SPLK - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Splunk Third Quarter 2020 Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Mr. Ken Tinsley, Corporate Treasurer and Vice President of Investor Relations. Please go ahead, sir.

Ken Tinsley

Great. good and Catherine, you, afternoon, everyone. Thank on Child; and me the Tully. call Jason Merritt; Doug are Chief today With Technology Tim Officer,

on After will well. website. webcast. call, issued website. also we on live the our have market via release, web material be call closed is page an is Relations which broadcast as posted a supplemental the posted conference note audio And Also press our available following Investor replay that This we on today, being

statements On to including best our forward-looking of file currently these may any refer after reflect on statements factors and our accurate materially. press and that today's release. statements. in forward-looking are expectations with information. mix obligation contain forward-looking and filed may with call to be including us, based this factors statements, documents not of other or our current making presented year may we contain and our industry regarding the revenue the today's today, customers, strategy, or during revise including being information made reviewed our These products, judgment known risks call, and we actual and from statements. our technology, the those Those results today, to These will differ and events contained documents financial we X-K Please markets, guidance as differ cause disclaim Form If update is flows; long-term this fiscal full call or fourth actual to expectations, XXXX; duration, for results investments. cash acquisitions forecast quarter and SEC,

release accounting and which non-GAAP financial are in generally accordance prepared the and is provided of non-GAAP GAAP on We our press reconciliation with A website. not will also principles. in results measures, discuss accepted

With now to over Doug. that,

Douglas Merritt

for Ken, great We joining you had you, us. Thank a thank all and QX.

and growth, software And XX% of we over unveiled our XX% and our total for conference data particularly X our action. and expanded of Data-to-Everything cloud to were decision Our strong. vision completed revenue in customers bringing growth. user welcomed revenue and question, XX% execution XX,XXX partners was We to the our first our I'm We growth proud every results platform, excellent, acquisitions. industry's Las strategic Vegas.

With that so we the data Data-to-Everything can rollout of platform, a organizations. introduced pricing our their to the on new value brings approach focus customers

our so extremely Our simultaneously pricing expand do pricing, infrastructure-based and positive. packages been new making easier pricing business predictive far opportunity has rapid while feedback Customer options, us. adoption it to worldwide meaningfully with

acknowledgment serve In FedRAMP Cloud of public a addition, technology positioning we as across government. received certification, power U.S. the a digital transformation strategic our customers Splunk us in step to our of and sector the critical importance

IT, challenges of a of mission. we With solving the offer capable for solution matter can authorization, data-driven and where single the mission the decisive success the actions agencies now security for

investing in its problem, you greatest let more As massive crime, opportunities problems strategies. strategic the government of is the and rollout to globe IT optimizing more alone data opportunities. answer to performance, customers data-centric enterprises the prosecuting Data believe responsiveness, to corporate or It a paradigm. the for software data to too. digital emerged and agencies a pressing Porsche's so, organizations this car, new believe and electric many fighting every firefighting are represents strategy as most problem to also medical all our think new asset as operations of operations. across development improving operations, research, necessary thrive, in is From government we survive, security the know, and has around and world's Splunk to We is to

across their secret For .confXX about was has their Domino's more how at sauce, revealed heard stories I company. Pizza teams example, the of one Splunk, best new to

The couple the business any support delivery a decision with Domino's years, they unless driven data. uses of culture can pizza Over They it do shift. past make not global prevalent has leader threats Splunk communications to customers trademarks, help and them and manage improve security brand as from all and high-quality their data. marketing, their as well protect operations, IT speedy with their customer their experience, simply

monitor end-to-end with can data Splunk improve partnership ask act Europe, expanded Ultimately, Splunk, landscape keep which enables to to security. questions in business the on Airbus and order their Splunk Space use and customer, a their Anaplan, devices, visibility overall Airbus Security. operational long-time on Defence throughout long-time business resolve it protect Splunk to to team And Splunk, customers. more and and can issues business reliable take thriving. better efficiency within systems global the Domino's With ensures with impacts IT seconds realtime across action and Cloud and IT in Enterprise of workloads. expanded data significantly before reduced their incidents Anaplan and across

Splunk of a using across products, adoption embraced Data-to-Everything. has also and further great sales a example is who customer Anaplan help of their drive marketing truly to customer

According in transformation. are the is they're be volumes investigate, and this enabling to X only data this for positioned transformation $X company on massive XXXX, in well projected analyze foundation Splunk years. reach to to so the reach and trillion digital to diverse IDC, is digital investments Splunk over and expected is $X Why to important? monitor, act of data. disconnected customers trillion

Fortune every industry, XXX. the every of represent the over XX,XXX of size And are function. already every customers organization our strategic We XX provider to and

of that need are growing order or Splunk In in and the data use the our and index serve and we of of in base technologies the our relevance else. investing products somewhere decisions, to cases, all Splunk's sits to value number they customer extend growing regardless whether customers'

has past Data-to-Everything we've of help strategic combination invested billion data multiyear, development been doing. excess Splunk world over Through platform internal a multibillion-dollar and the acquisitions, $X the couple a to commitment. years Building of of in into turn the

the long is to us more analyze new security appeal term. for faster to market cases. our use solve Splunk's further access new to and strengthen it users cases, IT ability expanding While technologies to also to our are allows these our and focus use we use data and

for our partners customers, and want summary, QX our our to In And thank proud data I Splunkers their am turn results. of doing. into commitment to I

Now to our product I'll you it over Tully, to Officer, take Tim technology our and through Chief turn Technology strategy.

