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CompanyName:SplunkIncCompanyTicker:SPLKSector:T echnologyIndustry:ComputerSof tware&Services
EventDescription:Q32016EarningsCallMarketCapasofEventDate:7.96BPriceasofEventDate:62.76
©2014TheStreet,Inc.Al l R ightsReserved Page1of25
Splunk(SPLK)EarningsReport:Q32016ConferenceCallTranscriptThefollowingSplunkconferencecalltookplaceonNovember19,2015,04:30PMET.Thisisatranscriptofthatearningscall:
CompanyPart icipants
KenTinsley;SplunkInc.;CorporateTreasurer,VPofIRGodfreySullivan;SplunkInc.;Non-ExecutiveChairmanDougMerritt;SplunkInc.;President&CEODaveConte;SplunkInc.;SVP,CFO
OtherPart icipants
JimSuva;Citigroup;AnalystPhilipWinslow;CreditSuisse;AnalystBrentThill;UBS;AnalystMelissaGorham;MorganStanley;AnalystDanielIves;FBRCapitalMarkets;AnalystMichaelTurits;RaymondJames;AnalystEdMaguire;CLSA;AnalystAlbertChi;JPMorgan;AnalystJasonValkemar;RobertW.Baird;AnalystAndrewKisch;BarclaysCapital;AnalystKirkMaterne;EvercoreISI;AnalystMattHedberg;RBC;AnalystKashRangan;BofAMerrillLynch;AnalystBrianWhite;DrexelHamilton;AnalystSteveKoenig;WedbushSecurities;AnalystTimKlasell;NorthlandSecurities;AnalystGregMcDowell;JMPSecurities;Analyst
MANAGEMENTDISCUSSIONSECTION
Operator :
WelcometotheSplunkIncorporatedthird-quarterfinancialresultsconferencecall.
(OperatorInstructions)
Asareminder,today'sconferencecallisbeingrecorded.
Iwouldnowliketointroduceyourfirstspeakerfortoday,KenTinsley,CorporateTreasurerandVicePresidentofInvestorRelations.Youhavethefloor,sir.
KenT insley(CorporateTreasurer,VPofIR):
Thankyou,Andrew.Goodafternoon,everyone.Thankyouforjoining.
WithmeonthecalltodayareGodfreySullivan,DougMerritt,andDaveConte.Weissuedtwopress
CompanyName:SplunkIncCompanyTicker:SPLKSector:T echnologyIndustry:ComputerSof tware&Services
EventDescription:Q32016EarningsCallMarketCapasofEventDate:7.96BPriceasofEventDate:62.76
©2014TheStreet,Inc.Al l R ightsReserved Page2of25
releasesafterthecloseofmarkettoday,andbotharepostedonourwebsite.Thisconferencecallisbeingbroadcastliveviawebcast,andfollowingthecall,anaudioreplaywillbeavailableonthewebsiteaswell.
Onthiscall,wewillbemakingforward-lookingstatementsincludingfinancialguidanceandexpectationsforourfourthquarterandFYandFY.Transaction,productandservicesmix,plannedinvestments,trendsinmomentuminourbusinessincludingcloudbusinessandimpactsonourmargins,andexpectationsregardingourexecutivetransition.Thesestatementsreflectourbestjudgmentbasedonfactorscurrentlyknowntous,andactualeventsorresultsmaydiffermaterially.
PleaserefertodocumentswefilewiththeSECincludingtheForms-Kfiledtodaywithtoday'spressreleases.Thosedocumentscontainrisksanduncertaintiesandotherfactorsthatmaycauseactualresultstodifferfromthosecontainedinourforward-lookingstatements.
Theseforward-lookingstatementsarebeingmadeasoftoday,andwedisclaimanyobligationtoupdateorrevisethesestatements.Ifthiscallisreviewedaftertoday,theinformationpresentedduringthiscallmaynotcontaincurrentoraccurateinformation.
Wewillalsodiscussnon-GAAPfinancialmeasureswhicharenotpreparedinaccordancewithgenerallyacceptedaccountingprinciples.AreconciliationofGAAPandnon-GAAPresultsisprovidedinthepressreleaseandonourwebsite.
Withthatandforthelasttime,IwouldliketoturnitovertoGodfrey.
Godf reySullivan (Non-ExecutiveChairman):
Thanks,Ken.Greetings,everyone,andwelcometothecall.Wehaveseveraltopicstocovertoday.
Firstandbestarethecoolstoriesaboutourcustomers.Wealsohavegreatresultsandoutlooktoreport--also,ofcourse,anoutcomeofourcustomers.And,wealsohavethegreatpleasuretointroducethenewCEOofSplunk.
Let'sstartwhereSplunkalwaysbegins,andthatisinthankingourcustomersfortheirincredibleandpassionatesupport.Ihadthehonorarypositionofactingasemceefor.conf,andthisyearwasthebestyearever.CustomersincludingTargetusingSplunktoanalyzedatafromautomationequipmentandroboticsintheirdistributioncenterstodrivedownsupplychaincosts.Or,BMWusingSplunktoanalyzemanufacturingandenergydatatoresolveproductionissuesandperformpredictivemaintenance.
SonicDrive-InusingSplunktoanalyzedatafromover,point-of-saledevicesacross,retaillocationstodeliverconsistentcustomerexperienceanddetectgiftcardfraud.And,RBCCapital,whotoldthestoryofa-hourSplunkHackathonandcomingoutwithmultiplenewcorporateappsthattheyimmediatelyputintoproduction.
Thanksagaintoourcustomersfortheirinnovativeusecasesandtheirpassionatesupport.Splunkisanamazingplacetowork,andIcanspeakforeveryemployeeinsayingthatourcustomersareournumberonesourceofinspiration.
WewillgettotheQresultsinamoment,butthesecondorderofbusinessistoannounceournewCEO,DougMerritt.BeforeIturnitovertoDoug,Iwanttoexpressmygratitudetoouremployees,customers,partners,andfriendsforyourincrediblefriendshipandsupportovertheyears.Thelastsevenyearshavebeenthemostfunandrewardingyearsofmyprofessionalcareer,andsoannouncingthatIamretiringfeelsprettystrange.
Inreality,Iwanttojumponanairplaneandgoseesomecustomers.But,Ihavebeendoingthatfor
CompanyName:SplunkIncCompanyTicker:SPLKSector:T echnologyIndustry:ComputerSof tware&Services
EventDescription:Q32016EarningsCallMarketCapasofEventDate:7.96BPriceasofEventDate:62.76
©2014TheStreet,Inc.Al l R ightsReserved Page3of25
years,anditisfinallythatphaseoflifewhereIwouldliketospendmoretimewiththefamily.AllofyouwhoaremyageknowwhatI'mtalkingabout.
We'veallrunhard,toomanymarathons,weekendwarriors,andabyjob,andnowwehavesomeaccelerateddepreciationonthechassis.Bettertohavesomefunnowbeforethewheelsfallcompletelyoff.
So,I'vebeenworkingwiththeBoardonasuccessionplanforsometimenow,andthat'severyCEO'sresponsibility.TheBoardhasbeeninvolvedandsupportive,butIconsiderthismyresponsibilitytopreparetheCompanyforthenextphaseofgrowth.NFLhistoryislitteredwithquarterbackswhostayedtoolong,andsomewherealongtheline,theyforgotthatthisisateamsport.
WhenIrecruitedDougtoSplunktwoyearsago,itwaswithaneyetosuccession,andI'mdelightedthatweareallnowreadyforthatsuccessfultransition.I'llbeworkingwithDougthroughQtoensureasmoothtransitionandthenmovingontoNon-ExecutiveChair.
So,nowtoyournewCEO.Dougisararehuman,onewhoissmart,competitive,andcreative.Andyet,heiskind.Heiscompassionate,andalwaysthoughtfulofeveryonearoundhim.
Heisalsorareinhavingstartedhiscareerasaprogrammer.IthinkitwasDoug'sCandCOBOL--.
DougMerritt (President&CEO):
Evenmoredetrimental,RPG.
Godf reySullivan (Non-ExecutiveChairman):
And,alittleRPGthrownin,andthenherotatedinto-plusyearssalesandmarketing.Thenspenttenmoreyearsindevelopment,productmanagementandproductmarketingandsixyearsasaCEOleadingstartupcompanies.He'suniquelyqualifiedtoleadatechnicalCompanylikeSplunk,andI'msohappytobeabletopassthetorchtosomeoneIrespectandtrust.
AtSplunk,hehasdoneagreatjobofbuildingourfieldorganizationandcontributingtooursuccess.I'mconfidentthatDougwilldoagreatjobasthenextCEOforSplunk,andIlookforwardtobeinginvolvedwiththeCompanyasNon-ExecChairandtoassistinanywaypossible.So,Doug,congratsonyourpromotion,andit'sanhonortopassthetorchtoyou.
DougMerritt (President&CEO):
Thankyouverymuch,Godfrey.Gettingtheopportunitytobementoredbyyouandlearnfromyouhasleftanindeliblemark.Ofalltheremarkableleadersinhigh-techthatI'vehadtheprivilegeofworkingwithandgettingtoknow,youaretrulytheabsolutebestintheindustry.
Thankyouforbeingsuchanincrediblerolemodelandteacherinpersonforme.Icouldn'tbemoregrateful,andI'mtrulythrilledthatwillbeabletocontinueourrelationshiptogetherwithyouasNon-ExecChair.
So,ontoourresults.WehadagreatQ,andIwanttothankourcustomersandpartnersfortheirenthusiasticsupportandourSplunkemployeesfortheirmanycontributions.
Totalrevenuescameinat$.million,up%overlastyear.And,I'mthrilledthatweaddedovernewcustomerstotheSplunkfamily.
