SPLK - Earnings call transcript Q4 2019

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Splunk Incorporated Fourth Quarter 2019 Financial Results Conference Call. At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host Mr. and of Treasurer Relations. Corporate Tinsley, Vice Investor President Ken Sir, begin. you may

Ken Tinsley

We afternoon you Doug me Conte. it release is Thank today Tom. our of everyone. the Merritt a close after and Dave posted are Great, and today good With market press call on and website. on issued the

based filed Those and to factors made not information. or SEC, actual are this today, from and XXXX; any after statements, call website. broadcast the an statements. fiscal may forward-looking that live products update conference we of will and cause and be financial and presented events results with or our press On our those replay contain during forward-looking be contained our audio operating as call, is today's expectations well including transaction available refer investments, to us, customers, webcast. markets, materially. as risks products, our we will including reflect current accurate And this statements. these full best revise expectations call known model on services, of regarding and Please today, resulting trends our being Additionally, our If our trends deal in via is from revenue factors being on information this results we forward-looking first statements These our investments; disclaim differ investments obligation year the size to trends actual subscription this the reviewed and our may technologies. in international call, expectations, following planned to we for X-K forecast and as documents documents judgment and guidance, and statements revenue contain release. with the currently and quarter making including and filed may other differ our These call regarding mix,

in release the financial let it of accordance not non-GAAP website. non-GAAP in principles. that, our measures, over with generally on which and discuss accounting prepared Doug. press A reconciliation and are turn accepted to provided GAAP also will me With We is results

Doug Merritt

Thank our past our year where and opportunity more communities fiscal year from XXXX partner I'm back kickoff and strategizing really the We're ever our you, about going delivery annual and ahead. field celebrating and tremendous around our proud success are into am Ken. execution I of FYXXXX. our confident than just over position the sales

growth over a comes $XXX year, and we fantastic XX% revenue. Our in last where energy in delivered up million revenue, QX software XX% from total

billion, the year, XX,XXX and with revenue For than year $X.X full totaled we exited customers. up XX% more year-over-year, the

best combination that and from growing around on-prem number continues of growth way platform a in consume their customers, world. Splunk success. enables expand momentum them adopting by seeing We're of customers in the their to Our continued international the deployments the and existing our come letting cloud, evidenced both new the

across events any And Data search and data, our business things performance, changing to technologies, that bring thrive skill in scale, that our of set analytics: simultaneously from to stream focusing massive Fabric you to of and opening including strategy monitoring no your positive larger the able to portfolio is to our as refine which year, you bear. metrics you'll delivered and really Search, they're constant. Unlike Comp regardless data amounts while and inside Stream data Data Two Splunk DFS, or DFS, a customers their excited language right to across existing and that processing chaos better DSP users or complexity location things the making on embrace our integrating where change Splunk matter sources well the data and The landscape users. within number their as are Splunk at capabilities. empower it find it our happen adjust moves where customers data of data DSP, world and where can the to make overwhelmingly Over The we’ve Cloud to the Processor, decision Splunk Enterprise feedback machine questions users new a lives. structure with ask aperture we both do we're around allow by before with or an our use the product magic capabilities, XX data. received as predictive Splunk monitoring access next-gen to data and our that know natural to announcements. not and have of index update technical is The improved other or products even will non-Splunk about the deploy with learning analytics stream; their having of you fiscal the past empowers without insights ever landscape solutions. mobile first with ease of existing

Our application compliance the operations the business security goal around analytics Internet things. of and platform, to solving and delivery, data IT customers' as ubiquitous fraud the remains challenges and data same become as our well

from a customers’ is number and machine wins a highlight approach. help shift based QX. I'd to they to and Our we to as success uniquely go our are priority learning an company one key poised few like through analytics

the across Splunk can data their Let's largest in manual The IT. that on enables to with used opportunity partners Splunk which Automotive California Health, of expanded The to data their public helped administers SHI, they'll different spent organization out this community application them on IT of their in colleges. Queensland, data, operations, already Enterprise, Australia saving electronic activity help troubleshooting. monitor States, they security, wide purchased customer, several Enterprise Splunk uses across of use enterprise system organization XXX security root deal. better perform monitoring and of monitor units the and gives its education services the State platform. units. so Cox With the share for higher reduce expansion Longtime cause time across in colleges and act is who the business Automotive records service Cloud analytics health monitor business also Queensland our and United Health to Splunk at predict the use the expanded the security. issues Cox drive analysis help on for Special Colleges, us instrumental were to systems integrated Queensland Community while time Splunk money platform shut an their outages. degradation and ITSI. medical and start IT

major on to are invite next all to support focused allows our ITSI. week a a ES the to in they Because the now Fortune no technology an to to Splunk WWF, Moving and a global different globe, on Splunk the United Cloud with and all APAC. countries. to of EMEA Longtime environment at FIFA, conserve a use on and the at and body oil chose purchasing NASDAQ our the best of because uses detection their to us they and heart across attending Splunk security as single operations. Steel around on to making Splunk Santos what platform UBA chose use because their products systems. WWF be a intelligence. forward over their use Enterprise, security ES their at meeting from or real-time Australian longtime XX and us to Fund, all XX who visit around and has extended ES Splunk will Cloud of the they who new international producer, who internal gone tacked the data is the customers Enterprise any already gas partners visibility across metals Splunk monitoring and be Splunk business wanted Limited and Enterprise, can many move of customer matter who standardized of wide include the please security help and football, Enterprise cyber company, Santos, in Customers wider their Splunk you a range They and Security I by to customer Splunk their Dynamics and organization Wildlife and Splunk effort threat of RSA to the the come risk. steel competition leveraging look Splunk a Steel that several data which recycling and works investment This initiative expansion abroad, source. using protect across the real-time ES. our platform Cloud Splunk new Splunk security, data purchased of address customer, support platform their gain in States is and in on competition increase chose governing Enterprise, World Splunk all optimize over of business to customers booth. ITSI, operations. units. expanded SOC ingest found the cases Cloud, of Dynamics