Timothy Tully

to in before acquisitions It's to bringing products, you, the to Thank for everything This my first call. focused programs on was Splunk beyond index the in Splunk Doug. via is be pleasure the more buy than history. ever highly announced innovation our invest. and build, we clearer ever initiatives: and than innovative QX and when three time

had patents applications. the issued Splunk of end pending in patent QX, of over XXX As over XXX

than And venture the size we've R&D wider our more R&D Data-to-Everything the Over XX of companies in sites. the invest data global our X announced to million a today, closed we team. of And we since during arm the years, doubled as XXXX. September acquisition launch past September $XXX Splunk new have ecosystem. event, has X We've committed

the Search of conf partners. XX,XXX days, there Over hosted to customers those, products, release X.X general Splunk announced and the Mission Splunk walk Splunk keynotes Data XX Stream Fabric and Splunk several in beta breakout and products, and Control. Processor, including releases new we I without being including Data beta the by X sessions. stopped of our to user world people around nerd, dozens during was both day came tech We were design of .conf conference. Las data Vegas to you're of of or attendance amazing every in and biggest things off ever, Over all nerd, I'm product XXX Enterprise nerd over charts. from Whether availability innovation. X a attend see Since the couldn't new far excited our

form focused is Splunk innovation function enable Furthermore, a that strategy to invest, beautiful product unbounded while are building our design, our you Within to fits buy in way. Splunk which we learning realtime on offering the and capabilities collaborative and mobile machine are, and build, indulgent through bringing everywhere processing to products products.

innovate we as and priorities Splunk products Enterprise these announced index. on to merged we QX, enabling the beyond customers In

we and uses the realtime sub-tunes industry-leading the volume which availability outside Stream First, and which stream or a is no cardinality machine Splunk sits index limits. learning, general by adaptive of powered learning unbounded with Splunk engine, our in realtime announced Data Processor,

in to Splunk the world, not We space. that leader this in the in are batch stream, convicted is positioned industry and the future the feeling learning of is be machine our in

Enterprise search capability federated We also supercharges speed scale Splunk deployments the of adding of and Splunk which order an magnitude to non-Splunk Fabric by Search, released across resources. Data addition in and more or

.conf, with where new And design we finally, our this This at X in quarter on our multi-tenant demonstrated the frameworks. ways collaborative platform. was features announced we're reside user display cloud-native full interface on that products new leading consumer-grade through

glass. of Mission into and was connects to on-premises Enterprise product first one that operation the cloud center UBA for SaaS hybrid our brings products Phantom together beautiful and single security pane Security, the The Control,

investigation The incident on management, new DevOps and style those Splunk can Splunk, customers second Investigate product where a and cloud-based product new realtime. more. delivered are on platform in flows to root production cause was cloud datasets and data data analysis, Splunk for easy to much analyze the based troubleshooting DevSecOps search onboarding, Investigate, use issues smaller collaboratively and workbook

observability data and a advance standard announced top acquisition collection both initiatives week, acquisitions OpenTelemetry positioned Pulsar. for Open help roots contributions Through to and to in our helps contributor Source we Next, like to Apache I'd the the to make donations deepen community. project's is the the strategy talk as of about of Splunk and additional our OpenTelemetry the Streamlio, that Omnition community. in our enhances portfolio This the and product

to is OpenTelemetry Splunk. open key data imperative important. accessible in everyone collection Making and for a investment Our is

in our projects the existing Flink, the more, of Apache XXX% new are the observability behind standard Kafka, We OpenTelemetry Spark, comes Open products. are to new at our for and which already commitments addition world. such This as to heart investment as Kubernetes Source

With Source welcomed of products and have logs, of has X monitoring and observability, for of that microservices customers are validating Splunk Consumers the and the infrastructure, and our of best which embrace transform purchases our their enhance pillars realtime metrics traces. our combining the use, building organizations. Omnition, solutions Open of we SignalFx applications, ease want to

integrating and for Omnition Splunk are unified experience. into SignalFx laser-focused a We on observability

In third designed data transforming inaugural go-to-market portfolio on generation with focus Ventures and we provides innovation Splunk, create value, and operations to million variety our the data True support complementary We Splunk million invest our investment piece to mentioned, Splunk inaugural social leaders. Splunk in for benefits, Splunk Fund early-stage X technology, funds into and Splunk our strategy. to to with of companies the using Impact $XXX Innovation to outcomes. I Fund introduced a with established existing a data Ventures startups access Social $XX engagement good. a a business to As of Ventures funds and startups, next is we Ventures including of Splunk QX, Splunk introduce is analytics.

Fund Impact investment goal a We Ventures Zonehaven, Ventures' that data developing have world-changing we were at get technology Splunk new companies already Splunk departments Splunk of product made a number outcomes. investments. start-up turn help to to the the in continue will in is fire will surrounding accelerate And to help Social ahead .confXX, achieve the building ecosystem our announce to of proud technology in data wildfires. first fund ecosystem platform.

When data and to every we mean Whether building, say to everything, intent our we're customers investing, is everything. question, we to decision innovation bringing bring enable or action. our we're buying to

Thanks again us. joining for

Now Jason. over to

Jason Child

execution Tim, afternoon, by joining us QX sector Appreciate strength and business. was public in Thanks, our you solid, good highlighted everyone. today.

license year-over-year. $XX of revenues, and XX% year. million, up In Third up million, were up software year-over-year. over Cloud $XXX were which $XXX QX, XX% million, revenues cloud, revenue the is was last total XX% quarter

last been faster opting than As contracts and we quarter, perpetual have Cloud over anticipated. we Term for outlined customers

we've bookings QX, mix perpetual discontinued In new offerings XX% model to result, due Cloud, a we'll renewable purchase. XXs effective to license exit X. software year the high and and nearly beyond. expectation some renewable slightly year in were final completion with our a shift our a accelerated QX, XXX% making customers either or Term next We As maintain and reach perpetual of of November this lower the than that

model. a to relevant which fresh model metrics taken complete, most look our are shift largely the go-forward at to With operating renewable we've a the

an license contribution growth license business. Term day underlying we as Cloud, diminishing ARR nonrecurring all the services. reflects Term ARR, of licenses, better annual perpetual perpetual that the the and Note we excludes revenue, maintenance period. annualized the last Cloud and which recurring or define metric professional value we're providing from contracts believe as annualized of With on total Today, of of and

intended to is period. bookings As this you'd normalized for metric into expect, a the view provide activity

