)	$	33,167		$	(25,070	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	9,103			9,103			10,813			10,813			10,123			10,123			10,902			10,902
Amortization of deferred commissions	10,317			—			10,336			—			12,156			—			13,844			—
Amortization of investment premiums (accretion of discounts)	217			217			125			125			31			31			(114		)	(114		)
Stock-based compensation	90,055			90,055			92,367			92,367			84,111			84,111			91,930			91,930
Deferred income taxes	101			101			(967		)	(967		)	(1,811		)	(1,811		)	(2,145		)	(2,145		)
Non-cash facility exit adjustment	—			—			—			—			(5,191		)	(5,191		)	—			—
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net	66,056			67,021			(34,350		)	(36,822		)	(56,564		)	(56,415		)	(126,095		)	(127,302		)
Prepaid expenses and other assets	(7,057		)	(7,057		)	(826		)	(826		)	(618		)	(618		)	(37,110		)	(37,110		)
Deferred commissions	(10,276		)	—			(14,046		)	—			(20,142		)	—			(32,292		)	—
Accounts payable	714			714			1,249			1,249			2,956			2,956			(1,510		)	(1,510		)
Accrued compensation	(10,988		)	(10,988		)	4,724			4,724			21,890			21,890			28,858			28,858
Accrued expenses and other liabilities	(7,905		)	(8,210		)	16,012			12,617			(5,533		)	(5,100		)	7,393			4,538
Deferred revenue	16,145			333			16,344			23,408			40,547			52,913			159,243			203,094
Net cash provided by operating activities	41,358			41,358			23,188			23,188			52,287			52,287			146,071			146,071
Cash flows from investing activities
Purchases of investments	(122,473		)	(122,473		)	(218,224		)	(218,224		)	(177,207		)	(177,207		)	(127,858		)	(127,858		)
Maturities of investments	163,065			163,065			175,200			175,200			175,745			175,745			173,475			173,475
Acquisitions, net of cash acquired	—			—			(17,223		)	(17,223		)	(42,127		)	(42,127		)	—			—
Purchases of property and equipment	(5,605		)	(5,605		)	(2,908		)	(2,908		)	(5,418		)	(5,418		)	(6,572		)	(6,572		)
Other investment activities	—			—			—			—			—			—			(375		)	(375		)
Net cash provided by (used in) investing activities	34,987			34,987			(63,155		)	(63,155		)	(49,007		)	(49,007		)	38,670			38,670
Cash flows from financing activities
Proceeds from the exercise of stock options	1,487			1,487			486			486			501			501			1,701			1,701
Proceeds from employee stock purchase plan	—			—			19,282			19,282			—			—			14,762			14,762
Taxes paid related to net share settlement of equity awards	(32,462		)	(32,462		)	(26,647		)	(26,647		)	(29,542		)	(29,542		)	(49,179		)	(49,179		)
Repayment of financing lease obligation	(317		)	(317		)	(485		)	(485		)	(497		)	(497		)	(509		)	(509		)
Net cash used in financing activities	(31,292		)	(31,292		)	(7,364		)	(7,364		)	(29,538		)	(29,538		)	(33,225		)	(33,225		)
Effect of exchange rate changes on cash and cash equivalents	28			28			714			714			(238		)	(238		)	1,117			1,117
Net increase (decrease) in cash and cash equivalents	45,081			45,081			(46,617		)	(46,617		)	(26,496		)	(26,496		)	152,633			152,633
Cash and cash equivalents at beginning of period	421,346			421,346			466,427			466,427			419,810			419,810			393,314			393,314
Cash and cash equivalents at end of period	$	466,427		$	466,427		$	419,810		$	419,810		$	393,314		$	393,314		$	545,947		$	545,947

Restated results reflect the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which we adopted on February 1, 2018.

Splunk Inc. | www.splunk.com

SPLUNK INC.