their be keep spent who the incidents will Splunk campus. their Pacific is IoT for platforms. that the makes wide they can highlight when purchased Splunk IoT add time determine there and has to and us several security the Bertelsmann The improve how cases. and addition troubleshooting IT in front, platform. to their Splunk can't ES, Splunk help and on to To their of of is to company a media impact IoT for use PugetSound and exploring service The data products. Enterprise, at Company, Splunk the IT range Security university customer IT now Illinois an the across Northwest, and cases use utilities company use Arlo, using University New Smart Splunk use data using on is IoT Home ITSI of and the real-time areas. provide actively home wide Energy, costs Arlo security expanded on other Cloud, can eye reduce critical it in streaming around of and to Cloud Enterprise Splunk their their this with monitoring and campus threat simple support connected detection expanded student Splunk customers experience

integrations PugetSound expansion, cost. data. will instrumental of to their its a be this operations performance Data, understanding their also industrial at their With order IoT data who Splunk and deal. systems from with partners to in thanks Arcus and improve gain in better will for Huge AWS data are their using control our PugetSound analyze

which expansion partners focus of it ecosystem, and continued our I'm sales Accenture, I Symantec want with year from partners onto was our particular, excited adoption to for our partner sponsoring within In of momentum a an incredible ecosystem, thank continued for strategic course Moving AWS, key their kickoff: by is us. premiere our Cisco, the and and support.

I'm and In the across in the take infrastructure. quarter security customers partners proud announced fiscal excited In driving, we're integrated our terrific so initiatives with Symantec's our part defense provides newly platform, cyber and summary, addition initiatives Splunk our a team. it to views joint XXXX to which finish we're to of equally entire like consolidated was

We of I'd to now investing data on-prem who journey of adoption you. We scale in expanding the Dave are we it aggressively. opportunity uniquely delivering value their and capture customers Splunk CFO, like are to to Dave, in call are platform cloud. for positioned our and over and We're are analytics growth. over tremendous our their both were the pursuing front Conte. us our early the high to to for in as hand and

Dave Conte

thanks Good report QX were year call. last which afternoon million, quarter of exceptional increase XX% to Fourth QX, joining a year. I'm everyone. Thanks right, All revenues the for over caps Doug. Splunk. a pleased $XXX an for strong

year, was over total of XX% revenue QX For million over cloud, QX license were up with full year. up for full which reflecting were strong $XXX bookings XX% over million, the XX% were billion, from total performance year. the full XX% last year, the $X.X XX% total year. $XXX million last year the prior and RPO $X.X is and software revenues this Cloud ended billion, and year, billion, software last the XXXX. year fiscal and revenues revenues, of of year up up $XX total over up our $X.X We in

our never execution, pleased we're satisfied. we As are as with

focused and we XXXX our XXX and that, customers new To a have portfolio, and establish coverage field with added a overall market to customers added our nearly Splunk in heard Splunk continue ending you've QX, more for we Cloud. our in unique the standard than groups, as our we product full investments analytics customers for over we our globally. XX,XXX year us data will say, customers As opportunity

programs to are commitments our and continued adoption. XXX platform Our In XXX continuing year. X-figure of packaging pricing our solutions as orders in as well Splunk versus innovations QX recorded we and product around accelerating last QX,

contribution fiscal the revenue This international we For year, Splunk International as XXXX. along percentage was XX in expect the orders teams XXX Full year revenues. see XX% versus XX total booked continue all international our of longer-term during year X-figure X-figure of of contribute their to adoption to greater teams and QX full operations customers we our annual a orders. XX% path. included help to contributed

and Moving represented ROI, the adoption. for to growing X% X% and and awareness global services compelling large by Overall, market services, are our of our QX scale product the suite professional education driving complimented a full in revenues increased and year. in

Turning and $XXX.X as net are to shares. all cloud XX.X%. scale we're share was margin $X.XX was using positive income $XXX.X income average fully our count QX X% million $XXX.X our weighted of operating gross on a per business. year-over-year And margins from the of diluted which results, QX was or million million, XX.X%, overall representing non-GAAP. a share and other up QX realizing basis margin efficiencies point

year, strength of based or million to $X.XX weighted to cash expectations cash was of overall performance. fully ended investments. on margin results $XXX from $XXX million shares. Full For a of free from cash million. income Free cash the above XX.X% the $XXX and flow we top-line share These was million. billion and full flow translate due year count $X.X XXX.X year cash per operations was diluted our nearly Net operations in operating in QX flow our million, share, $XXX the million flow of with $XXX was average and

ahead predominantly on schedule. shift we a significantly QX is As our model described of our call, to renewable

planning were of contracts. mix we and XX% For term a fiscal software for cloud XXXX,

software around year, next for above the adoption, rigor was originally XX% we year. mix the customer With renewable success for our and the target XX% set fiscal

we expect XXXX efforts, of Given the bookings will be our our fiscal XX% of now that effectiveness renewable. software