$XXX This million For the compares XX% license billion total of October to $XXX XX, year, $X.XX year-over-year. contracts. comprised representing million quarter ARR ARR in ended was cloud from and of billion, maintenance from last and total QX term $X.XX of growth

slides For look published your in with at release. ARR the benefit, a today's back X-quarter we've included

to the is mid-XX% next ARR for range. be growth year outlook for initial Our in

end, QX RPO, of We recognize quarter RPO expect last revenue billion, next ended of with months, which The QX total over to million we at $X over XX% year. last up value, year. up $XXX XX% XX% from million $X.XX year-over-year. XX from million, up contract as XX% than RPO QX the was portion up of recorded was the XXX year. quarter, bookings $XXX greater In XXX total last orders we in of

In levels XX years public slightly recent We believe stemming months was fiscal in of On of their orders prior require year-end XX than to top many levels pub-sec margin quarter, line greater cases, a which overall was margin These operating QX this duration, in third XX%, momentum X months. specific that's with overall basis due strong slightly by margins, agencies. from to XX%, business. duration a government booking solid in business, mid-X-figure our our around up QX. non-GAAP. revert federal sector QX gross term years. our magnitude on planned, the will orders and agencies we cloud than performance. our was skewed had to this and extended from driven up QX U.S. to With this a to our X year-over-year in scale can several quarter, better and are up contract

Turning guidance. to

remainder million, to a should QX We non-GAAP expect margin continue our with year. revenues operating $XXX the the approximately XX%. trajectory reach of for high-growth of

$X.XX maintain full the and year, total up we are from margin billion, $X.X we operating now of For target of revenues non-GAAP billion, expecting our XX%.

cash is to Cloud model you Analyst through discussed Looking it's walk Day further future relating the are year shift Today, invoicing target updated 'XX. at our trends. important the Term flows for view out, To ratable cash customer market only long-term into last reiterate, perpetual consideration billing we roughly X quarter expect updated a by we completely for and to spring, get timing contracts last quarter. change year next to the same cash fiscal intend and operating to full in think flow is but driven a to year we our the and level preference and we flow that from we reiterating in

flow and meaningfully visibility, positive more approach previously cash we'll turn and booked in other billion to FY begin FY from this targets time. As to we're at contracts billings 'XX. multiyear in and $X 'XX contribute meaningful -- a growth cash providing collections, later operational should Again, high-level for detail

closing, In year. a it strong forward excellent looking and was to to quarter, finish the we're an

With it for that, questions. open let's up

Operator

[Operator Instructions].

with from Raimo first comes Our Lenschow question Barclays.

Raimo Lenschow

questions. And congratulations. quick Doug, two had I

want you us got So And the around indications early follow-up. and changes? a people to which are pay can from people you any base Like little ingestion what thinking? way usage Doug, was obviously reception about customer I a you see well. compute the have Do bit on of the talk the feedback? on pricing then a gave bandwidths You as what for from of kind like

Douglas Merritt

Thanks, Raimo. Yes.

a the as away from altogether. almost an and volume-based broadband pretty So talk months people is the one want a pricing. event data visit I've been as you and customers enthusiasm then sigh I've What we the for on or get from .conf things seen past data much talked infrastructure consistently with top our two we would and approach to just about, volumes about guess, high strike who our component in both the of continued series, universally is customer of a relief road for

data. European volume and use with about wildfire of from a instead because who again large talked couple One a pricing about the of a are clients focus spreading worrying of favorites of who the on that to they -- being moved produced crisply of visits, cases X my bank, these visits value the is across could bank infrastructure-based cases

excited really So it. about

That or every new understood enablement, as that sales where about in marketing, so to many said, hard entirely to customer lean news not it, hears there we them. still talked it's I by and are on communications have customers

So come value to a that the for Splunk to the understanding that teams doing ensure customers all in with has our work the lot with what portfolio. do get of we're and

Raimo Lenschow

idea disclosure, should the AR? ARR? Jason, on do Is to of number, Can all talk our the And we we that's Perfect. effect heads around -- it's there think So need like really, thanks now, new it's obviously, through for get and that. at it time helpful. extra of is story you subscription Is kind How have more about like really or an obviously story? normalized the there. see coming what have a to X-year like that? a next I that we So year's still

Jason Child

first, durable the to metric guys this I say, annually. is the predict to about ARR the only to Term X% quarter perp trend probably customer performing you we think base, business -- is, make or Cloud. I'd actually the provided we think growth little if think about actually Yes. to have about try easier I second, converted the think, most of thing about to just five would it. you most a think it most say, kind customers how is And to our important of try to for

And lot to so there's a growth come. of

is mid-XX% to of we'll year a the place further update at future. to and to point, give So significant next looks we my a what in of -- this good don't And me view early like. certainly normalization, said point. actually third I start kind from And an in be deceleration. range you We terms that know did expect of I there brings don't

Operator

with question comes Zelnick next Crédit Brad Suisse. our And from

Brad Zelnick

more assumptions to said most at and the appreciate we perhaps, on if but assumptions are that you Doug Jason, $X fiscal operating as end with get for Analyst quarter. for and you guys, billion what And I've XX a there? got forward, Jason the sensitive we and look flow a Day or 'XX, move great congrats, specifically, follow-up. to you'll above cash one cause share can in in I more the you Slide that are one up and And what below?