Godfreymentionedsomegreatcustomerstoriesfrom.conf.Atthesametime,ourproductteamsmadeanimpressivesetofannouncementsincludingSplunkenterprise.withdoubletheperformance,lowerTCO,
CompanyName:SplunkIncCompanyTicker:SPLKSector:T echnologyIndustry:ComputerSof tware&Services
EventDescription:Q32016EarningsCallMarketCapasofEventDate:7.96BPriceasofEventDate:62.76
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andadvancedvisualizations.Enterprisesecurity.andournewSplunkuserbehavioranalytics,orUBA,tobetterdetectandrespondthroughoutthelifecycleofasecurityattack.AswellasupdatestoSplunkLightwhichisnowavailableasacloudservice,andHunk,orwhatmightbemorenaturallydescribedasSplunkanalyticsforHadoop.
And,goingbacktoourSplunkroots,whichbeganbyfocusingontheITopsandappdeliverymarkets,weareveryhappythatwelaunchedourITserviceintelligencesolution,orITSI,whichisfocusedspecificallyonthosecoremarkets.MorethanadozenSplunkcustomerssuchasAdvancedMDandVodafonehavebeenrunningITSIinproductionandareravingabouthoweasythesolutionistoinstallandconfigure.Andhowquicklytheyareabletoimproveservicelevelsandcustomersatisfaction.
Forexample,AdvancedMDusesITSItomonitorthehealthoftheir$billionclaimsflowprocesstoensureuptimeandanimprovedcustomerexperience.Theyreportedseeingcriticalinsightsliterallydaysafterinstall.InQ,wehadgreatcustomerwinsinITopsandappdeliveryincludingGettyImages,Z illow,Cisco,Intralinks,IndependentHealth,andNASDAQ.
Asyouknow,ourQalsolinesupwiththefederalyear-endsoletmeswitchnowtothehighlightsofourpublicsectorperformance.InOctober,weheldourfirstgovernmentsummitinDCwherewehadmorethan,attendeesgathertosharegreatusecases.Now,Splunkishelpinggovernmentandeducationalorganizationsfulfilltheirmissions.
Forexample,theUSCitizenshipandImmigrationServicesaidthatquote,Splunkisthecornerstonethatgluesalotofourtechnologiestogethersowecangetfastreactiontimeonourdata.And,IquotetheWhiteHousemilitaryoffice--weuseSplunktobeproactive,sinceenabling,ithasbeenatotalmindsetshift.Andfinally,ArizonaState'sinformationsecurityofficereliesonSplunktokeepthedataoftheir,studentssecure,mitigatefishingandspam,andproactivelyidentifypayrollfraud.Itwasatrulygreatevent,andIwanttothankourcustomersfortheirenthusiasmandcongratulatetheSplunkpublicsectorteamonagreatevent.
Wealsohadareallystrongpublicsectorquarterintermsofcustomerexpansion.USPostalServiceusedSplunkoriginallytosupportIToperations.But,rapidlyexpandedwithsecuritywhentheywerebreached.Todayinadditiontosecurity,theyuseSplunkfornetworkmanagement,bigdataanalytics,andemailmonitoring.And,wehadtheDepartmentofEnergy,whosignedanEAAwithSplunk.
Wealsosawgreatmomentuminstateandlocal.FairfaxCounty,Virginia,anewSplunkcustomer,choseSplunkcloudandESastheirnext-generationsecurityanalyticsplatform.TheStateofArkansasISdepartmentsignedanEAAchoosingSplunkastheirstatewideSIM,toensureregulatorycomplianceandimprovetheirsecurityposture.And,theStateofMainepurchasedESoverlegacySIMS.
WehadanimpressiveQinourcommercialsegmentsaswell,ledonceagainbytheAmericasteam,thatalsodroveEAAswithmultiplecustomers.IncludingSynchronyFinancial,whosignedanagreementforSplunkenterprise,ES,andITservicesintelligence.And,Groupon,whoexpandedwithanEAAtodeliverimproveduserexperienceacrosschannelsthroughordermonitoring,mobileusage,andbehavioranalysis,merchantperformanceandpoint-of-saleanalytics.
WealsohadgreatcustomerwinsbyourinternationalteamsincludingLloydsbankinggroup,whoadoptedSplunkastheirloganalysisplatform,basedonsuperiorfunctionalityandaflexible,licensedeploymentmodel.And,IKEAexpandedthisquarterandalsospokeatourSplunkLiveStockholmaboutwhytheyreplacedalegacySIMwithSplunkenterpriseandES.ThelegacySIMcouldn'tscale,couldnotservethousandsofusers,oringestalltypesofdata.
IKEAalsorecognizedthestrengthofSplunkasaplatformtohelpwithITopsandbusinessanalyticsbyusingSplunktocomparereal-timesalestohistoricalsalesacrossregions.Othernotableinternational
CompanyName:SplunkIncCompanyTicker:SPLKSector:T echnologyIndustry:ComputerSof tware&Services
EventDescription:Q32016EarningsCallMarketCapasofEventDate:7.96BPriceasofEventDate:62.76
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winsthisquarterincludeDubaiSmartGovernmentandNTTDocomoinJapan.
Movingontosecurity.QwasarecordquarterwherewesoldmoreESthaninanyotherquarterinourhistory.Wecontinuetostrengthenourroleasthenervecenterforsecurity.Herearesomeofourcustomerwins.
JabilCircuit,whichhasbeenusingSplunkforITops,hasexpandedusetosecurityandaddedEStoquicklyidentifyandpreventthreatsandprotecttheintellectualpropertyoftheircustomers.NorfolkSouthernCorporationexpandedtheirSplunkenterpriselicenseandmadetheirfirstpurchaseofESforevendeeperlevelsofthreatdetection.NorfolkSouthernusesSplunkintheirstate-of-the-artsecurityoperationscenterastheirSIMtoensuretheirbusinessandITinfrastructureareprotectedatalltimes.
And,alargemedicalinstitutionandlongtimeQRadarcustomerwastargetedbysophisticatedattackerswhowereintheirenvironmentlongerthantraditionalSIMmodelretentionallows.Splunkwascalledintoreconstructthedatatoidentifytherootcauseofthebreach.OthernotablecustomersforsecurityincludeAmazon,CreativeArtistsAgency,Yodlee,andNorthwesternMutual.
OurIoTcustomerusecasescontinuetogrowaswell.CenterpointEnergy,aFortuneelectricandnaturalgasutility,choseSplunktomonitortheapplicationsandinfrastructureunderpinningtheirsmartmeteringandsmartgrid.SimilartoTargetandBMW,whichGodfreymentionedearlier,FruitoftheLoomwillbeusingSplunktoanalyzedatafrommanufacturingequipmentandsystems.ManycustomersareleveragingtheKepwareindustrialdataForwarderforSplunkforreal-timemonitoringandanalyticsoftheirindustrialdata.
Lastbutnotleast,cloud.OurQresultsshowcontinuedaccelerationinourcloudbusinesswithordersgrowingintripledigitsyear-over-year.OurcustomersareexcitedwiththespeedandeaseofSplunkcloud.Theyarehappytofocustheirtimeandattentiononanalyzingthedatatoachievetheirbusinessresultsratherthanprocuringanddeployingequipment.
OneparticularwinI'mexcitedtocalloutisProgressiveInsurance,anewcustomerthatselectedSplunkcloudforITopsandbusinessanalytics.Splunkwillbeusedtoimprovecustomerexperienceandgaindeeperinsightintooperationaltrends.Customerswanttoknowthattheirworkloadsareasreliableandsecureinthecloudastheyarein-premise.Splunkistheretohelpcustomersmovetothecloudwithconfidence.
Transitiontopartners,I'dliketocalloutafewkeypartnerendorsements.LetmestartwithAmazonwebservices,whoattheirrecentuserconference,reInvent,Splunkwasagainheavilyfeatured.OurappforAWSwaspresentedintheopeningpartnerkeynote,andSplunkwastheonlyanalyticspartnerintheAWSIoTannouncement.
AtreInvent,wealsoreleasedanewversionoftheSplunkappforAWSwhichintegrateswithservicessuchascloudtrail,config,andVPCflowlogs.ThisenablescustomerstomovetothecloudbygivingthemsecurityandoperationalandeconomicvisibilityintotheirAWSenvironments.WealsodeliverednewintegrationswithvariousAWSservicestoenablecustomerstogainanalyticsandvisualizationtoservicessuchasAWSlambda,IoT,andkinesis.
Finallyaswecontinuetoinvestinourjointengagements,TeresaCarlson,VicePresidentofAWSworldwidepublicsector,spokeduringthekeynoteatourrecentgovsummit.IndescribingthevalueofSplunk,Teresasaidquote,SplunkishelpingcustomershaveconfidencetomoveandgrowtheirbusinesswithAWS.Thankyou,Teresa.Wecouldn'tagreemore,andwelookforwardtoaffordtoourcontinuedsuccessfulpartnership.
WealsoannouncedourstrategicalliancewithBoozAllenHamiltonthispastquartertocreatejoint
CompanyName:SplunkIncCompanyTicker:SPLKSector:T echnologyIndustry:ComputerSof tware&Services
EventDescription:Q32016EarningsCallMarketCapasofEventDate:7.96BPriceasofEventDate:62.76
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solutionsforcyberthreatdetection.Inaddition,SplunkwillbeutilizedbyBoozAllen'smanagedsecurityservice,cyberforsite,tomakethedataitcollectsmoreactionablethroughsecurityanalytics.Wewillalsojointlydevelopandhosteventswhereleadersareputinasimulated,incidentresponseexercisetohelpthemunderstandhowtoprepareforandhowtorespondtocyberincidentsandthreats.Ipersonallysatthroughoneoftheseexercises,andI'vegottotellyou,itwasanincrediblypowerfulexperience.