XXXX momentum the we to year billion non-GAAP continued to based revenue guidance we for to and year. full on we fiscal target are guided finish previously the Turning $X.XX fiscal our XX% $X.X billion, our maintain increasing is business, strong XXXX which from expectation and on margin our operating up the

quarterization QX. fiscal revenues, seasonality you have the past greater particularly XXX can XXXX results, and Looking of in our as at our see caused in

We and weighting in million. the of revenues of the revenues expect year about first approximately of to half in XX% the total at seasonal in the QX impact with largest $XXX remain half we XX% expect back the where

is Our op impacted well. seasonally margin as

you in consistent we a non-GAAP with to X% expect We negative count QX, billion. of in $X historically. ramping strong, at use business our operating a our about then in EPS margin finally position we've you QX the think The average QX especially XXX when seen expect breakeven in trend and loss QX revenue weighted cash an flow of generating for QX capability And operating about should of since share calculations, shares. is be beyond trajectory million

collected impact normalizes, expect term billed Eventually contracts of normalize our will when and of one we in has flow As continued also flow cloud million, of the cash well. I've are flow an near-term, fiscal successful investment model operating for In contracts increments. being a mix before will mentioned year and shift our full software renewable as renewable. in cash capital more as renewable year towards the reflecting contracts to important be cash us. on $XXX transition year an operating about FYXXXX XX% XXXX,

an CapEx build million overall in these we Bay facility with $X.X will Francisco are XXXX XXXX global our evenly growth. important Collectively, the more of and Boulder, $XXX our outs our sites In our expansion and against Splunk the and investment London, spread the These of it. confidence as are our Singapore execute San for expansion global over projects require phase is fiscal doubling where driving fiscal footprint. next Our squarely to investments outlook year need for the for was major ability about than prepare year. projects revenue and in opportunity closing, area updated billion we our our of extraordinary for continue in increasing reflects

success overall execution enhancing Our field customer our product are expansion is and driving our investments capabilities.

drive well it data is questions. the your up fuel Splunk to make that, adoption Thanks and interest. much as With we'll for time we’ll for the strategy pace of we and our to Our working for open customers. platform ubiquitous continue

Operator

[Operator Barclays. your question Our line from you. of Lenschow now line Thank Instructions] first Raimo the from comes is open. Raimo,

Raimo Lenschow

strong from of as year. Congrats through look the for picked it really has you. large-scale I my question increased momentum if the side, and end Thank Doug, year. up first you, go at like the that really

can X-figure bit of like they it other. like they about that for normal for guys up kind Thank are And XX% Dave those of how taking kind are are within are are bring at you what a bit what other And one look just what example little there And little the to customers of amazing. versus from the duration like you. or can a to it’s you – you how do talk example. and like in terms takes puts can talk what then as and one you sounds – customers, RPO about are If using they an doing? growth

Doug Merritt

end-to-end fabric platform company, And to data any been overall this Yeah, monitoring and on we've capability case years, that Phantom that as IT then power our is list and VictorOps for leads data analytics. use analysis lead with across that and schema Raimo. they can many And index this full driving. lost X-figure and been you us key two deals. orchestration through really or specific predictive we've one and in followed start collaboration cases, of usually been or this Thanks, usually eventually the so with – begin and you we've you element we that what get to about to security is now add realize the cohort be power has a a talking or get this capabilities, use they

data XX% I terabytes ago. ingesting their more at Splunk a enough. data they as of still those of fewer, cases. Those week, rolled us phone in our capability years of is organization our there to They're notable platform. this active our to get They tens, success to, using capabilities our were a think now obviously cetera. cases of for the our users are some use the population, cloud feel better goal twenties, on-prem to were or anonymized SKO home taking thousands to At have use for very case that additional and value, that deployment, bunch ROI access hundreds, on end reasonable advantage are of that customers customer X-figure query lean view results, et that but we get and iterated And number in customers, company continue the that. employees, for percentage hundreds have our help of a of and fulfillment, companies across customers time got a to companies XX% out

that and should figure of possible deals, do that lead help wanted eight we to that that seven ultimately So can these out they get to of customers our more and everything that Splunk the value

Raimo Lenschow

Dave…

Dave Conte

We're balance bookings. happy know, a RPO metric been of to deliver in with it's we And comprehensive think a Raimo. talking the has overall It’s proxy certainly as lot about more field our terms because sheet. Hey, the for Dave. that translates obviously the in to results statement the a continued just you income in performance we've

full of about duration duration year. our of year XX in year, up the from duration the In months for terms prior That's XX fiscal about our was full months.

Raimo Lenschow

Perfect, done. thank you. Well

Doug Merritt

Raimo. Thanks,

Dave Conte

Thanks, Raimo.