Jason Child

Sure.

say the first, comes thanks. cash, feel would sensitivities, there's about We it to I lot. a quarter. when So great the

into years you've than this more vast have. transformations first cash And to to The full moving when we're, back. have going percentage now looked our is we're flow in to kind ratable of why years from cash the the billings. X I kind flow moving duration top you'll of gone Since take that is X at a from the as or taking upfront, of through short, snap thing is revenue of kind effectively through average But collecting years, us companies going that about see it's to majority -- probably of transition X through. to get line

I And bit, is to so very in between going where be to a a confident feel depending move them of variables. 'XX. bunch we're The on going movement

versus the What what's the X, How deals? much X and mix of ramping on-prem? versus is cetera. cloud So X et year in

will which I on 'XX, guess. the be are little those to fiscal transition, be transition. why XXXX will very again, numbers sorry, post be confident which 'XX, more the have opaque I'm I where through is But or in reasons -- the So a

Brad Zelnick

just Can observability for leveling OpenTelemetry. appreciate it. about to customers the playing talk And in Tim great will hear it Excellent. and competitors? it you think its context. Splunk benefits to the it it's my impact how means in field about you have what the and space, commitment I the great follow-up, That's speak

Timothy Tully

Yes.

Splunk helps the substrate an Source data the to OpenTelemetry customer customer. one which the feel is we're one to some user. and the And in do of best move them not what's the What really made to particular any power upon like do we that Splunk, by always best to best think moving for think interest that it them but operate. collect gives framework for common trapped to that user. what's best for vendor is trying they're of I vendor is Open and the is we a Ideally, donations really the

Operator

question next Morgan with Weiss the And from comes Keith Stanley.

Keith Weiss

bookings So you've the strength numbers. and in ARR current those seen of a RPO lot numbers real

the a that's pieces see model. of of equation. couple could one of really was really their through So up monitoring terms kind the cloud be in ask of the more Any nice our SignalFx in that space. of kind your kind new of kind wanted interest, to and about next getting should I you peaked thinking of customer to within the of over and into give of interest flowing sort the Probably about that business observability initial timing us the we that ramping how year? read fully

Douglas Merritt

doing we index, Streaming what also we approach super data Thanks, with has Mission, and Tim Streaming our unique we're streaming the as to to amazing you combination completely data an of we're that do Data than been release portfolio the Keith. is of but our Streamlio, learning unbounded applying about and rest. Processor. Yes, learning complement really machine with about Stream of at are, Processor is rather within talking guessed, excited the exciting. what SignalFx, Data

heads capabilities clear model in success as move anything in a they any tails scale having of online we've is than critical agile to feature the the interest It's capability CI/CD and key entire exciting. the now as is a But above forward. that high for and backbone moving the seen else on DevOps basket edge of to I And announcement kind have and perspective. tech, their very a next-gen business, the wedge of in role is the we SignalFx fully that the industry how portfolio think that since function

the on based thoughts interacting customers been you with? all do Tim, you've any have

Timothy Tully

They upmarket SignalFx compared with vendors. to Yes. especially They well blends an the SignalFx is sort scalability positive. of really been that have what that customer know The other of our recognize product customers base. provides,

it what cross of starting metrics about of of around in terms tracing better lives gives of to which facets this solutions on excited of microservices-based easier the a products. our And all much the sort application it's And of and as opposed observability are architecture. is There -- view customers much for our you they that really The been to logs, consume traces. traditional into a to tracing of other they've appreciate lot to really And acquisition Omnition wall sort thing of table brings the are your Omnition. user text.

they're the the buying the and story Splunk really Omnition around So power into combined of SignalFx portfolio.

perfect suite. then last observability platform figured data was be see our SignalFx, really add building around our move our is Data together would the And pleasantly a have was of to customers I marriage can products Stream with sort if with they're is really the story that the that that DSP excited that And products amazing. thing my I'd they which with customers have what just was out that figured already out hypothesis, Processor walking

So I've been really pleasantly surprised to see that.

Douglas Merritt

why? And is Tim, What the DSP?

Timothy Tully

a Yes. lot they get to to and they place they and metrics logs, of traces logs have where customers, have want around sitting A together.

been of going And to Processor to to take those stream build Stream so going logs, ingest to powerful happen convert to to SignalFx. DSP what use inside and into and And what's they're And on Data platform. they it's the And sort is metrics. our thing using it the product data they're top into use ingest out see. of that's take of really cases recipe other that a them

So excited. we're really

Keith Weiss

in some isn't still it of be scaling been year-on-year equation. maybe you're overall for a something should I've cloud going-forward basis, the but the right? gross be on seeing but quick point And exciting. assuming one probably down, margin. coming side rapidly, so be one With that that margin should expecting this Jason I'm increases sounds modeling at that And we declining, the on really number gross to Okay.

Jason Child

to yes, as over up today is of They time, right in now, they Over view -- next the because XX%. my of years, are probably couple cloud margins mid-XXs. the get

see So XXs. mix cloud high it down, we're as the grow, come obviously you since will in on-prem, the of

of more was QX would say mix. I higher little because But a

a saw because strong all quarter. for since went late that largely You business the on-prem actually or pub-sec our really certification in is -- our FedRAMP through on-prem

see range I to closer mix as percent our but it expect get -- So cloud the start would XXs to grows. to

Operator

Our next Phil question Wells Winslow comes Fargo. with from

Philip Winslow

on just how .conf some on it know are you versus congrats to this. great products that was you out feedback positioning positive the but very Processor. in on we of quarter. The And market a the DSP touched Data on other wanted Stream that got sort there of I earlier, streaming dig at are I on Streamlio being at a in think the then sort context and acquisition. and and the stand-alone about are of talk on people Splunk portfolio? the heard about of of existing Kafka Flink two? I've your I also And capabilities. then do Streamlio mean of Pulsar part Pulsar the copped X.X, in obviously, How context and you those

Timothy Tully

Yes.