Insummary,itwasafantasticquarter.I'mreallyproudoftheentireSplunkteam.Ourcoredevelopmentteamskeepdeliveringimpressiveinnovationandfunctionalitythatwasonfulldisplayat.conf.
Themarketgroupsaredefiningstrategy,productdirection,andbuildinganenviableecosystemfortheirsolutions.Ourcloudbusinessisacceleratingbasedonaclearstrategyandgreatoperationalfocus,andoursuperbfieldorganizationjustkeepsgettingstrongerandbetteratdeliveringcustomersuccess.
Again,thanksallofourcustomersandpartners,andthankstoeverybodyworksatSplunkandforagreat,greatquarter.Now,letmeturnthecallovertoourCFO,DaveConte.
DaveConte (SVP,CFO):
Allright.Thanksmuch.
First,Doug,manycongratulationstoyou.VeryhappytoseeyousteppinginastheroleofCEO.
Andmanycongratstoyou,Godfrey,onyourretirement.Ofcourse,asChairman,I'llstillgettomesmerizeyouwiththenumbers.Maybeyouwon'tbeontheauditcommittee,butregardless.Herewego.
Godf reySullivan (Non-ExecutiveChairman):
ThethingIlookforwardtothemost.
DaveConte (SVP,CFO):
Herecomethenumbers.Q,asyou'veseenintherelease,wasourbesteverdrivenbyincreasingadoptionofourproductsandplatform.
Third-quarterrevenueswere$.million,a%increaseoverQoflastyear.Licenserevenuesgrew%year-over-yeartotaling$.million.
InQonceagain,morethan%ofourlicensebookingscamefromupsellstoourcustomers.Werecordedordersgreaterthan$,.WealsosawlicenseASPsgrowsharplytoover$,inthequartercomparedto$,to$,historically.ThejumpinASPswasattributedtotheincreasedadoptionbybothexistingandnewcustomerswhoaredeployingSplunkforagrowingsetofusecases.
Nowonpriorcalls,Ihavementionedthattheratablemixofbookingscontinuestovarysubstantiallyquarter-to-quarter.Asabriefrefresher,thekeycontributorstotheratablemixaretermlicensecontracts,Splunkcloud,andcertainEAAs.
InQ,theratablemixofbookingswas%whichisonthehighendofourguidedrange.AsI'vesaid,theratablemixcanswingsubstantiallyquartertoquarterlargelybasedoncustomerbuyingbehaviorandgenerallyfollowingseasonalpatterns.Wethereforetakealongerrangeviewofmixandpreviouslyhadbeenexpectingtobeatthehighendofourfull-yearrangeof%to%.
Consideringyear-to-dateactualresultspluscurrentvisibilityforQ,wenowexpectfull-yearmixtolandbetween%and%andexpectitwillremainattheselevelsonanannualbasisoverthelongerterm.AsImentioned,themixcanswingseasonallyandfalloutsidethisrangeforanyindividualquarter.
CompanyName:SplunkIncCompanyTicker:SPLKSector:T echnologyIndustry:ComputerSof tware&Services
EventDescription:Q32016EarningsCallMarketCapasofEventDate:7.96BPriceasofEventDate:62.76
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Allright.Backtotheresults.
InQ,internationalrevenuesrepresentedapproximately%ofthetotal,consistentwithpreviouslevelsandcomparableonayear-over-yearbasis.Oureducationandprofessionalservicesrepresented%ofrevenuesinQ.
Withrespecttomargins,whichareallnon-GAAP,Qoverallgrossmarginwas%,consistentwithlastquarteranddownslightlyyear-over-year.Reflectingtheexpansionofourcloudbusinessaswellasservicesaroundourcoremarketsolutions.
Outperformanceonourtoplinetranslatedtobetter-than-expectedbottomlineaswell.Operatingincomewas$.million,representingapositiveoperatingmarginof.%.Qnetincomewas$million,andEPSwas$.persharebasedonafullydilutedsharecountof.millionshares.
Cashflowfromoperationswas$.millioninthequarter,andfreecashflowwas$million.Overall,weendedthequarterwith$millionintotalcashandinvestments.
Now,lookingforwardtotheremainderofFY.WeexpectQtotalrevenuesofbetween$millionand$millionwitha%to%positivenon-GAAPoperatingmarginforthequarter.Withouryear-to-dateperformanceandourQoutlook,full-yearrevenueswillbeapproximately$million,upfromourpriorguidanceof$millionto$million.
Aswecontinuetoincreaseourinvestmentsinmarketgroups,productteams,thefield,andSplunkcloud,wemaintainourexpectationtogeneratepositivenon-GAAPoperatingmarginofabout%forthefullyear,consistentwithlastyear'slevelandpriorguidance.Sinceweexpecttobeprofitableonanon-GAAPbasisforQandthefull-year,foryourEPScalculations,youshoulduseafullydilutedsharecountofapproximatelymillionsharesinQ.
I'vesaidthatour[fusion]margintargetsincludetheimpactofagradual%to%increaseincostofservicesfromourgrowingcloudbusinessaswellashigherprofessionalservicesdeliveredaroundourcoremarketgroupsolutions.Weremaincommittedtorunningthebusinessonapositiveoperatingcashflowbasisoverall.Withourstrongyear-to-dateperformance,wenowexpectthatfull-yearoperatingcashflowwillbeapproximately%ofupdatedfull-yearrevenues.Thecomparestoourpriorguidanceof%.
AsI'vementionedbefore,FYisahigherthantypicalCapExyearasweexpectthebulkofourSanFranciscoHQbuildoutcoststobeincurredthisyear.Whencombinedwithglobalfacilityexpansionsthatmatchupwithourgrowingemployeebase,weareontracktoincurapproximately$millionintotalCapExthisyear.$millionofwhichwe'vealreadyrecognized.
LookingpastQ,IwanttogiveyousomeinsightintermsofhowwearethinkingaboutnextyearwhichisourFY.Currently,weexpecttotalrevenuesofapproximately$millionnextyearwiththeseasonaltrendscloselyfollowingthoseofFYandFY.
Asyouknow,sinceourIPOinApril,industryanalystshaveincreasedthepotentialTAMforourproductstoabout$billion--somethingthatwesharedat.confduringanalystday.Giventheearlystageofthemarketandgivenouroveralllevelsofgrowth,wewillremainininvestmentmodeaswecontinuetheexpandtheproductportfolioandourglobalfieldreach.Wewillcontinuetorunthebusinesswiththeseinvestmentsinmind,andasaresult,weexpectthatnon-GAAPoperatingmarginnextyearwillbecomparablewiththecurrentyearlevels.
AsImentionedatthatanalystmeeting,werecentlysignedaleaseforournewSouthBayofficeatSantanaRow.Thebuildingiscurrentlyunderconstruction,andweexpecttotakeoccupancyinlatecalendar.Obviously,thisisgoingtorequiresignificantamountofcashinvestmentintermsofcompleting
CompanyName:SplunkIncCompanyTicker:SPLKSector:T echnologyIndustry:ComputerSof tware&Services
EventDescription:Q32016EarningsCallMarketCapasofEventDate:7.96BPriceasofEventDate:62.76
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thebuilding.
Assuchglobally,weexpectnextyearabout$millionto$millionoftotalcapitalexpendituresfortheentireFY.Again,thebulkofwhichwillbeforthatSantanaRowbuildout.
Inclosing,ourteamcontinuestoexecuteonourmissiontodeliverexceptionalvaluetoourcustomers.Qwasreallysolid,andI'menthusiasticaboutouroutlookfortherestofthisyearaswellasFY.
Thanksmuchforyourtime,yourinterest,andI'msurealivelyQ&Asession.Withthat,Operator,backtoyou.
QUESTIONS&ANSWERS
RETURNTOTOPÊÊ
Operator :
(OperatorInstructions)
WalterPritchard,Citi.
JimSuva(Analyst-Citigroup):
ThisisactuallyJimonforWalter.GreatquarterandcongratstobothGodfreyandDoughere.
DougMerritt (President&CEO):
Thankyou.
Godf reySullivan (Non-ExecutiveChairman):
Thankyou,Walter.
JimSuva(Analyst-Citigroup):
HowshouldwethinkaboutthenormalizedCapExgoingforwardbeyondFY?
DaveConte (SVP,CFO):
NormalizeCapEx,sure.IfyoulookbackatCapExpriortotheseHQbuildouts,wewererunningintheanywherefrom$millionto$millionannually,andthosewerespecificallytiedtoheadcountadditioncosts.So,aswegainsomecriticalmassintermsofsizeoftheCompany,wealsohaveagreatercapacitytohiresowethinkthatwecanaddmoreemployeesnextfiscalyearandtheyearafterthenwehaveintheprioryears.So,IwouldexpecttheCapExtorangeinthat--callit,$millionto$millionrangeonanormalizedbasis.
JimSuva(Analyst-Citigroup):
Gotit.Thanks.Andthen,secondly,whatpartnershipsarereallydrivingbusinessforyou?ItseemsasthoughyoutalkedabouttheAmazononehere,anyotherinterestingtidbits?
DougMerritt (President&CEO):
Yes,wearestillinaheavyco-sellmodewithallofourpartners.Ithinkwemadesomegoodprogressaswe'veinvestedmorespecificallyacrossthepartnerchannel,butwhenwegetasensethatweareabletohavepartnersdrivemoreandusparticipatelessthenwewillabsolutelybuilditintoouroutlookforyou.
CompanyName:SplunkIncCompanyTicker:SPLKSector:T echnologyIndustry:ComputerSof tware&Services
EventDescription:Q32016EarningsCallMarketCapasofEventDate:7.96BPriceasofEventDate:62.76
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JimSuva(Analyst-Citigroup):
Gotit.Thanks.