Operator

open. comes question is next Philip, Winslow Our line from Fargo. your line Wells now the Philip of from

Philip Winslow

adoption just Agreements. large the call of have of and great of how start out, Agreements packaging pricing and sort just guys on get you Kind close through of just year. call customers it Raimo large walk deals. about about contracts. in in whether these of a Unlimited more and the think that's But and the us and the taking of usage the in Unlimited a even when place pricing use let’s just of as EA call the wanted maybe metrics of just EAs EA to there sort success, Are for – pointed you I you to thanks out kind impacting across putting any kind be focus incentives to Obviously of metrics equation. congrats take for sort around concern these my some cases – lot that Hey, it us would on question – pricing larger the year in out thinking drive the it deals? help – these great

Dave Conte

Hey for structured greater the EAAs, have to Phil, just And What almost orders fact than economics capabilities. orders. around do not all are than customers. all clarify X-figure X-figure they're predictive in I it's XX Dave. is XXX want greater really not unlimited the

not. transactions element, our But want And unlimited those some EAA not with nomenclature. large just those everybody, that I of have an synonymous of some to are for do in clarify

Doug Merritt

inverted banding worked customers hard the or with more Splunk two past just apparent available And available sales We sequence unlimited reps bracketing that’s within SKO. and that we very and That little in. guys forward clarity this aware the have that where over or makes that within you at a force different we've it for customer kicks lean bit that's – aware probably the first Phil, make to whole make aware to second three years that third. and

ends So visibility data. annual a that that fee there size assurance economic of would based predictive have they organization, and that get customers to more on a that the is little expect the upper of bit the when finite of

over infrastructure make helping on faster and those reduction separation storage, CPU, think have the total storage you cost at significantly intensity. that we comfortable in footprint – our network customers. compression more TCO ownership, and past I the cost actually All out made and to storage, things XX% scale that query of everywhere make of efficient that years so have of a roughly quality is less more for much response with look of feel overall for cost the get in and you at all from more data and really can couple utilization organizations resulted these independently reducing infrastructure of cheaper when continue and compute – enhancements the

So combination infinite the transparency this We scale. is of I and on Splunk helping to the with on to We're overt now, continued trying on time combined about the which and TCO higher that infer for applications, the think try it value. we've website. customers be our to also that understand to overall provide not helping more faster with to impact big an progress that the our pricing publish we drive thresholding – made

help We've them I will that more think at said, got still helping companies get unlimited are as unlimiteds this what's band of upper the with or an end-to-end as saturation. part of But these to of install feel getting us get is X% platform EAAs confident its below with band. EAA to our Dave more base. or to that That's opportunity as a upper lot data comfortable customers of arenas. well

Philip Winslow

guys. it. thanks appreciate I Great,

Doug Merritt

Thanks, Phil.

Dave Conte

Phil. Thanks,

Operator

Rangan Kash question line your Bank of of is the now America. Kash, [Operator comes line next Instructions] from open. from Our

Kash Rangan

into You've transition Red keep transition more like The this see does in about high company's on wondering barriers level, of a that. rate level, and true focused. companies of state the of there have been you I term tactical talk looks that put not growth. has of model licenses, debate even for little Do thank see landscape limitations at of to the comes target there's lot secondly, a I'm growth they future? been kind on high RPM there. so you. gets basis has up of it keeps SIEM much how want able high me. sustainable, growth attain competitive this logging very through far? congrats to opportunities one it you to comment that the vibrant recognized just it the Congrats have replacement sustainable as vendors. been rate or can on more work the legacy that been so It And Hey, speed, the you Thank into a bit a on [indiscernible] I mind, but you from questions for again. guys. that's any space down and your to the Barchetta downing slow a And rush if to

Dave Conte

and We're of one Dave. all accelerate the obviously It's Kash. which course shifting bridge, would model as be lane transition Hey, towards renewable through drifting we our contracts.

don't song. those Barchetta For are lyrics those of you additional in know, who the Red

a really quarter And you headwind a had transition in – the and Kash, longer million. we when said, last accelerated duration measurements cloud the about about growth, a more because from update full in thing the I on So components like for strong the of of have gave – about that looked cloud. a we we million. year, we we the had the tailwind the duration lot had contribution a there XX We at about terms XX when actually are at headwind we time on question and that and because did call one for an model is sustainable moving, and our of that how various

duration. about XX of said to So cloud a our from million million the about XX headwind math shift and from tailwind

be renewable a to XX, we of now little going like from the okay, much XX when So fast different. take because yields we to to revenue is going how we're that cloud that say, mix forward bit and obviously

our what's revenue clock, that we're of you year estimate stated guess a we I business Again, So early. and XX% think rewind the might translates with well, about, that be our renewable about say would or satisfied XX% into I XX% original really that if And getting to included would cloud. recall software the you yield how growth.

that So bookings fiscal being that early, similarly we software cloud. our year XXXX realized a had about of XX%

a greater the a that's in in embedded to greater become all and a difference look of we when we XX%, guide. but then to So see expect continue forward yield, revenue there to the the result, And is cloud terms percentage. as

about and $X.X long, against billion think think – a in as we what think change RPO early is think innings runway the ultimately, We I you very RPO, here. TAM. it's

Doug Merritt

market honored and automation driven excitement is really is we're estimated dropping TAM. I'll then a fuel piece, security XX on large opportunity these the to competition that we're that of now security Dave's they market help Within can expansion with is addressable seeing customers strength and of still and obviously side that as end-to-end – we And more think outcome add the set for other the than grow. understanding cybersecurity of into move is much I the momentum, that critical. and help have scenarios. more data It's driving continues comments total billion And that our addressable and to total opportunity that's and ultimately that piece the people on lot try to that fulfill

monitoring, that of and investigative SIEM and automation, is analytics lake being ultimately now combination with is the combination monitoring of effective act. and a analyze it’s means which just orchestration, monitor, alerting that collaboration, investigate, really becoming automation routines, once predictive Where redefined. means our and So continuously

means even market seeing we're roadmap and is So that VictorOps accounts, of our group what of SIEM, Enterprise within characteristics other that that blends in exciting driving existing our ES they really security and and a ITSI, others. some playing that generally we’re the part revitalization mean further which Splunk by We've UBA got of Phantom. were

– lead can in SIEM. – or the once we the the what’s in continue market security called So SIEM to that lead

every I of to awareness So revitalizing as people more it TAM continue itself SIEM shift means. and that see months XX get what

Kash Rangan

into Dave as highway don't you the off take Thanks. and congrats the said. lane get one gas foot the Thanks, as pedal

Dave Conte

much. so thanks Kash,

Doug Merritt

in harder one go highway. to the lane Got

Dave Conte

That's right.