later see for staging have the of a around. more message a of lot place the with DSP-like there's who Kafka Kafka there data people lot before And customers happening. device the a processing using use part, we cases Mostly, most sort as to of part a things. around see are playing is first So you are to or we sitting

of a of stream in sort yet. as the of processing lot itself Nothing

vendor to think starts solution. underneath hood. part where of of all itself our of I that's actually So solution, a lie. it the the is we some DSP actually sort superset part confusion that. and That's as use of of actually We Kafka the

sources, lookup, masking. non-Splunk monitoring, or data But just most So you allows that. unloading, dimension realtime more aggregation, staging Splunk realtime it for came to processing, importantly, PII to area if stream route we're general, in you do deployments a data. allows The data alerts, it even than much to multiple to

data equation. platform the understand close customers I have about seeing a for at point. piece of key the DSP this been really is And extension really that and are X customers talking So I think that story years of to that Doug

team yes, really have for team Streamlio, at of a ex-Twitter some is time. up And picked you the is hood potentially. it's who for that That talent sort on this amazing Stream doing of fantastic technology the expertise Pulsar brings leverage and great it what amazing terms the wealth with that acquisition, With technologists accomplish of interesting, been looking and to inside in In additive guys see it we're and core. and ex-Yahoo! there. quite Pulsar us, acquisition that to Data an to underneath largely, piece was is guys to Apache that a the Processor, of and And we're ways of think really to product we for equation. it trying fact the

Douglas Merritt

what and the seen, to And four for if our well Phil, we've that as organic-and-build customers and rallying as to our go now partner-and-purchase years I what, and four back, of hopefully, analyze see, approach. our you've guide pillars around approach framework act, is investors almost investigate, been monitor,

like something those of is orientations. lean-forward And on I Pulsar, think, one extremely

And advancements around a iterations DSP. enhancements love will We that in next-generation Source, whatever we've the out way done are experience, the as it advantage come purposely customers then of of new in this stable in built or Open we us. case, so come of the a have what yet, product the community with get product progresses, technology forward, underpinnings and

so be leading overall Open Source. you embracing actively engineering around customers. So We're hopefully, guys our we serve all all with the group are backbone to to augmented world Open are talent community. a can The contributing continues from of the Source the to noticing back we be edge that

Operator

with UBS. next comes question from Our Fatima Boolani

Fatima Boolani

I'll with for question Jason. a you. for start have and question a I Doug Doug,

and introduced, is focus a the mentioned constructs new key pricing enablement you the of sales that context area. models the Within you've

very impact would ecosystem. model used how structures level, lines, at I organization have I So for compensation be filling wondering for sales incentives these distribution a your different a on who able indirect along was equally, those to constructs time you if new will for a your I may. perspectives in share and and within long your and And to if partner channel Jason, then a then follow-up clearly are high

Douglas Merritt

Sure.

volume, that is think for infrastructure, founders and initial I look why with we at -- think proxy came So the a when metric. the data that's I that up

in understand time come shift where I or life going translation basis, their case more So their case to to virtual bring simplifies or infrastructure from to enablement force, the what makes what life. the the that banding needs virtual volumes, customer with core, need is that with I to customers. Where is and communications use they're CPU just spend from sales an is a use rep does think, think and to data on crisp their the something

In was a the it was past, proxy. data

solution? easier and the appreciated something is Now you seen this to going do success the customer by by value priority, what that are #X think I queries about to as an they a is can with customer And of why excessively have which the all remain translation accruing going the we going two value know find customers going tiering high-cardinality the by or deal, data optionality our data, leaning with one translation an as going banded are on you having are base. a to or easier elegantly get never and decision that's not is we those data, And having factor meaningful that be for get offer customer been options. but still -- whether lean into predict that to metric, So of I've on. our I exactly, an or be we they infrastructure talking proxy, on customers, they're to a

Fatima Boolani

appreciate I you. Jason, for color. that And

mentioned your only migrated factors. customer that form to has transitioned base or perpetual about Cloud over of actually and/or You X% Term

one you on for certainly base. opportunity convert the hand, an that's to So the

perpetual are On the how I'm newer the erstwhile to of we Term, how and would from around that system. some an internalize, should contract, perspective, trading working these horse other kind an hand, wondering manage through models of just you moving accounting between pricing in

standpoint, can help helpful. guardrails that be an would you us some that if accounting put from really around for So

Jason Child

just perp are guess stream. are subscription renewal those base, subscription -- approximately installed renewal I that maintenance clarify, the currently to X% of folks our I'm Well, sorry, in in our stream

around they Xx higher. Cloud. into they're And or will that when those maintenance average, will so stream somewhere or upgrade, upgrade on do upgrading folks decide either continue is to at And what or Term they

So or that it a to and high think of your as they're would to very they're retention I going dollar we rate, upgrade higher either amount. into have question? answer a going remain Does

Fatima Boolani

helpful That's clear. very Yes. and

Operator

comes Jefferies. question from Brent next Our with Thill

Brent Thill

study, you the surprising early, if expanding opportunity. you is it's thoughts your the really you mentioned know meaningfully I on in there new platform maybe or hadn't perk case is a but seeing us geo pricing that terms are what's from that Doug, before? other give to or you the a studies case you're some coming area your could new most that of up

Douglas Merritt

Thanks, Brent.