Godf reySullivan (Non-ExecutiveChairman):
Thankyou.
Operator :
(OperatorInstructions)
PhilipWinslow,CreditSuisse.
PhilipWinslow(Analyst-CreditSuisse):
Thankyou,andI'mjustexcitedtobethefirsttosaycongratulationstoGodfrey.Irememberwhenwemetatthefirst.confoverfiveyearsagowhenyouweredoinglessthan$millioninrevenueandhowexcitingthestorywasthenandjustseeingwhatyouhavebuiltthisCompanyinto.Youdeservearestsocongratulations.(laughter)
Godf reySullivan (Non-ExecutiveChairman):
Thankyou,Phil.Totalgas.Somuchfun,andIappreciateallofyoursupportovertheyears.
PhilipWinslow(Analyst-CreditSuisse):
Ofcourse,Iknowyouweren'treferringasalifetimeBroncofantoPeytonManningwhenyouweretalkingaboutquarterbacksstayingtoolong.IfitwasDavemakingthatcomment,IknowhewouldbetalkingabouttheBroncos,butactuallygoingtobreaktheOperator
DougMerritt (President&CEO):
Thanks,Phil.Sosales-frontwise,I'vebeentalkingforafewoftheseearningscallsaboutafocusedstrategywithindifferentcountriestobuildcriticalmass.Wherewehaveeffectivecriticalmass.Largenumbersofpeople,referenceableaccounts,goodpenetrationwithinindustries.UScommercial,andIthinkincreasinglypublicsectoraregreatexamples.Weareseeingacontinueddropintimetoproductivity.Thoserepsarecomingupprettyquicklyasyouwouldguessbecausetheenvironmenthelpsthem.Theexplicitfocusoverthepastyearandchangehasbeen,let'sgetthatsamecriticalmassinternationally.And,overall,ifIlookglobally,wearestillprobablyaboutayearonaverageforrepresentativetoreallybeatfullproductiverates,butthat'sreallyrepresentingthevariantsofthincountriesversusmediumcountriesversusthick.And,ourgoal,aswe'vesaid,istokeeppilinginvestmentintoourtopregionssowecangetthosebenefits.
DaveConte (SVP,CFO):
Andthen,Phil,yourquestionwasoncewegetthroughtheatypicalCapExinvestmentsthatwe'remakingaretheresomecorrespondingOpExamounts.And,we'vebuiltintoourforecastandouroutlookcertainlyforthisyeartheremainderofthisquarterandnextyearaswearethinkingaboutitinitiallywhatit'sgoingtocostusontheoperatingsidetogetthebuildingsonline.Oncetheyarethereandwehaveabettersenseintermsoftheoccupancycoststhenwewillrollthatin,butmostofthatwillgetbuiltintoFY.
PhilipWinslow(Analyst-CreditSuisse):
Gotit.Thanks,andcongratsagain,Godfrey.
CompanyName:SplunkIncCompanyTicker:SPLKSector:T echnologyIndustry:ComputerSof tware&Services
EventDescription:Q32016EarningsCallMarketCapasofEventDate:7.96BPriceasofEventDate:62.76
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Godf reySullivan (Non-ExecutiveChairman):
Thanks.
DaveConte (SVP,CFO):
Thanks,Phil.
Operator :
BrentThill,UBS.
BrentT hill(Analyst-UBS):
Godfrey,you'llbedeeplymissed,butwe'reingreathandswithDoug.So,IguessforDougjustonthenewrole,canyoujusttalkalittlebitaboutwhatweshouldexpectfromyourperspectivegoingin?Obviously,everythingisworkingandgoingintherightdirection,butmaybetalkthroughjustacoupleoftopprioritiesthatyouhavegoingintoyournewrolewouldbehelpful.
DougMerritt (President&CEO):
Absolutely.Thankyou,Brent.OneoftheincrediblyexcitingthingsaboutSplunkasDavementionedinhisremarksistheTAMthatwearegoingafterisbigandseemstocontinuetogetbigger.Eventhoughwe'vebeenaddressingthemarketeffectivelyandjusttalkedaboutagreatquarter,wearestillsoincrediblyearlyinthatcycle.Ifwehada$billionorlargerTAMandtheguidancethatwe'reprovidingwearestillinthe.percentagepoint,lowsingle-digitpercentagepointsofpenetrationofthatTAM.So,formyfocus,thenumberonemostimportantthingaswithanytransitionistomakesurethatQhappensthewayitissupposedtohappenandwedon'tmissabeatwiththefield.I'mgoingtocontinuetomanagethefieldleadersdirectly.We'vegotareallystrongteam,andI'mconfident--weareallconfidentthatwewillkeepoureyeonthatincrediblyimportantgoal.Outsideofthat,ensuringthatwekeepthegrowthpedaldowntoexploitthatTAM,keepdrivingourproductportfoliothewaywehaveintothedifferentadjacentmarkets,andkeepdrivingSplunkasadatafabricplatform.IthinkoneoftheadvantagesthatI'vehadisI'vebeenherefor.yearsandhavedefinitelyhadalotoftimewiththerestoftheexecutiveteamandtheoverallSplunkteamtomakesurethattheformulathatGodfreyhasledandwillcontinuetoleadasanexecutivechairmanwithhisinfluencehasbeenexecutedsoeffectivelyandmakingsurethatwekeepthatinmindandkeepguidingtowardsgrowthIthinkisgoingtobekey.
BrentT hill(Analyst-UBS):
Thankyou.
Operator :
KeithWeiss,MorganStanley.
MelissaGorham(Analyst-MorganStanley):
ThisisMelissaGorham.I'mcallinginforKeith.Bestoflucktoyou,Godfrey,andechoeveryoneelsetosaythatyouwillbemissed.
Godf reySullivan (Non-ExecutiveChairman):
Thankyou.
MelissaGorham(Analyst-MorganStanley):
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JustaquestiononSplunkcloud.Itseemslikeyouarestillcontinuingtoseeverygoodtractionthere.Justwonderingifyouaredoinganythingtoincentivizeyoursalesforcetosellthatsolution?Or,aretheylargelyneutraltosellingSplunkcloudversusSplunkenterprise?Andthen,intermsofwhereyou'reseeingtraction,isitlargelygarneringnewusers?Or,doesitallowyoutofurtherpenetratewithinyourexistingcustomerbase?
DougMerritt (President&CEO):
Thanks,Melissa.ThisisDoug.Iwilltakethat.Wearetryingtokeepitneutralrightnow.OneofthestrengthsofSplunk,Ithink,isnomatterwiththeinfrastructurallandscapeisofacustomer--heavilyon-prem,heavilyacloudoranytypeofhybrid,ourproductcanfollowthatconfigurationandit'simportanttofollowthatconfigurationbecausewe'regoingtoneedtobeclosetothatdatasource.Makingsurethattherepsapproachthecustomerstraightfromtheverybeginningonhowdoweserveyourneedsbestwithoutpushingonewayortheotheriswherewearetryingtokeepthatcompplanintheirfocus.
Withthatsaid,Ithinkthegrowthincloudhasbeenaverybalancedgrowth.WeseesomenewcustomerslikeProgressiveInsuranceIhadtalkedaboutearlierintheremarksaswellasexpansionofexistingcustomerswhomightbehavingsometypeofhybridmodelorevensomecustomersthataremovingtheirentiresetofworkloadsovertocloud,andit'sprettymuchacrosstheboardalsoasfarassmallerSMBaccountsallthewaytosomeofthelargeraccountsthatwehaveannouncedinthepast.It'sfollowingsuitwithwhatweareseeingwithSplunkacrosstheboard.
DaveConte (SVP,CFO):
ThisisDave.It'sinterestingasourcloudbusinessgainsmomentumandacertainlevelofscaleandmaturity,thepatternthatwehaveexperiencedwithexistingcustomers--again,over%oflicensebookingscominginupsells.ManyofourcloudcustomershavefollowedthatpatternaswellandhaveincreasedtheirworkloadsinSplunkcloud.So,there'sareplication,ifyouwill,orasimilarcustomerexperienceintermsofhowtheyputmoredataintoSplunk,getmorevalue,andthenlookformoreopportunitiestoputmoredataintoSplunk.That'sexcitingforsure.
DougMerritt (President&CEO):
I'lltaketwomoresecondsonthishybridapproachbecausewetalkaboutthatalotandsomeothercompaniescanusethatterm.WhatistrulyamazingaboutSplunkis,itdoesn'tmatterwhereeachcomponentsits.Youcanberunningsearchesondatabothon-premandincloud,privateclouds,publicclouds.ThedatacanbeindexedinanyportionandsentanywhereelsesoitreallyisaubiquitousapproachwhichfromwhatIcantellsofarintheindustryisitmakesusinacategoryofone.
Operator :
DanielIves,FBR.
DanielIves (Analyst-FBRCapitalMarkets):
Thanks.Godfrey,ayearfromnowareyougoingtobeascratchgolfer?(laughter)Isthatthenewgoal?
Godf reySullivan (Non-ExecutiveChairman):
Iamsofarawayfrombeingascratchgolfer.Thatwillnotbeoneofmygoals.
DanielIves (Analyst-FBRCapitalMarkets):
Okay.Thankyou.
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DaveConte (SVP,CFO):
Godfreyalwaysshootsunderbutheplays.
DanielIves (Analyst-FBRCapitalMarkets):
And,theballfromthewoodsmagicallyendsupinthefairway.Youaregoingtobemissed.Ithasbeenagreattrip.Myquestionisonthesecurity--theintersectionofsecurityandbigdata--asbigofaroleyouguyshaveplayed.Whatinningareweintermsofonthatsecuritydataanalyticsmarketopportunities?Obviously,ithasbeenakeypartofyoursuccess,buthowdoyouviewthatgoingto?