Doug Merritt

way. traffic No, the no other

Dave Conte

Thanks, Kash.

Doug Merritt

Thanks, Kash.

Operator

from James. And Turits Michael question is line next from your line Michael, the of Raymond comes now open. our

Michael Turits

think to to mix like off somewhat I'd and on extension evening. Dave, of Kash’s Good of start what – is guys. to question duration. Hey I an

going now said year, is headwind. mix is you’d comps which in previously up, frankly next a So the mix you've expected

even it just I duration not so to the up therefore but duration and to the appears makes whether – on to me or And in next you’re guide reiterating better, headwind? that year either same you’re wanted a you the tailwind a see that be expect

Dave Conte

our priority, the as we increase months their enhances question. is kind the visibility corporate We duration which back now Hey, the spot customer to Dave. from to Michael. renewable. products we all is really to think of ties success. and the Either XX customers Thanks and data. business expect of adoption It’s even one the number we believe for Yes, XX% giving of it their for us value sweet that percentage our ultimately that normalize

contracts, going exclusively we're is rate. our own why not think And which I to fiscal going terms what year. XX be think of to that for next XX I months month sell is So used obviously our constant in model we've that's

Michael Turits

last to and what related another then happens here, year expanded geek duration as question, the And the mostly on of you some the is but move the this into out we when to of of terms come starting Okay. duration beginning for beginning for year, for financials those stuff sorry Does you of kind cross-sell contracts would couple have but of to in upsell? up a and another ability then any create get you of headwind that don't cross-sell upsell opportunity, renewal that the years.

Dave Conte

prepared actually with term about remarks We've one, talk or seen number remain third why of contract rates it their typically. being back of initial in their come customer And anymore. completion we term. advance time. in or don't second our course upsell even Not, for their long the customers contract success often XX% That's of above a

You to trying the second we your like we of like your that to predictability very year that year we of product. back the lock spent might And you. a spent the customers instructive a we'd realized interesting extend year first steering around was Splunk to that We that largest now we're there's us left, year deploying came nothing our displace really recall so for at because and costs. and they in early actually transparent it and one were say

to it's So will it's a enterprise, often relationship. and that early see come typical to across or we say the the customer move success back very when we want continue our expand

Michael Turits

Okay. Thanks David Doug time. of and Thanks [indiscernible] guys. the

Doug Merritt

Thanks, Michael.

Dave Conte

Thanks, Michael. it. I appreciate

Operator

the now Zelnick question Our Brad from Brad comes Credit next your line open. Suisse. from of is line

Brad Zelnick

Excellent, guys. on thanks much and again so great congrats quarter a

Doug Merritt

Thanks, Brad.

Dave Conte

Thanks, Brad.

Brad Zelnick

and the in you and ecosystem? at How – one how, all, all your technology question opportunity news the And partnerships week your has players this space the that My think and you've gotten of think one Phantom? and the players orchestration make legacy for differently analytics absolutely do changes security you does various alignment my this about with if it larger security. seen the competitors by question, acquired of

Doug Merritt

believe portfolio, automation Brad. was question, operations, combination an to this predictive addition but is IT of case, Splunk really operations, The analysis, capability investigation key Great goes with augment action that the operations. we sales but use of Phantom both to and which monitoring marketing security often operations any before operations security obviously,

pillar IT strategy components, the later, in said generalization in of roadmap portfolio important leaned with this a for the really key and take landscape think the saw Fitz year, it and acquisition. advantage our That IT can for the an security of them validating potential our the Phantom So instance. that space I that so sturdy the for the big it's – platform a is player the Rick with on another and is of that year side

the on capture point ends a the the of to agile coordinated to above be all tries intelligence landscape. and to about has talked those ton data. more brain and are the surfaces. and is I needs center more the action the advantage a hundreds vendors on is ridiculously because ensure those layer and nerve XX the security be actual high living et average that to capability use products different adaptable the that attack that vendors. end changing detection it that you – guys view has And with of oriented, think given direct our cetera off as workout, of major defense whole network that in point throw [indiscernible] is Where heterogeneous uniqueness each activity the one know or as trying tend that perimeter dealing And minor landscape of vendors and and constantly the

a that our comfortable make on be will we has to and company firewall products own that super competitors’ on It's almost of think their I make that for and layers the gives hard products, those a owns point going with. a landscape to unique good combination integrate landscape data of to actually that vendor so products Why And feel people surround the right. think be vendor them point status as some human feel perspective to multitude XXX% of to nature. that a able counter that that focus presence our neutral those, with their and us of elegantly different or as a owns confident network is it that would end

So of the into we there's and we like anything layer that's being and at a think else and all complex the really in IT are landscapes forefront, that the abstraction convoluted play and it being IoT or on neutral value you lot the vendor so data. focused security turns

Brad Zelnick

That and products makes What of had sense sales specific sales you your fiscal kick into lot I a comp quick just a off. behaviors be to of could plans incentivizing? in might you terms XXXX Thanks. up, what If just have me. follow and changes