Non-GAAP financial measures and reconciliations

To supplement Splunk’s condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), Splunk provides investors with certain non-GAAP financial measures, including non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss) and non-GAAP net income (loss) per share (collectively the “non-GAAP financial measures”). These non-GAAP financial measures exclude all or a combination of the following (as reflected in the following reconciliation tables): expenses related to stock-based compensation and related employer payroll tax, amortization of acquired intangible assets, adjustments related to a financing lease obligation, adjustments related to facility exits and acquisition-related adjustments, including the partial release of the valuation allowance due to acquisitions. The adjustments for the financing lease obligation are to reflect the expense Splunk would have recorded if its build-to-suit lease arrangement had been deemed an operating lease instead of a financing lease and is calculated as the net of actual ground lease expense, depreciation and interest expense over estimated straight-line rent expense. The non-GAAP financial measures are also adjusted for Splunk's estimated tax rate on non-GAAP income (loss). To determine the annual non-GAAP tax rate, Splunk evaluates a financial projection based on its non-GAAP results. The annual non-GAAP tax rate takes into account other factors including Splunk's current operating structure, its existing tax positions in various jurisdictions and key legislation in major jurisdictions where Splunk operates. The non-GAAP tax rate applied to fiscal 2018 was 27%. In addition, non-GAAP financial measures include free cash flow, which represents cash from operations less purchases of property and equipment. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Splunk uses these non-GAAP financial measures for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. Splunk believes that these non-GAAP financial measures provide useful information about Splunk’s operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. In addition, these non-GAAP financial measures facilitate comparisons to competitors’ operating results.

Splunk excludes stock-based compensation expense because it is non-cash in nature and excluding this expense provides meaningful supplemental information regarding Splunk’s operational performance and allows investors the ability to make more meaningful comparisons between Splunk’s operating results and those of other companies. Splunk excludes employer payroll tax expense related to employee stock plans in order for investors to see the full effect that excluding that stock-based compensation expense had on Splunk’s operating results. These expenses are tied to the exercise or vesting of underlying equity awards and the price of Splunk’s common stock at the time of vesting or exercise, which may vary from period to period independent of the operating performance of Splunk’s business. Splunk also excludes amortization of acquired intangible assets, adjustments related to facility exits, acquisition-related costs, including the partial release of the valuation allowance due to acquisitions, and makes adjustments related to a financing lease obligation from its non-GAAP financial measures because these are considered by management to be outside of Splunk’s core operating results. Accordingly, Splunk believes that excluding these expenses provides investors and management with greater visibility to the underlying performance of its business operations, facilitates comparison of its results with other periods and may also facilitate comparison with the results of other companies in its industry. Splunk considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities, including investing in its business, making strategic acquisitions and strengthening its balance sheet.

There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by Splunk’s competitors and exclude expenses that may have a material impact upon Splunk’s reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in Splunk’s business and an important part of the compensation provided to Splunk’s employees. The non-GAAP financial measures are meant to supplement and be viewed in conjunction with GAAP financial measures.

The following tables reconcile Splunk’s GAAP results to Splunk’s non-GAAP results included in this press release.

Splunk Inc. | www.splunk.com

SPLUNK INC.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

(Unaudited)