DougMerritt (President&CEO):
There'stwoaspects--there'smultipleaspectsthatIkeeplookingatasfaraswhereweonthetrajectoryofgoingafterourTAM.And,oneofthemiswithinagivencustomerthatisusingusforsecurityanalyticsorforanotherusecase,howmanyofthesesourcetypesthatshouldgointoSplunktoprovidethatcomprehensive,end-to-endvisibilityareactuallymappedintoSplunk?Evenwithinsomeofourbettercustomers,therestillismoreprogressthatwecanmakeongivingthemthattruevisibility.I'mmakingsurethatallfirewalllogs,allIDSIPSlogs,end-usersecuritylogsarefedin.OSanddatabaselogs,soIthinkthatwearestillrelativelyearly.Thatwholetermofsecurityanalyticsisarelativelynewterminthesecuritylandscape,andinmanyofthecustomeraccountsthatIgointoandthatmyrepsgointo--we'restillevolvingthatviewpointofwhywearedifferentthanatraditionalSIM,whydidwegetdraggedintothismarketinthefirstplacebecausewe'remoreofthisdatafabric.We'vemadereallygoodprogressthere,butit'salonggamestillinfrontofus.
DanielIves (Analyst-FBRCapitalMarkets):
Congrats,Doug.
DougMerritt (President&CEO):
Thanks,Dan.
DaveConte (SVP,CFO):
Thanks,Daniel.
Operator :
MichaelTurits,RaymondJames.
MichaelT urits (Analyst-RaymondJames):
I'llfollow-uponDaniel'squestiononsecurity.Youhavegivenusasenseofwhatpercentagesecurityhasbeenoftotalrevenuesinthequarter.Canyouupdateusonthat?Andalso,onboththecompetitivepicturethere.Whatyouareseeingcompetitively?Anychanges,anybodynewinsecurityanalytics?And,ofcourse,ithasbeenaquestionofthequarter,isthereanychangeintheoverallstrengthofsecurityspending?
DaveConte (SVP,CFO):
Sure.Hey,Michael,it'sConte.Q,securitywasabout%ofthebusinesssothathasbeenprettyconsistentintermsofithadbeen%,%acoupleofyearsago.WeadvancedourofferingsintermsoftheESsolution.Ofcourse,weIthinkwiselycreatedourmarketgroups,andHaiyanjoinedthecrewandaddingthatsubjectmatterexpertisereallygaveusadifferentpositionatthetable.Overthelastnumberofquarters,
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wehaveseensecuritygofromwhatwasagainacoupleofyearsago%,%toconsistently%ofthebusiness.WesawthatagaininQ.
DougMerritt (President&CEO):
Onthecompetitivefront,Michael,IsaidthatIhaven'tseenanymajorshift.IfIgobacktowhatissouniqueaboutSplunkandwhyhaveweemergedassuchasuccessfulsecurityvendor.GodfreyhastalkedoneveryearningscallI'veeverlistenedtoaboutschemaonreadinsteadofschemaonright,andwhythatissoimportantinmanyusecasesandinsecurity,inparticular,itisactuallycritical.Thatschemaonreadallowsustoaskanyquestionofthedatathatwewanttoaskatthemomentofaskingwithouthavingtohavegonethroughthepainofmanicuringandmassagingandcleansingthatdataliketraditionalsolutionshavedriven.Ourcoredifferentiatorstillremains.Securityissuchavolatile,alwaysprogressing,alwaysevolvingmarketplace,andwe'vegotacorearchitectureandthensetofproductswithenterprisingsecurityandnowwiththeuserbehavioralanalyticsproductthattakesadvantageofthatflexibility.WearestillgenerallycompetingwithpartneringwithflashcompetingwiththeSIMvendors.Feedingdatainto,grabbingdatafrom,orinsomecasesifitisabrand-newbuylookingatusversusthem.
Godf reySullivan (Non-ExecutiveChairman):
Iwillevenpileonhere.Ithinkthenatureofthequestionistherehasbeenalotofchatterinthemarketplaceaboutwhethersecurityoftoppedoutorstartedtodeclineinsomewayorthatsortofthing.Wehadagreatquarterinsecurity,andIbelievethatwehaveanunusualopportunitygoingforwardthat'snotjustlimitedtoSIMorlimitedtothreatdetectionorlimitedtosomeofthepointsolutionaspectsforexactlythereasonthatDougpointedoutwhichistheabilitytogetlotsofdifferenttypesofdataandanalyzeitinalmostanywaythatdeliversbothforensics,security,investigation,userbehavior,insiderfraud.ThenumberofusecaseswecangetbecauseofthenumberofdatasourcesIthinkputsusinalittledifferentpositionthansomeoftheconcernthatwasinthemarketplaceearlierthismontharoundotherearningsreportsandthelike.Wearehugelybullishaboutthesecurityopportunity.
MichaelT urits (Analyst-RaymondJames):
Great.Thankyou.
DougMerritt (President&CEO):
Thanks,Michael.
DaveConte (SVP,CFO):
Thanks,Michael.
Operator :
EdMaguire,CLSA.
EdMaguire (Analyst-CLSA):
Goodafternoon.Godfrey,IknowwhenyoustartedatSplunkyouwantedtohavefun,andit'sgreattoseeyoumanagingthetransitionsowellonahighnote.Bestwishestoyou.I'msureyou'regoingtocontinuetohavealotoffun.
Godf reySullivan (Non-ExecutiveChairman):
Thanksverymuch.Iappreciatethat.
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EdMaguire (Analyst-CLSA):
IhadaquestionabouttheroletheapplicationsareplayinginthegrowthofASPs.And,reallythequestionhere--youhadalludedtoamuchbroaderrangeofusecasesthatyourcustomersareusingthetechnologyfor,butalsoyou'reabletochargenowforITSIandenterprisesecuritywhichseemtobetrackingwell.Howdoyoubalancethebreadthofhowyourcustomersareusingtheproductswiththefocusthat'sinvolvedwithengineeringandgoingtomarketwithmorespecificsolutions?And,doyouactuallyseethishigherISPlevelcontinuingatleastforthenearterm?
DougMerritt (President&CEO):
Thanks,Ed.WhenIlookattheapps,Ithinktherearemanybenefitstothem.Oneiswecanchargeforthem,butthecoreisithelpsillustratethetimetovalueofSplunkbeautifullyforcustomers.Youcangivethemtheplatformandletthemhuntaroundandfigureoutthevaluetheyaregoingtoget,oryoucangivethemaplatformwithenterprisesecurityontoporwithITSIorwithUBAandtheygetimmediateah-hahmomentsandthencanstillusetheplatformtohuntaround.Ithinkabitoftheperformancethatweareseeingisfastertimetovalueinsomecasesbecausethoseappshavefasterclosecycles.But,thecoreisyoustartwithusecaseAandyouquicklyseeBandC.Youjumpinadifferent[buying]centergetadditionalusecasesandtheenterpriseorientationoftheplatformcomesout.Thatisreally,Ithink,thepredominanttrendthatIhavebeenseeingasfarassomeoftheASPincreasesorsomeofthesedeepercustomerrelationshipsastheystartedwithsecurityandmovedtoITopsandappdeliveryandthenrealizedthereissomebusinessanalyticsandIoT.Or,theymayhavestartedITOAanddoneadifferentjourney.But,IthinktheEAAformatsthatwerolledoutatthebeginningoftheyeararestartingtogetalittlebitmoretractioninthemarket,andthatincombinationwithsomeoftheseappsisIthinkaverynicebeneficialpiece.
EdMaguire (Analyst-CLSA):
Great.Thankyou.
DougMerritt (President&CEO):
Thanks,Ed.
Operator :
MarkMurphy,JPMorgan.
Albert Chi(Analyst-JPMorgan):
Thankyou.ThisisactuallyAlbertChionforMarkMurphy,andcongratulationsonagreatquarterandthenews.YoumentionedseveralEAAenterpriseadoptionagreementwinsonthecall.CouldyoucommentonhowmanyEAAsyouclosedduringthequarter,andhowdidthatcomparewiththepriorquarters?Andalso,whendoyouthinkthatcouldbecomealargerheadwind--or,sorry,atailwindifithasn'tbeenalready?
DaveConte (SVP,CFO):
Hey,thisisDave.Again,asDougmentioned,werolledtheprogramoutMarch,andwhilewearecertainlyhappywiththeEAAtransactionsthatwe'verecorded,they'restillafractionoftheoveralltransactionvelocity,andoveralltransactionvolumecontinuestogrowforus.It'sthatcustomersarelookingatusintermsofastandardplatform,andasaresult,youareseeingitinthoseASPs.Intermsofitbeingofaheadwindortailwind,again,theabsolutenumberofthemissosmallthatintermsoftheoverallsizeofthebusiness,Ithinkwearegoingtoneedtogetsomemoremilesintherearviewmirror
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beforewecanevaluatewhetherornotthere'ssometypeofcontributioncomingfromthoseguys.
Forthoseofyouthatwereatanalystday,Ihadshownsomeexamplesofacustomerlifecycle,andit'sreallyimportanttounderstandthatjustbecausewehaveanEAAprogramavailable,thecustomerintermsoftheirmaturitywithourproduct--howmanydisparateusecaseshavetheydeployedacrosshowmanydifferentdepartments.Ultimately,thevalueofstandardizationacrosstheplatformiscorrelationofallyourdatasources.So,IhadacouplecustomerexamplesinthePowerPoint,andit'sanywherefromfouryearstosixyearsofsteadyadoptionintheseindividualusecasesordepartmentsthatleadstothematuritythatyouneedtoseeinanaccounttowhereyouwouldsayyes,theyareripeforanEAA-typetransaction.Ithinkthat'sareallyimportantcontributorintermsofhowmanydoyouthinkwearegoingtodooveraperiodoftime.