Doug Merritt

Good, good follow on question.

it that amount feel I'm of of at lot is against was So that like reasonable segments this dislocation we’ve last and excited experimenting we that that and more the got tweaking we've field a past the relatively allocation different year tuning year. the of segmentation, a years with segments couple this been against right level

more enhancement an it's done. we've So what of already

promised now are our more very to offerings, And they cloud. our collaboratively benefits are Lot care motion to deeply continue that the as on – engine. do. of we are actually characteristics, internal forward different the that's I contracts. routines and more about a the like – the of with customer into different all to natively very programs sales customer types more we've to key that really teams making out really or ruling teams piece, of success term on customers fulfillment tools. that forward renewal so we been renewable cetera, to lean the on that them component they now and get think has natural We've type our lean it the et integrated Splunk customer. and partners and compensation and And much of think integrated, adoption automation our continued reps same I thoughtful that of the visibility both customers we've the clear On this that that about baked working that They feel ROI team. are been surround our part of And seen different partners on that we've

external the hopeful so lot array the see I'm are keep So continued Splunk groups direction. these across initiatives of given excited how can rates groups a right base, within effective and those expansion of and data complex within in we'll the internal a renewal broad and going teaming partner

Doug Merritt

XX be both it is field, partner not add, remised just employees delivering our months which XX% ecosystem, full early. I’d And and renewable with the our to would congratulate

the of everybody of but to village, model, our for And course, We’re we're really kind model. execution. about our transforming that excited there rate that go-to-market kudos a takes it out

Brad Zelnick

Great job. Thanks again guys.

Dave Conte

Thanks.

Doug Merritt

Thanks Brad.

Operator

from comes question Bank of the next Montreal. Our Keith line Bachman from of

now is line Your open.

Keith Bachman

it about in ELAs that think, that mean you Do I role And changing? is said Dave, are is Hi, percent X%. capabilities installed the think in much. pricing, what see about also talk are security a broadly, you the ask of evolving, want small Splunk's very the you base, more expanding how is SIEM as wondering I on I'll if does role growing, as at by competitive also thank I customers changes remains those think might but really a I'm these Splunk don't and over about really go wanted a with you you're as gets landscape, to direction. the yet the about follow-up. try different in marks to And complaints high the year the on pricing. you is how you to that mechanism just rate And your any customers, you. pricing. of services? is changing. vendor or have that one next so? Or bundle evolve think talk And then I do pricing Thank focused

Dave Conte

Keith. you, Thank

sorry good is as as have on pricing. a sinus the – and be. my And hearing two Keith –two aspects not thing I a on should So like that had half. it a week

Keith Bachman

just good. I fine. don't either been never so has listening listen My

Dave Conte

newer for it. comprehensive two manipulation, and simplistic Yes, to to that pricing, on schema And you ingestion one to. of given is is us more of the and think, that there the based there's the make And people as lake, we're there Data be a and as banding metrics, data, one against injection the based singular, iterations Where ingestion when I X,XXX opportunity understand you lots continue where of with lake. get frustrations the aspects based you get questions copy Stream there's continue source therefore no of of iterations of times literally of data the and you're transparent to based for Data Fabric into I the some products looking and to investigative to with different structure or times asking Processor, the pricing, it applications a where of that lake the some question an set. With pricing duplication a million Search to like non-ingestion everything capabilities models ask at, investigative should can within different that same pricing. investigative commingle trying data data still you we're classic events, that pricing

making got value predictability it there's those feels customers, conversations. it around as with on investigative and the but so sure working lake, more investigative of it trying on how we've feel with a data make safe that more like how scenarios generally bar are And to monitoring, that people We're can we're So clear, they've that that price and informed set also on that's is and the – it tightly automation that they transparent them raise and been on clear really When lake. correlated. piece. of depends are. just definitely predictive analytics we And the

Keith Bachman

to that a cash incremental more side XX% Or barrier some renewable for level is And can it cash there it cash forms on, your that's Thank you think flow your a to year, this Dave. flow? thereafter? would might the the resume Okay, generation you. for just your remind opportunities do remind alright. further renewals you. call normalized us my then therefore is you just transition Can that XX% impact Dave, on that follow-up and me. XX% Thank you mentioned coming And impacting flow. us you in from

Dave Conte

Thanks Keith. effect many question. thought beginning to had a contracts above plan downstream We hey annually. those year. The Yes, the cash at well billed the was trough a XX% on renewable we the so this of year our again transparent of cash are for acceleration were as obviously flow

$X.X example, less end the un-invoiced the fiscal the at less value billion an fiscal me amount of increased $XXX contract last total Let of was amount XXXX. year give unbilled – million. was of it than contract And value by in a you

line million So we we $XXX results almost were expected. I XXXX. in what got And in fiscal yet flow with still, think, to cash the

as expect might of so built would we XX% we that that forward already of up We're increase year. get course really sitting XX% we've that XX% have I don't forecast XX%, can't out can't. I to normalize. to move So ultimately total XXX% – unbilled a to it how But there. And up at to XX%, this $XXX gone from renewable. than renewable that's then by go more million, the we And estimates in for affect amount –

we'll probably in will fiscal from be XXXX the last So transitional flow think normalization fiscal XXXX. get I then And yield. the cash year

Keith Bachman

Dave. Understood, you thank

Dave Conte

Yes.