	Three Months Ended						Three Months Ended						Three Months Ended						Three Months Ended
	April 30, 2017						July 31, 2017						October 31, 2017						January 31, 2018
	Restated for ASC 606			Previously Reported			Restated for ASC 606			Previously Reported			Restated for ASC 606			Previously Reported			Restated for ASC 606			Previously Reported
GAAP gross margin	74.4		%	76.0		%	78.6		%	78.6		%	81.3		%	80.5		%	83.9		%	82.3		%
Stock-based compensation and related employer payroll tax	3.7			3.5			3.1			3.1			2.4			2.4			2.0			2.2
Amortization of acquired intangible assets	1.2			1.1			1.0			1.0			0.8			0.9			0.9			1.0
Adjustments related to financing lease obligation	(0.1		)	(0.1		)	(0.1		)	(0.1		)	(0.1		)	(0.1		)	(0.1		)	(0.1		)
Non-GAAP gross margin	79.2		%	80.5		%	82.6		%	82.6		%	84.4		%	83.7		%	86.7		%	85.4		%
GAAP operating income (loss)	$	(112,650	)	$	(97,457	)	$	(77,202	)	$	(82,109	)	$	(29,881	)	$	(50,815	)	$	34,323		$	(23,914	)
Stock-based compensation and related employer payroll tax	94,196			94,196			94,765			94,765			86,289			86,289			94,862			94,862
Amortization of acquired intangible assets	2,693			2,693			4,241			4,241			3,564			3,564			4,290			4,290
Adjustments related to financing lease obligation	(2,244		)	(2,244		)	(2,205		)	(2,205		)	(2,205		)	(2,205		)	(2,206		)	(2,206		)
Acquisition-related costs	—			—			—			—			643			643			—			—
Adjustments related to facility exits	—			—			—			—			(5,191		)	(5,191		)	—			—
Non-GAAP operating income (loss)	$	(18,005	)	$	(2,812	)	$	19,599		$	14,692		$	53,219		$	32,285		$	131,269		$	73,032
GAAP operating margin	(49.7		)%	(40.2		)%	(27.6		)%	(29.3		)%	(8.7		)%	(15.5		)%	7.5		%	(5.7		)%
Stock-based compensation and related employer payroll tax	41.6			38.8			33.9			33.8			25.1			26.3			20.7			22.6
Amortization of acquired intangible assets	1.2			1.1			1.5			1.5			1.0			1.1			0.9			1.0
Adjustments related to financing lease obligation	(1.0		)	(0.9		)	(0.8		)	(0.8		)	(0.6		)	(0.7		)	(0.5		)	(0.5		)
Acquisition-related costs	—			—			—			—			0.2			0.2			—			—
Adjustments related to facility exits	—			—			—			—			(1.5		)	(1.6		)	—			—
Non-GAAP operating margin	(7.9		)%	(1.2		)%	7.0		%	5.2		%	15.5		%	9.8		%	28.6		%	17.4		%
GAAP net income (loss)	$	(115,124	)	$	(99,931	)	$	(78,593	)	$	(83,500	)	$	(29,668	)	$	(50,602	)	$	33,167		$	(25,070	)
Stock-based compensation and related employer payroll tax	94,196			94,196			94,765			94,765			86,289			86,289			94,862			94,862
Amortization of acquired intangible assets	2,693			2,693			4,241			4,241			3,564			3,564			4,290			4,290
Adjustments related to financing lease obligation	(2,244		)	(2,244		)	(2,205		)	(2,205		)	(2,205		)	(2,205		)	(2,206		)	(2,206		)
Acquisition-related costs	—			—			—			—			643			643			—			—
Adjustments related to facility exits	—			—			—			—			(5,191		)	(5,191		)	—			—
Interest expense related to the financing lease obligation	2,114			2,114			2,106			2,106			2,094			2,094			2,083			2,082
Partial release of the valuation allowance due to acquisition	—			—			(546		)	(546		)	(1,994		)	(1,994		)	—			—
Income tax effects related to non-GAAP adjustments	5,935			1,833			(4,681		)	(3,356		)	(13,166		)	(7,515		)	(35,769		)	(20,043		)
Non-GAAP net income (loss)	$	(12,430	)	$	(1,339	)	$	15,087		$	11,505		$	40,366		$	25,083		$	96,427		$	53,915
Non-GAAP net income (loss) per share
Basic	$	(0.09	)	$	(0.01	)	$	0.11		$	0.08		$	0.29		$	0.18		$	0.68		$	0.38
Diluted	$	(0.09	)	$	(0.01	)	$	0.11		$	0.08		$	0.28		$	0.17		$	0.66		$	0.37
Weighted-average shares used in computing non-GAAP net income (loss) per share
Basic	137,785			137,785			139,063			139,063			140,413			140,413			142,074			142,074
Diluted	137,785			137,785			142,852			142,852			144,415			144,415			147,047			147,047

Splunk Inc. | www.splunk.com

The following table reconciles GAAP net income (loss) per share to non-GAAP net income (loss) per share. For certain financial periods, GAAP net income (loss) per share to non-GAAP net income (loss) per share was not reconciled due to the difference in the number of shares used to calculate basic and diluted weighted-average shares of common stock.

	Three Months Ended						Three Months Ended
	April 30, 2017						January 31, 2018
	Restated for ASC 606			Previously Reported			Restated for ASC 606
GAAP net income (loss) per share	$	(0.84	)	$	(0.73	)	$	0.23
Stock-based compensation and related employer payroll tax	0.69			0.69			0.65
Amortization of acquired intangible assets	0.02			0.02			0.03
Adjustments related to financing lease obligation	(0.02		)	(0.02		)	(0.02		)
Interest expense related to the financing lease obligation	0.02			0.02			0.01
Income tax effects related to non-GAAP adjustments	0.04			0.01			(0.24		)
Non-GAAP net income (loss) per share	$	(0.09	)	$	(0.01	)	$	0.66

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