censored around forward As things a Porsche how driving can And the logistics more are .conf, are always of think from as variety like I the or of the being examples something role bit with with the through or Porsche and blown, play Taycan, case walk X execs successful this servicing the you to more getting aware of or rollout But I stream those to that of ago. marketing been Splunk. we've it's seeing true introduced, that use sure is talked and provides integral realtime capability make one is or departments augmented across years and the about while, the HR more we're think, Splunk even that a their data as cases. for case the And like in think where things of a and and more across that the keynote enhanced that flowing Taycan to those way I why use at is finance, that those. stream, expansion sales or manufacturing all X much learn for maybe reality filter and we've can from capability use it could data DSP have for,

with price a costs?" or usually when infrastructure data of a impact feeling banded to use. where bulb customers true light the these and Data-to-Everything X-petabyte a to X either something be that's be be gosh, the get seen a of them or control make term rapidly with the I've able being overwhelms now XXX-terabyte that option, X.X escalate I've goes a or see for the here terabytes. my on or basis. above option lack volume or going terabyte I predictability have those is And the too got have, "Oh How -- really pricing when And accounts, escalating with I this is virtual the option, manage basis unlimited a on on That's I can do not Fabric What feel sure could I terabyte like a backbone.

attention I don't going performance the to from to XXX infrastructure. think going XX virality cases." not but go European use based I a will "Oh be that's was maybe terabytes. that or have on. mentioned that to I got whether factor So I'm control care these bank I'm with to gated It my terabytes of to, pay gosh, I've we be

Operator

And Rangan from our of Kash next comes with Bank question America.

Kasthuri Rangan

your question absolutely I is to to flow .conf going it for of why consider what complicated wanted high win, landscape a crowded do could acquisitions? Tim for I've win, take especially just question to question long dumb think more though. a investors got stream given It Relax. down. you. Doug, Splunk a you, to to what digital a just broadly cash and a do deep I'm does processor It what for upbeat. question going In be That's level. but it not I DevOps, looked speaking, so you have Jason, And really and was cash for Jason. flow a question, for fascinating. very be you, ask

incorrect. just I can since little switch thought the would started I stuff you last high has to than quarters, renewable 'XX. that have assume bit why would help you might understand X turn have running the what flow expected, in maybe ASC is that a of us to been calendar QX we longer XXX If relatively cash in But the that was

you see free time cash the flow should conversion. we So about the into full calendar to start get XXXX,

the calendar So not happen turn on you calendar why and in 'XX? with not details the in obviously, that's 'XX level-set can to happening. But us just you expect

Douglas Merritt

just Streamlio Awesome. the this marketplace observability Omnition that Tim in hand next-generation this acquisition looked or as start, with What with Apache over entity and I were and Pulsar said going SignalFx to due engineer we and SignalFx, the and intro. every viral I then saw for we we piece. And when the of diligence, why of it the the our addition is we conversations. I'm about at and complexity in to single development we the Kash, far usually, I will nature, DSP for think as excited deal how so of can engineered, environment. Xx X the announced

ephemeral and of lot simple. In some noise. public it lot sense, cloud of a a of as becomes short-lived creates makes potential and a of lot provides issues also potentially, optionality ton does, think complexity You it and a but it streaming everything

to performance. to successful And a we observability arena through evaluating, been we've portfolio around. And that that framework. very our geared going years interoperate as what on to any together, you better through And volume of teams is case platform Splunk hundreds that get scale in. is to we but high-level in easy that very, the the data and thinking that's a to can being operate we've to demands trying feel company go ultimately, is that insight basis, probably to be handle. hundreds and actually to able component the color use, effectively add that's environment Tens that like of and and split, to of someone corner the of streaming petabytes terabytes driving have And distinguished continuous a of to challenging ourselves key Tim, than

Timothy Tully

entire far best of And built use what Yes. product in It's Omnition I tracing indicated confident we I'm a questions. excited being just what scalable we the of what to Doug sort one looked I world. one the we mentioned vendors. at the and the the about took of survey the SignalFx. as and the most more did took of easier then reasons is on earlier buying of world's I really on traditional think is landscape fact saw platform that have we the built we've sort the all And observability and so as after

together And has and saw took Obviously, and already metrics logging what married I is in traces best that's we we is solutions world what's the us. platform, the Splunk. which best with so been did it the what

certainly next is come that's that's that with and here, just that who of on my integrated wants SignalFx, an and together what user think are the And metrics traces, part those sure already a further we're solution, which X fantastic And focus. laser-focused for months so recipe I making Splunk. DevOps #X together is for

equation you all really or much is, to front about to I'm want just as about of other the just and are, That the user easier thing really of And and top at adding interface whenever products excited want. to use they consumable what as DevSecOps going the DevOps user piece -- really, on and the they talk then I much doing enterprise. consumerization on heard They're wherever for of in probably that, be sort me the the last more to these we're possible. making places is important future. to mobility me the the

the And interface, an so the that combination user equation. makes I just of and the unbeatable just think, it scale platform,

Jason Child

question. flow the cash On

Okay.

So let kind down it pieces. X just me into break of

you say, I'd First, XXX. mentioned

of not tried So percentage the to about as dollars XXX doesn't revenue talk have that's It's just any on impact on cash. and I And why recognition. revenue. a absolute

the of billing try which -- ratable have year. bit, really approach, you to going been just to this would was to inflow to look driven little kind those keep earnest this change So but second, a of completed we apart. we middle I be move by moving that is course, if inflow, of at say, in

necessarily percentages a what, from, not last you're quarter difference. make to is that when while XX% significant was growing, so percentage a XX%, huge And going those

is also ties of I -- the say is amount would an that or point, second to which bills. second point, we the have Then of which increased ramping part

X. in year either They and utilizing. then ingestion they're to lot then X because they're a deals and year as big amount pay two that the they bigger year So in in on bigger want we're smaller pay vCPU, paying a of or will doing,

longer And to so work ratable transition takes itself to this for going add on when through. cash out. of more billing, a top pushes that you it little It

the very the outflows. piece, then And I'd last piece say, is third

continue less than function Our are Tim as, still growing as relatively in growing the are call, going we into technology, been. And have where well it on to grow talked to they've building sell further we we be all to Doug continue invest technologies. are to been as OpEx, out is about we've a while our revenue, course, going outflows those of to that and fashion the as able go-to-market a lot aggressive

cash on we're So try OpEx back fact that show cutting to to earlier. not the

flow that's really ever one in have So to than cycle. the why had, get that will to we've will take X we been years the stronger best years more it past. cash But when come us out, our we of Xx,

Operator

Mark from with Murphy Our question comes next JPMorgan.