Albert Chi(Analyst-JPMorgan):
Thanks.So,canIsaythatlessthan%to%ofyourlicensebusinessatthispoint?
DaveConte (SVP,CFO):
Intermsoftransactionvolume,certainly.
Albert Chi(Analyst-JPMorgan):
Gotit.Thankyou.
DaveConte (SVP,CFO):
Yougotit.
DougMerritt (President&CEO):
Thanks.
Operator :
SteveAshley,RobertBaird.
JasonValkemar (Analyst-RobertW.Baird):
ThisisJason[Valkemar]sittinginforSteve.Thanksfortakingmyquestion.IwantedtogetanupdateonSplunkLight?Ithasbeenoutforaboutsixorsevenmonthsnow.Justcuriouswhattheearlyresponsehasbeen?And,isitprimarilyattractingnewusersfrommostlysmallercompanies--mostlySMBs?
DougMerritt (President&CEO):
Itisaveryexcitingproduct.IthinkSplunk,againlikeIwastalkingaboutearlierasfarason-prem,cloud,hybrid,wearetryingtobepresentinasmanydifferentplacesasacustomercouldpossiblylookattothentakeadvantageofSplunk.IthinkLighthasdefinitelyopenedupmoreofthesmallerdepartmentalandSMBmarketthatwantspossiblyasimplerproduct,differentpricepoint,etcetera.Wearedefinitelyseeingvolumesincrease.Interestingly,ithasbeenprettystrongintheeducationsector,whichmakessensegiventhesmallerITstaffs,butstillalotofdemandsthateducationalinstitutionshave.Thewholepointwaslet'smakesurethatwecontinuetomakeSplunkavailabletomultipledifferenttypesofcustomers,andwe'reseeingthattractionwithSplunkLight.
JasonValkemar (Analyst-RobertW.Baird):
Great.Thanks.
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Godf reySullivan (Non-ExecutiveChairman):
Thankyou.
DaveConte (SVP,CFO):
Yougotit.
Operator :
RaimoLenschow,Barclays.
AndrewKisch (Analyst-BarclaysCapital):
Hi,thisisAndrewKischonforRaimo.MycongratsagaintobothGodfreyandDougandonthequarter.Doug,couldyouupdateusonhowmanyquotarepsyouhavenow?And,nowthattheheadofsalesisrunningtheshow,doyouhaveanychangesinstoreforhoweitherwithpricingorwiththestructureofthesalesorgthatyoucouldsharewithus?
DougMerritt (President&CEO):
Sure.Wefinishedthequarteratasfarasdirect,individualquotacarriers.Obviously,theoverallsalesorgthatsupportsthemislargerwithpresalesandoverlayofsalesandthebusinessvalueconsultinggroupandtheothercontributors.Asfaraschanges,Ithinkthatthat.yearsoftimewiththeteam--thatSplunkisauniqueCompanywithsomeuniquemodels,andithasbeenreallygoodlearningexperiencetogetthechancetobeaccountableforthatrevenueandgotoeverycorneroftheglobeandseeeverytypeofcustomertoreallyunderstandwhatmakesSplunkspecial.IamabsolutelythrilledabouttheTAMandthegrowthopportunities.Ithinkwe'vebeeneffectiveindrivinginvestmentintothefieldsothatwecankeepthatexpansiongoingattheratethatweneedtohitourgrowthnumbers,andIdon'tseeanychangeintheapproachesthatwe'vebeentakingasfarasgoingafterthegrowthinthemarket.
AndrewKisch (Analyst-BarclaysCapital):
Great,andcongratsagain.
DougMerritt (President&CEO):
Thankyou.
Operator :
KirkMaterne,EvercoreISI.
KirkMaterne (Analyst-EvercoreISI):
I'llechomycongratstobothGodfreyandDoug.Doug,IwantedtoaskyouabouttheBoozAllenrelationship,andyoumentionedearlierthatyou'restilldoingalotofco-sellingrightnow.Youhavesuchauniquebusinessthatofferssomuchvaluetoyourcustomersoncetheyunderstandwhattodowithit.But,oneofthethingsthatprobablyhasn'tevolvedasquicklyisapartnerchannelaroundthatwhichcouldmaybeopenupthetopofthefunnelandbringmore--takethatnewcustomersaquarterupto,.DoestheBoozrelationshipopenthatpartneringchanneluptoyoualittlebit,andIguesshowdoyouseethatevolvingasweheadintocalendar?Thanks.
DougMerritt (President&CEO):
Absolutely,Kirk.Iwilldividethatintotwoaspectsoftheanswer.TheBoozAllenrelationorour
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relationshipswithVerizonorAccentureorAWSorCiscoorotherkeystrategicpartnersreallyhelpsonhandingintroductionsintoaccountsandpointedintroductions.AtBoozAllen,itisgoingtobeallaroundeitherdrop-insonsometypeofbreachormediationorinsightintocybersecuritythreats.So,Ithinkthatthatandotherrelationshipsinthatsecurityspacewillhelpuswithbetterchiefinformationsecurityofficers--CISO-typeapproaches.Thosearegreat,andwe'vegotsomeco-sellingrelationshipswithsomeofthoseorganizations.AWSandourrepsarehand-in-handwithmanyofthesedifferentaccounts,butbeingabletohandovertheend-to-endsaletoanyofthosestrategicalliancepartnersis--wewillworkonit.Itwillbenicetogetthere.
Thesecondpieceisthechannel.First-tierdistributorslikeArrowandsecond-tierISVsandVARs,andthat'sreallywherewe'vebeenworkingtogetthemtobeabletocarrytheballendtoend.Wehaveinstancesofthatinthefieldrightnow.Ineedthoseinstancestogoupbecausewhenthathappensourrepscangofocusonthesesixopportunities.ThechannelcangofocusontheseotherXopportunities,andwecandivideandconquerandbesuccessfulwithinthemarket.And,thatwasmoreofwhatIwastalkingabout--whatImeantwiththeco-sellisstillthemajormotionwiththatchannel,andwe'reworkinghardtogettoaleveragesellwheretheyarecarryingtheball.
KirkMaterne (Analyst-EvercoreISI):
Thanksverymuch,andcongratsonagreatquarter.
DougMerritt (President&CEO):
Thankyou,Kirk.
DaveConte (SVP,CFO):
Thankyou.
Operator :
MattHedberg,RBCCapitalMarkets.
MattHedberg (Analyst-RBC):
Thanksfortakingmyquestion.Twoquickones.Firstone,Doug,wouldyouexpecttoeventuallyhireareplacementforHeadofFieldOpsmaybeaswegetintonextyear?Andthen,forDave,obviouslyyoucommentedonflatmarginsnextyear.Isitsafetoassumethatcashflowasapercentageofrevenuenextyear?Shouldthatbesimilartowhatwehaveseenthisyear?Or,couldthat,infact,tickupalittlebit?Thanks.
DougMerritt (President&CEO):
Thanks,Matt.Yes.Absolutely,lookingatpullinginareplacement.Wewillopenasearchrightawaynowthatthenewsisout,andwehavegotalotofverytalentedfolkswithinourfieldorganization.I'mexcitedtoseewhattheopportunitiesareasfarasthosefolksaswellaswhatisoutthereexternally.MyQfocusthoughisthatwe'vegotpeopleinseats,theyaredoingtheirjob,let'skeepthatmotiongoingatthesametimethatwelookforwhotherightlong-termleaderisforthatfieldopsorforthefieldleadershiprole.Itmayturnouttobemorethanonerole.
DaveConte (SVP,CFO):
ThisisDave.Asitrelatestomargin,we'vegivenourpreliminarypointofviewaboutrevenue,andasyoumightexpect,wearerightinthemidstofalloftheheavyliftingaroundnextyear'splansosomedirectionalthoughtsaroundthemarginiswhatIintendedintermsofwhatwe'vegiven.Whenwegetto
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theendoftheyear,ofcourse,wewillgetmorespecificaroundwhatyoucanexpectfromusnotonlyintermsofmarginexpansion,butalsocashflowasapercentageofrevenue.Atthattime,I'lllooktogiveyousomeguidanceintermsofwhatFYlookslike.
MattHedberg (Analyst-RBC):
Gotit.Thanks.
DaveConte (SVP,CFO):
Allright.
DougMerritt (President&CEO):
Thanks,Matt.
Operator :
KashRangan,BankofAmerica.
KashRangan (Analyst-BofAMerrillLynch):
Godfrey,Ihopetoseeyouata[unicorn],andDougyoualreadyhaveaunicornsocongratstobothofyou.
Godf reySullivan (Non-ExecutiveChairman):
Thankyou.
KashRangan (Analyst-BofAMerrillLynch):
Unicornsaremuchbetterthangolf.
Godf reySullivan (Non-ExecutiveChairman):
ThethingiswhenIplaygolfIgetaviewofthecoursethatnobodyelsehaseverseen.
KashRangan (Analyst-BofAMerrillLynch):
Myquestionisonthecompetitivelandscape.Doug,youmentionedattheanalystdaythatyouactuallysleepquitewell,butIwantedtojustunderstandinthisquarterwhatwerethemajorchangesyousawwithrespecttoAmazonasacompetitor?SumoLogic,Elasticsearch?Trend-wiseanyimprovement?Winrate?Thecompetitionfallingoffwouldbeuseful.And,secondly,Doug,oneforyou.Whatwouldyouattributethelicenseupsideto?Wasitoneortwolargetransactions?Andalso,whenwelookatyourmixofbusinesscomingfromratable,isitfairtosaythat--orletmeaskthis.Ifallofyourbusinesshadjustbeenlicenseandnosubscription,whatwouldyourbusinesshavegrownbythisquarter?(laughter)Thankyou.Ihavetoaskthatmesmerizingquestion.