Doug Merritt

Keith. Thanks

Operator

[Operator next your the comes Piper Alex, from of open. from Instructions] Alex line line Our Zukin is question Jaffray. now

Taylor Reiners

the bit on was wondering comment in is a quarter. It Reiners a quarter. looks international guys for I Alex. thanks could good congrats like Hi, drove beyond about opportunity see into penetration that fiscal domestic? that, the on evolving what And a thinking how XXXX then standpoint, and you how from with mix international? of versus are you on if This accelerated you quite and Taylor

Doug Merritt

new adjusted we we north, don't seeder, in and big, pleased we I seeders, the that were continue and execution view seeders – we the as leader, quarter not know cetera, if their were EMEA, leveled sales we that leadership felt selling I capability quality, And down up of than I brought to investment, we central filling across and are priority the we that get think making of as ago, see we sub-dealer LATAM a well. which have as focus I same seeders process, dramatically teams have the handful and ranks on focused bigger nice general as not as across we countries, with that leaders leadership you that be double leadership one hard maintain our think should entire a since overall our had now And the that well. think new get continue out these back wrong – out on And little is we quarters within to right own to south, I a that reference Taylor, expansion, in sub get through had had et see that those we Dave probably in benefits us. of that years pretty but clear to come those big more coverage APAC in we thought a progress build leader. the starting been expansion. in remember start many and here. lot and we on good we are felt out continued more but and motion a as alternate good had that Hey progress year ago before the to came felt it those levers five And the I both international And is it's been proven on as think within as of countries, pulled Board a I for and to have then high beneficial

says happy – satisfied Dave As never we're but satisfied. we're

the up a of outside expect XX% out a U.S., while is more year, more on we're there's that's next we as nosing the U.S. there the to a of But after, the GDP great. lot outside are basis than that international year this sectors So year inside. lot and percentage GDP because

to get approach, more focused we we a remain that do how on. balanced that something be is So

Dave Conte

a had to Dave. the strong kudos of say challenge the contributor and all of domestically. larger folks percentage not that, the internationally it's finish the satisfied, to the becoming all hey, they've folks terms again, is great a I'll Yes, proud, And performance just for great in year.

in us my execution growth. the Doug to think, But terms at of was a our delivery mentioned, create all challenge be really sales in of is the I able all crisp. kickoff. regional great foundation they're to continued And internationally for to listening And as chair challenge So going continued for that anybody one. call. to it's is there know out leaders to great be number I

Taylor Reiners

isn’t big it. then on federal, a the seeing cycles quarter or I you, government linearity related typically on impact follow-up XQ if And quick know for a U.S. any to wondering sales Got but I just federal shutdown? was you're

Dave Conte

part of some cover It complex is deals civilian very I'm backup and But year front definitely are of of year. felt sector restricted as some state, long-term had the that that shutdown those had about team. a almost of architecture agencies, sector speed their last public that approvals assemble broad. agencies in the of The had on the of us really and initiatives. military we've Splunk came think admirable and as so we're and impact for pretty some effects. performance sector are and their key sure a We're public they definitely But through us very a there's And them. that I really for to in since And of reference the there. trying the team year as would that government's many still obviously local absolutely as energized budgets. well with bunch have for possible, the the continue the thrilled of proud public make belief seen to – to rapid education. they’re customers willingness their

Taylor Reiners

Got it. again. Thanks congrats and

Doug Merritt

Taylor. Thanks

Operator

Our open. your UBS. next of line Boolani is Fatima, the now from Fatima comes from question line

Fatima Boolani

taking for question. will maybe start you I with Good you. Thank Doug the afternoon.

core and think us KPIs suite general sort rates attach seeing other level, a about can made appreciate you build apps, or follow-up how a platform you're help premium of I for to you quantitative if that And understand more then I what of of your of of to continue adoption of you on metrics I that references As of better that adopting? some portfolio help Dave trending is and may. the the out broader us sort applications have Splunk any on a

Doug Merritt

Hey Fatima.

for – Security rates the had is all under being the XX% premium the still all the for growing fraction there apps of Enterprise Enterprise apps is been well the Security across average portfolio. a that. is So the And attach with lead, while

overall get up and focused more got and than than change as individualized offs. And what a a that for We see we We lot There's that propel apps pay accounts even can attach not – and we a having that rate customer potential teams have potential pleased integrated fewer of we with And like my still know we department and and on of education few have continues of of IT are which makes the our XX,XXX the opportunity what as and just belief same the rather customers is of that simplify the doesn't based data growth ITSI, operating to on we're within that back serve Phantom, higher rather I suite the apps And sense. of on our skews That for at for within focused very customers. a the focusing the ES, think on landscape the the I premium where VictorOps we're of effective well, IT So operation we with center have series cyber accounts like broad those to knowledge UBA, that kind lean with center the combination this is belief really hopefully the the cases. the doesn't to they then the even of year see that one been will stocking earliest to use it's results. offering. portfolio security an and continue the those feel within units the have team's that And operation least is definition awareness components our innings reps, of centers in to also XX,XXX and because of we way those them. the what security amalgamation continue have. a folks both focused look a means in the apps. premium and on

Fatima Boolani

seeing from side front. you're are you headwind for Thank little or leaving unchanged? perspective is a considering what makes reagent as that’s there? wanted the of to margin hiring mix limiting understand perspective cloud That what that an factors And investment outlook, that sense. of your Dave appreciate better on a margin from you. I probably sort the you, the other revenue accelerates on a more levels the bit shift But