Mark Murphy

assuming I'll to add orders X my mentioned congrats. Jason, with part over you just clarify. those are, X, wanted that -- Or contract total of I I'm value agencies. for interpreting And that X, inaccurate? mid-X-figure had several am instance, government I years. $XX is correctly? million that

Jason Child

and closer we I that But not range. rather million the they're they're say, would -- mid-X-figure, no, range to than $XX $XX-ish X the million mid- the I mean -- so definitely, big. no, when to they're million That's between not say $XX X.

Mark Murphy

great. That's Okay.

second is to guess -- guiding growth you're a I question little the I'm The surprised mid-XXs. I'm ARR

five to out. something start guessed big such Next that fiscal you'd year, I just quarters would a number, have guiding out you're and it's maybe because closer XX%

confidence that is you out sector that's of Or else something is level kind by you being pipeline, lifted it Is or far? performance? unusual So are I'm in just curious, seeing there bit something on going this a lifted? being public that the forecast providing that of going

Jason Child

And is of it's kind Well, about strong layer ARR if the a X of will, is a average for cake, works no, years. us, very -- duration growth. our you it's just way

ago sold what the sold have X ago. we we this and a what years contracts sold we year year, you So

know next is sold to year. about we next is be so that, also feel into good happen And going going we roughly X/X going year, what And to next about year.

see gives the actually us pipeline year. to pretty that the And so and into we ramp that confidence expect next good

forward well been months, XXX business on-prem, figure only maybe it license -- So are just kind maybe there has complete was And view hasn't a I and made it's the I think confusing revenue performing it my -- the consumption. think large. really while. it's annual be hard But little you're my honestly, pulling yes, since out would what but appreciate I've the been extremely for really quite to mean, been I I And numbers a that understanding. the so here made so it X of

And have a continue view will to better just and been performing. we we performing so strong this for how hopefully, provide expect how strong

Operator

with Michael James. Raymond next Our comes question Turits from

Michael Turits

together. Doug Jason and It's maybe a question for

Tim much this to migrating growth? that's come amount for to the is of you XX you it to of driver on that? like Is a business from just a How in ARR mentioned of Xx and Cloud. maintenance, contributor had Did Term maintenance, over XX still in go about meaningful to or annual that ARR? talked And On you terms ARR that's in that Xx. was mean back, think said that I you --

Douglas Merritt

beginning want very the You I of -- so was at confused question. the

Michael Turits

want just I part to from maintenance or ARR. So is Term of that know if for the migrations to driver Cloud

Douglas Merritt

it. Got it. Yes. Got

what sure make So in that's same I to it's thought page. the saying. I you're want

us X% into could our new growth cases our and ARR perpetual think forming customers number, within have new use only that why there of of was footprint off strong perception easily that, contracts of Jason not ARR number transitioned leading accounts, our not customers. perpetual forming So I term expanding -- to term. And contracts the is that that not with just converting perpetual X% and be is a

response Jason for strength think, business. Kash's underlying back question, I me, to of And said a just the to, indicator of the just the and core going that's what as

help to new bring cohort of And in continue on analysis were the customers leaned number the we people we've have that and confused to got make continuing ensure that that why that that's purity ARR that We they not use think departments new find number. seen. on that great or our customers he to same I sure penetrate are cases, new that

Jason Child

about is to billion remaining we guess right. it exactly so add it. $XXX kind is X point million roughly and that, of or gets if Doug you it -- That's so billion, the kind cloud, would Right. or -- about billion break I Yes. maintenance. -- the of $X.XX $X-ish mean the said of I No, down of XX% I of $X.XX

and And so is of -- that of term portion and that a perpetual. then a is portion

but breaks there's if that -- the don't provide down. it magnitude, how So helps I that's of know kind

Michael Turits

Doug, the a we contract then, customers driving what's have adopted stage, pricing, Okay. elasticity in going when to the new value? there? essentially lower In it's the such sense for other total have new early do that -- but seen increase you're is And that some getting more that an we're know have when price, words, consumption I unit that

Douglas Merritt

Yes. It's a question. good

So all curve get, much you the really versus the with per-gigabyte And our worked volume infrastructure to has the that pricing framework. way the curve lower done is banded what there a we've visibly is higher extend always fee price that unlimited out is. more way an pricing

we more was always key affordable it were payments to was there's because -- stretching the volumes advantage people an been term we basically So banding out with higher data. helped more like the over continue years. thing feel X for What

term, as saw, we now to gig. moving XXX we are to feeling from perp converted comfortable gig from So people more XXX

example, comfortable cases the more does make the correlates I of and use to that's are think that there. you what volume think go X terabyte does, figurative a terabytes, volume I back the to is data the feel of out banding banding just XX from which to and

cohort or like dramatically not stay XX seen their yet. what consume as either predictive infrastructure the lot have price in are seen haven't that total few probably footprint or it's with I yet, not Splunk. data points, that have I increasing flat framework, with than a they the to anyone way, -- is have our so So that -- customers we go less they a prolific converted down new new

Operator

from comes Bachman question next with Our Keith BMO.