DougMerritt (President&CEO):
Youdo.Iknowyoudo.Letmetakethecompetitive,andthenI'llhandovertheratableandmixtoDave.Onthecompetitivefront,Ireallyhavenotseenanynotablechangesinthemarketplace.Firstofall,AWSisnotacompetitor.WearenotincompetitivesituationswithAWS.AmazonisacustomerofSplunk,oneofthecustomerswetalkedaboutintheearlyremarks,andIthinkthesynergiesbetweenthetwocompaniesrightnowarestrong.Itisanevolvinglandscape.
AWShasgottoservetheirconstituency.Youneverknowwhatisgoingtohappen,butwe'retheonly
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monitoringpartnerwithablueprintfor[landathat]AWSreInvent.AfterthereInventshow,AWSpostedtheirownblogonthebenefitsofkinesiscombinedwithSplunkwheretheyactuallysaid,thispowerfulcombinationletsyouquicklycapture,analyze,transformandvisualizestreamsofdatawithoutneedingtherightcomplexcodeusingAmazonkinesisclientlibraries.IthinkthereisgreatsynergieswithusandAWSandwewillcontinuetoworkaggressivelytomakesuretheystayassynergies.
Andthenfortherestofthecompetitivefront,Elasticremainssomethingthatispoppingupinouraccounts.Youcan'tstopfreewareandopensourcefrombeingdownloaded.Wherewehavedroppedintoaccountsandhadadiscussionwiththeaccount,wehadthewholebuildversusbuyworkshops,Iwastalkingaboutattheanalystday.Ourwinrateisridiculous.TheoverblowncostsofsomethinglikeElasticbecomeincrediblyapparent.Wejustbuildoutfortheusecasesandthenlookatthedevelopmenttime,thehardwarecosts,theoperationalcosts,anditliterallyisaXtoXandinsomecasesincrease.Whatlookslikefreeisnotfree,andGodfreyhasfocusedonusabunchofdifferenttimes.Ithinkthecompetitivelandscaperemainsthesame,andwe'vegottofighteverydaytotakethatbigTAM,butweareupforthefight.
DaveConte (SVP,CFO):
HiKash,thisisDave.Asitrelatestolicense,wehadreallyniceexecutiongloballyintermsofallthesalesteamsclosingtransactionswithFortunecompaniesatmeaningfulamounts,andthat'swhatyouseeintheASPs.Thelicenseperformance,theASPperformanceandofcourse,theoverallgrowthmetricsarereflectiveof,Ithinkacollectiveeffort.AndasDougmentionedinhispreparedremarks,ofcoursewithSeptemberbeingsaidyear-endwehadaverynicequarterinthepublicsectoroftheAmericas,werejustterrificintermsofbreadthanddiversityacrossdifferentindustryverticalsacrossalloftheregions,andsimilarly,internationally.ThequalityanddiversityofthecustomerswhoarelookingtoextractvaluefromtheirdatawithSplunkisjust--themomentumisterrific.
Andyourlast,andyourfavoritequestion,ofcourse,iswiththemix,whatwouldgrowthbe?Again,Ihaveagreedwithyouphilosophicallythatifmixwaslower,thengrowthrateswouldbehigher.Butwebuildin,again,assumptionsaroundmix,althoughitisthemostdifficultcomponentofourmodeltopredict,andwebuildthatintotheoutlookthatwegive.Ithinkwe'recertainlyreallypleasedwiththeresults,anditwasasuperstrongorder.Andweregoingtodothebestwecantokeepupdatingyouguysonhowwethinkmix--again,howdoesmixstabilizeovertime?I'dliketosaywe'vegottentoalevelofstability(technicaldifficulty)annual%,butonlyexperiencewillprovethattobetrue.
KashRangan (Analyst-BofAMerrillLynch):
Iwillkeepaskingthemesmerizingquestions.
DaveConte (SVP,CFO):
Fairenough.
DougMerritt (President&CEO):
Goodquestion,Kash.
Operator :
BrianWhite,Drexel.
BrianWhite (Analyst-DrexelHamilton):
Congrats,DougandGodfrey.Idon'twanttoleaveoutDavidandKen,socongratsonanewbosstonight.
CompanyName:SplunkIncCompanyTicker:SPLKSector:T echnologyIndustry:ComputerSof tware&Services
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DaveConte (SVP,CFO):
Mywifewon'tagreewiththat,butIwill.
BrianWhite (Analyst-DrexelHamilton):
MyquestionisaroundASPhere.Thisisaprettysubstantialupticksequentially.Ithinklastquarteryousaid$,,yousaid$,thisquarter.You'vealwaysputitinarangeof$,$,,soIjustwanttobeclear.ThisisatrendweshouldexpecttocontinueintoFY?IsthereananomalywithASPsthisquarter?Thatismyfirstquestion.Secondquestionisjustaroundcross-selling.You'vegotthisexpandingportfolio,andI'mjustwonderingifyou'reabletocrosssellalotofthesenewproductsthatyou'vebeencomingoutwith.Anymetricsaroundthatwouldbegreat.Thankyou.
DaveConte (SVP,CFO):
Sure.Idefinitelywouldnotcharacterizethisasatrend.It'sthesinglequarterwherewe'vehithistoricallyhighandnotablyhigherthananyotherquarterintermsofASPs.Importantly,aswelookacrossthepopulationoftransactions,asI'dmentionedtoKash,wejustdidsomanyhigh-qualitytransactionswherecustomerswerereallylookingtoadopttheplatform,thatit'sreflectiveoftheASPs.Now,ifthatcontinuesintothefourthquarterandthenwhenwestartlookingatouroutlookspecificallyforthefirstquarterandwebelievethatthetrendinASPsisupticked,thenwewillgiveyouthatupdateatthattime.Butasinglequarterisnotenoughyetformetodeclarethatatrend.
BrianWhite (Analyst-DrexelHamilton):
Okay.(Multiplespeakers)
DougMerritt (President&CEO):
Onthecross-sellingpiece,watchingITSIgetlaunchedwasawesome,becausethatobviouslywasourcoremarket,thewholeITopsandapp--developmentappdeploymentmarketplace.AndIthinkitreallyhasreinvigoratedthatmarket.Youputoutanapplicationthatuplevelsthegameontopoftheplatform.AndwesawlastquarteraswereleasedITSIandpeoplestartedfocusingonthatITopsusecaseisalittlebitofauptick,andtheusecasepurchasingfortheplatformwithinthatbuyingcenter.AndI'mwatchingthathappen.Fedobviouslyisaprettysecurity-heavygrouprightnow,andI'mwatchingalotoftheirsecurityusecasesstartthere.AndthenasweshowthemsomeofthatITSIorpartnerapplicationsaswell,theydrag--they'vealreadygot%ofdatatheyneedor%ofthedatatheyneed,andtheycangetimmediatevaluewithsmalladditionsofdatainoneoftheseapplications.Idothinkithelps,anditcertainlyhelpswiththeSplunkasadatafabricplatformthatmessageswell.
BrianWhite (Analyst-DrexelHamilton):
Okay.Again,congrats,guys.Greatjob.
DougMerritt (President&CEO):
Thanks,Brent.Appreciateit.
Operator :
SteveKoenig,WedbushSecurities.
SteveKoenig (Analyst-WedbushSecurities):
Hi,gentlemen,thanksforsqueezingmein.
CompanyName:SplunkIncCompanyTicker:SPLKSector:T echnologyIndustry:ComputerSof tware&Services
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DougMerritt (President&CEO):
Hi,Steve.
SteveKoenig (Analyst-WedbushSecurities):
Godfreyit'salittlehardtobelievethatIwon'tbefollowingyouatanymorecompanies.I'llbelieveitwhenIseeit,how'sthat?
Godf reySullivan (Non-ExecutiveChairman):
Allright.Thanksverymuchforyourkindwords.Iappreciatethat.
SteveKoenig (Analyst-WedbushSecurities):
Well,thankyou,Godfrey,andDoug,congratsyouaswell.
DougMerritt (President&CEO):
Thankyou,Steven.
SteveKoenig (Analyst-WedbushSecurities):
Iwantedtoaskyouguys,alittlesimilartoKash'squestion,onbookings,youdon'tgivebookingsmetrics,sowecanonlyguessatthemath.Butyouobviouslyareveryrocksolidonlicenses,andthat'sdespitethevariabilityintherecurringmixofbookings.MaybeDave,ifyoucanelaboratealittlebiton,whatisitthatallowsyoutoachievethatconsistencyonlicenses,eventhoughbookingsismovingaround?Isitconservatismintheguidance,ordoyouhaveleversyoucanpullintermsofhowyoudirect--insenseoffield,orarethereotherfactorsI'mnotthinkingabout?
DaveConte (SVP,CFO):
Well,I'dliketosayit'sbeenconsistent,butinreality,theguidancearoundthemixhasbeenametricIhaveupdatednowfivetimessincewe'vegonepublic-plusyearsago.Andevenwiththatguidance,we'vefallenoutsideoftherangeprobablyjustasmanytimesaswehaven't.Ultimately,thequalityofexecutionisinthatthefieldcontinuestodeliver,anddeliverinameaningfulway.So,witharobustportfoliooftransactions,thatflowsthroughtotheincomestatement.Therehavebeenquarterswherethemixhasbeenallovertheboard,andthere'sbeengeographydeltasbetweenincomestatementandbalancesheet,andsomefolksandtheirmodelshavehadconfusionthere.It'slike,well,welikeyourrevenuebeat,butwhere'sthedeferred?Ifwehadbeatlessonrevenue,thenwewouldhavemoredeferred,right?Thosegotogether.