Dave Conte

– Hey, I for headwind years margin of us. component the underlying Fatima for is that's been mean, greater percentage with a of first nailed course thanks you the sale. for the greater And cloud question. first to of comes costs

it can thesis just field, investment overall really same that of terms the since our of the portfolio to number of long-term product. has remains large. in of relates quite field product amount it believe opportunity and we As and in TAM customers can value investments, the generate The We public, revenue growth the obviously. and to we the deliver we doubled more is went that than

be every here day. opportunity appropriately think much so And that road. in windshield on work the I discipline to that got in do the we leaning appropriate the we our is the down investments they've to with ensure that got the that's right the ROI

of confidence XXXX, what that how up next part for and ourselves it's we're I've okay, make level beyond, really And and the for all in investments? But Fiscal the Not So when about those what's got execute. leg of mix. margin those to investments we it's what's the think XXXX really right to but going beyond. setting margin, fiscal, great then fiscal important and are today. XXXX important that parcel

Fatima Boolani

we the business software quick go the how me. as that's mix should Thank think the is increasing maintenance up it growth de emphasized? and about another forward expect to you. should And between perpetual Wanted relationship for we sneak one, the renewable licensed

Dave Conte

will maintenance shrink its maintenance renewable We a for the contracts – a terms our component is on-prem question. it there expect would it's time. Yes, fine in contribution no, component. certainly of over said, still That to

to have continue as part maintenance of will diminish total perpetual stream, and we time. TCV maintenance over total our legacy revenue stream will but So our the

Doug Merritt

Thanks Fatima.

Operator

next from of comes Steve question Securities. Alright, from Wedbush the Koenig line

Your line open. is now

Steve Koenig

in. Great. Thanks squeezing gentlemen for me

So just one question here.

the just So was it And beats bigger. of the getting like the have been stupendous. seems beat size

respect was the should and to expect out? guidance how be future of guidance actual conditioned delta are in all these assumptions variables And between how results that turned the you future results? to the with – we the I'm in the wondering And into so your in your the Dave what the beats or going kinds forming are

Dave Conte

have out Steve the on percentage percentages you Yes, call said the over there whole the as its I Many the the get Dave. of because years hate harder. game bigger numbers get

we're the I'm X, now day, like reflected sustainable end revenue. globally crystal line. our result, trying the and about on in be own we a time is to in characteristics, how in would position lot If characteristics, bigger that's an pipeline the to planned your execution a to think At one field pipeline I than But growth generation maybe of the our enviable in generate the your opportunity expanding percentage that's of the that really rate a of beat or How delivered think different that, productivity in the a if spend number ball, Y. had field, the we but our what's delivered as top expectations over the over about is in. terms I much the business and the capacity is

fun complexity sheet characteristics off can between all geographical challenges some of sheet. know balance terms create income statement, the and we lot of then it’s revenue mix a in that with because Splunk, balance As

And $XX and our a around it basis of estimate in, belt our get we've I get of course bottom's for But guidance we the the all amount So $X.X the quarter billion. work in we factor all our of and to think, million appropriate the for next revenue by that you we expectation. current increasing on up analysis done, estimates. was will update greater clarity, as quarter. our under continually of We

Doug Merritt

Cool.

Steve Koenig

lot a And you Well Dave. great. Okay, to guys the congrats thanks on quarter.

Dave Conte

We appreciate it.

Dave Conte

one question. we that. appreciate Thanks more time Steve have Tom, we for

Operator

Sure.

line Our open. Wood last now question comes your Cowen is from the line Company. of from & Derrick Derrick

Andrew Sherman

VictorOps Great, if do further is the a as enter was I little thanks. this It's that year, Andrew from Thanks. integrate And how to light go-to-market a hoping Sherman could standpoint? on as plan Derrick. you acquisition how of shed to for you you going?

Dave Conte

excited VictorOps. past we've months, made really including the XX the We're question. good that acquisitions with Yes, over

the teams circle making value to or lessons results sure trying true was or of years five, you're the think to VictorOps, we're alert better able I they a is want. and Phantom past learned that a monitoring investigation, my selection capabilities the to to not, wagons that whether the getting predictive for collaboration, main continue the when at achieve a that both VictorOps for alert, is iterate. we the and midst a on sense are lot important are like an lot or in a effectiveness six And reason use integration. Splunk the that of

really the elegant And arena do next-gen cloud-based an is kind within VictorOps Ops, how prime think, of into the as delivery and So are doing used community in in orientation. that But App community. DevOps capabilities alerting IT as I the job to platform that, Splunk we serving well. Dev, effective that bake they obviously collaboration addition is app

analyze, that as data But is element is out benefit past So as to making immediate for building a been four sure a act core monitor, on focused key pillar each IT Apps the three that lot two, an benefit VictorOps IT of our like we're act pillars possible. the that the long-term platform we've And Phantom portfolio. years. there's strong looking investigate, portfolio, the are that of of the and

Doug Merritt

Great. question. Andrew it. appreciate thanks the for I

Andrew Sherman

thanks. Great,

Operator

session. concludes the our like now that Ken conference And question-and-answer I over Tinsley. turn to would to

Ken Tinsley

Thanks Tom. evening. your Really hope your everybody participation. have and you thanks appreciate a help good today I for

Operator

our your Thank call. wonderful Have participation. for conference you that's And a day.

may disconnect. You now

Splunk (SPLK) 28 Feb 192019 Q4 Earnings call transcript