Keith Bachman

thinking RPO about side. The think QX? first as the be I pretty RPOs out. we is there we is both to if wanted question I'll a the see should you had and meaningful snapback. anything for anything throw that wanted And there And/or there's current just about RPO out call Both total on to the

Jason Child

that. -- I'm RPO would at say the well, This versus or of I bookings. is take sorry, XX% prior up -- Jason. XX%, XX% I'll XX% XX% period bookings at RPO, current RPO total

impact, this XX%, it roughly more XX%. remember, was of kind of points XXX the On really that was basis like onetime so

XX% it quarter last This consolidated you bookings. we XX%, quarter, therefore on into acquired RPO at which have that RPO, SignalFX, taken to if took down about out and would

next overreact of why can And or I RPO with one number about as quarter. very a lumpiness one other. some the is thing lot deals. really out strong acceleration even that's to good at last Now selling durable the That look much too we're volatility bookings. I the the pretty cause it's the -- move shifted large see X significant X Those now some metric We within think from that you'll is in still versus quarter. bookings. a RPO RPO growth ARR -- of but not We're that growth going and to just X we still talked that why can It have X-figure to what or so quarter a is deals. The like deals about that way bookings.

Keith Bachman

incremental opportunities process transition talking even what changes about previous to you think to you've not the to Okay. last what should Fair or as on you in many more But pricing impact are they are I going is consumption similar the you're transition, if highly core, more me out question. the correlated. Because the Splunk? enough. during had have potential upsell data, to say? one for your gotten of thoughts, for And ways, this Doug, to customers from any do you are

Douglas Merritt

Yes.

indexing Splunk expansion, much I I we that with when in ease of the think years ago, that and two leaned motion years two up. because Cloud, Term ago think, really the aggressively upsell started Enterprise went again, did upsell motions start more

data of there's been my is volume, is, there. First consistently that in for all appetite much -- all, is so data pricing, the out which and of around a so motion. is customer I What sensitivity why have again, I've opportunity conversations there volume-based we think much perpetual seen

Now the interesting thing about the portfolio.

So data were there's feel of it pricing will talking on people and able streaming of like the value volumes add -- and a got to go that that to make automation in data index so the be has that Phantom purposeful to that at out get rest to you Splunk very the the Data-to-Everything to to after they the costs be high of platform, go and easier control not for a with important very act acquisition. wide the data not the complement just And complemented by you about variety response what being for data Tim in the centered very But you valuable. what's capabilities, orchestration it. want able and it's to have then is rest But pillar years the is in now of portfolio data I around really at be about been X interesting a index and and add to index. being and need if

of And a some the that activity think on continued high-attached, look are and be really, for then doing the index the reps DSP, taking I to portfolio to as when revamped a DFS, That's you the we really of job and that plus Splunk looking And and Mission guys that, Omnition, plus I there's UBA. et add think should SignalFx, apps well. top, And good begin are like growth of our customers awesome, in lever plus cetera, really expansion developer next forward Enterprise there. years, ITSI, automation the Control, CS, out multiproduct, at Phantom, with journey the we value is a then orchestration, X of when happens. X, lot

Operator

question And D.A. our Davidson. with Nowinski next from comes Andrew

Andrew Nowinski

were looked Brexit-related? a revenue I execution Was just region? like on, question wanted the there just Or that to decelerated. modestly any international in ask I issues guess, it you

Douglas Merritt

public is, which of for the of which U.S. us, that major governments number overperformance government those -- goes is back we major sector we have to It's that the That was international. versus world. the driver -- U.S. the sector, around sold public the into the number and

and high XXs, as mid- mid- reason EMEA are we've or continued there's be to to talked high on that we internationally, no in and about cadence that can't focused to capability execution APAC. very then in high mid- both And XXs And all XXs.

opportunity need a of of neutral every companies we've located to make country happens. the that the sure But world there's is take advantage that across the So in of organizations, Governments, a work do data player. rest lot got to that, commercial to is that data.

set Everywhere make effectively. So there is that can ample opportunity. we sure we them, we've that got to pursue

Andrew Nowinski

Okay. be your attributable lot then guess, given you And Obviously, basis. likely changes. me. know down X-figure last the year, be capacity And would I that licensing a now I logo might but deals, and why that were year-over-year versus new wondering current a And was sales get one strong. I was very adds, higher whether is last your RPO on down for of to

Douglas Merritt

changes. It's on, is. it's focused we've attributable we talked I'm been how frustrated I about, that licensing very don't have -- and as think that metric something I've -- obviously and to by it stubborn

clear in prospecting. team. end We quarters X-plus quarters. reps that spending we there's they They're her sales ramped. they What so circling a global the here where and on -- now, did basis, around opportunity attention been than head know exists. momentum, Christian, get X do have new We exponential up so within have carve there keep of is that Susan and Those for the more I would and starting time not that there's out to seen accounts much time growth much

portfolio we've whole doing multitude that's time enhancements, focused including than and of go easier will are consumption been et acts, can deliveries of eventually nothing move other cetera, there's cloud, there. us on foundational through a find that that We attention that some that to I different of think the But don't any number. and

Operator

with Merwin Goldman And from our comes Sachs. question final Chris

Christopher Merwin

log updates do cross-sell solution in try curious just of existing you still it's Just to where process? integrating the know integrated with process mind a fully the the bring us you are on any I you very you Do products? to updating but when early, SignalFx, that to plan to market start there.

Timothy Tully

This Yes. is Tim.

folding in taking user the So what acquisition see the is and into term, we're experience. SignalFx to going short directly it Omnition the you're

year. suite the a sort Splunk will sometime -- QX. from being in rest would together observability very of the combined the sometime in you're That in of interface. rest and so user be short of the early the see a going product time the said, in pulling And advancements that metrics traces around next And here, then collapsed be with logs middle observability suite to of

be the We linking the there will already with X. between

link the between and a going click X from just you're away forth So products. back really

Operator

time all for have call we Mr. the closing any that's the And back questions. Ken Tinsley remarks. turn to like for I'd to

Ken Tinsley

And great us. you, joining thanks, I Have your Great. everybody, Catherine. appreciate today. help Thank a night. for

Operator

Thank this concludes call. conference today's participating. gentlemen, and you Ladies for

great You may now disconnect. a day. Everyone, have

Splunk (SPLK) 21 Nov 192020 Q3 Earnings call transcript