Butagain,Ithinkthefundamental,orthefoundation,forourabilitytocontinuetodeliver,Ithinkenviableresults,isgroundedinunbelievableexecutioninthefield.Ofcourse,thatiscoupledwithgreatexecutionintheproductsgroups,because--Ithinkitwasprobablytwoyearsago,GodfreyandI,westartedtalkingaboutfromsingleproducttomultiproduct,andfocusedonadoption.So,theproductteamsinthemarketgroupsprovidingthesesolutionstocustomers,coupledwithterrificexecution,that'showwearesucceeding.Customerslovetheproduct.Andthat'swhyfromaninvestmentperspective,andwe'vetalkedaboutitnowacoupleoftimes,whenyoulookattheTAM,wehadearlyitis.It'sallaboutensuringthatwehavetheappropriateamountofcoveragesothatwecangoreachthecustomersandthatwedelivertheappropriateamountoftechnologythatcontinuestoleadthemdownthevalueprop.So,that'swherewearefocused.
Now,ifyouthinkbacktoanalystday,wetriedtogivesomecolorintermsoftherelationshipbetweenwhatyoucancalculatefromthefaceofthefinancialstatements,whichisabillingsnumber,andwhat
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revenuewerecognize.Andthathasbeenprettyconsistentrelationshipoverthelast,isit,what,threeyears?So,wearestaringatthatandsay,boy,isthatsomethingthat--isthatcoincidental,oristhatsomethingthatwewouldbuildourownmodelaroundtohelpussolvetheratablemixquestion?ButIthinkitisadecentproxytolookat,withsomevariability,asyouwouldexpect,intermsof,howdoItrytofitinthegeographyquestionbetweenincomestatementandbalancesheet?Checkoutthatrelationship,wearedoingthesamethingonourside.Wegettotheendoftheyearandifwethinkit'smeaningful,thenwewillgivesomemorecoloronit.
SteveKoenig (Analyst-WedbushSecurities):
Alright,soundsgood.Congrats,youguys.Thanksagain
DaveConte (SVP,CFO):
Thankyou.
DougMerritt (President&CEO):
Thankyou,Steve.
Operator :
TimKlasell,NorthlandSecurities.
T imKlasell(Analyst-NorthlandSecurities):
Hey,I'llthrowmycongratulationsallaroundtoyouguysaswell.Ihavealittledifferentquestion.We'vebeentalkingalotabouttheapps,thesecurityappsandtheITops,butyouhaveaprettyactivedevelopercommunity.Areyoubeginningtoseesomeoftheapps,IwouldsayleakoutoftheITdepartmentwheremaybebusinessanalystsorwhathaveyou,whoaren'treallycoredevelopers,beginningtousetheproductfairlyconsistently?ProbablydevelopedbytheirITdepartment,butagain,movingout?
DougMerritt (President&CEO):
Yes,forsure,andthat'ssomething--Ithinkeveryearningscall,Godfreyhasalwaystoldtwoorthreefunstoriesthataremorebusinessanalytics-oriented,orinsomecases,IoT.AndTim,Iwouldagreewithyou.ThebulkofthoseareappsorframeworksdeliveredbyITforlineofbusiness,buttherearecases.There'samassivesemiconductororganizationwheretheirengineeringteamactuallyusesSplunknativelybecausetheyareparsingthroughmassiveamountsofCAD/CAMdata,floormachinedatatotrytofigureout,arethereanomaliesordiscrepancies,eitherinthedesignoffuturechipsorthecurrentchips.Ithinkwe'vegotamoretechnicalenduserbase,thenwestillhavegotareallygoodUIforthem.AndwerecentlybroughtonSnehalAntaniasourCTO,andtheguywho'shelpingtodrivethestrategyforbusinessanalyticsandIoTtodowhatwehavedoneinsecurityandITOAthere.Let'swatchourcustomers,let'sspendlotsofthetimewiththosecustomers.They'vebeenreallygoodatleadingustothenextstepofrepetitivehighvalueusecases,andfigureoutwhatwrapperscanweputaroundtheproductssothatthird-partydevelopers,internalITshops,orevenbetter,individualenduserscanstarttogetvalueofSplunkaswell.
T imKlasell(Analyst-NorthlandSecurities):
Okay,good,andisthatmeaningfulrevenuesrightnow,oraretheyjustinterestingusecasesandit'sgoingtotakeafewyearstogrow?
DougMerritt (President&CEO):
CompanyName:SplunkIncCompanyTicker:SPLKSector:T echnologyIndustry:ComputerSof tware&Services
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Ithinkthatnon-ITOA,nonsecuritysegmenthasalwaysbeeninbetween,fromwhatI've--%-ishto%-ish.
DaveConte (SVP,CFO):
Ithasbeen%orlessinaggregateacrossanalytics,IoT,industrial.Ithinkthat'sasmuchafactorofthehighlevelofgrowththatwe'veexperiencedinsecurityinourcoremarketsasitisforthosefolksnotgrowing.ButasDougmentioned,intermsofhavingatailoredsolutionthatweputintothefieldthatisspecifictoahighlyrepeatableusecaseinthosemarkets,wehavenotidentifiedthatatthispoint.Ourcustomersareusingtheplatforminthousandsofdifferentusecasesthatfitintothosecategories.AndtheworkthatSnehalandtherestofusaredoingistosay,okay,howdowehelpcustomerswithatailoredsolutionontopsimilartoITSIthatisarefeedabledataextractionandvaluepropthatwewouldthenputitintoGTMteam?
DougMerritt (President&CEO):
Myonlyreservationaboutthosenumbersthatwe'vebeengivingoutisthatthosearetheinitialbuydesignationswhenthedealisfirstdone.Buttheexpectations,Ifeellikewe'refailingifthatinitialbuydoesn'tquicklytransformintoadditionalusecasesandnewdatasources.So,that'sasquishynumber.AndasDavesaid,therearethousandsofappsandusesandcustomers.OnthiscallwetalkedaboutLloyds,Progressive,CenterPoint,FruitoftheLoom,BMW,Target,asahandfulofthosewhoareusingusforeverythingfromroboticsinstrumentationtocustomerintimacyandunderstandingonmobileappsandwebsites.
Operator :
Thankyou.GregMcDowell,JMPSecurities.
GregMcDowell(Analyst-JMPSecurities):
Great,thankyouverymuch,andI'mhonoredtoaskthelastquestion.Godfrey,IthinkhistoryisgoingtojudgeyouasoneofthetrulyiconicSiliconValleyCEOs.Andtothatend,IwashopingwecouldmaybespendaminutebringingittoahigherlevelandmaybeaskingyoutomaybereflectonyourjourneyatSplunkandeventothisday,whatyouthinkinvestorsmostmisunderstandabouttheSplunkstory.AndIguessthesecondpartofmyquestionisyourpartingadvicetoDougandtheManagementteamonmaintainingthecultureoveratSplunk,acultureofinnovationandexecutionandhowtheteamcanmaintainwhatyoustartedoverthere.Thanks.
Godf reySullivan (Non-ExecutiveChairman):
Well,thanksforthatquestion.Icouldgoforawhileonthesetopics.Firstofall,Ienjoythecompliment,becauseouryoungerdaughterstillthinksIamadork,sothatIwouldberememberedsomeofthewayisactuallyquiteencouraging.WhenIthinkbackonthejourneyofSplunk,thethingthat'sbeenconsistentthroughoutallthoseyearshasbeentheculturethat'sdisruptive,innovation,irreverent,nonconformistculturebuiltaroundtryingtodothingsanewway.Itshowedupintheproductstobegin,butnowithasshowedupineverypartofthewaywemaintainourrelationshipwithourcustomersandthewaywetrytodelivervalue.IstilllookatSplunkfromearlydaysandsayweareoneoftherarecompaniesthatjustgavecustomerssoftwareandsaid,useitandprovevaluetoyourself.Andwhenyou'rehappy,youletusknowandwe'llbehappytoparticipatewithyou.AndIthinktoagreatdegree,customersstillappreciatethefactthatSplunkhasoneofthemostcustomer-orientedandcustomer-friendlyapproachestothemarketofanysoftwarecompanythat'severlived.AndIthinkwe'llhavethatasahighlightforyearstocome.
So,it'sbeenatruehonortobeapartofthisplace.Idon'tknowthatyouleadasmuchasyoupartywith
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it.YouhavetobeabletohangwithSplunk.It'snotquitethenormalleader-ledcompanyasmuchasitisthetribethatleadsitandeverybodyelseisapart.Butanyway,that'sawesome,andmyadvicetoDoug,well,I'vebeengivinghimadvicefortwoyearsnow,soI'mnotsureheneedsanymoreofmyadvice.Ithinkhecomesprettymissionreadyforthejob.Thebestpartofinternalsuccessionisyouhavealreadylearnedalltheproducts,you'velearnedthecustomers,youknowtheculture.He'sbeenoutontheroadnonstopthelastcoupleofyears.Idon'tknowhowmanycustomersyou'vemetwithsofarandhowmanyengineeringmeetingsyou'vebeeninandhowmanyQVRs.ButIthinkhiseminentlyreadyforthejob.AndthenicestpartaboutitisIdon'thavetoactuallydomuchintermsofcoaching,becausewehaveworkingtogethereffectivelyforalongtimenow.
I'mjustthrilledtoseetheCompanywhereitis.Ithinkthefutureisbrighterthanthepast.Ourusecaseiscontinuallyexpanded,ourcustomerscontinuingtobeadvocatesforus.Itisawonderfulandremarkableplacetobe,andIjustthinkthatnowisagreattimeforatransitionwhilebusinessisgreatandvelocityisgood,andIthinkDougisexactlytherightpersontotakeustothenextchapter.Thankyouforthatquestion.
GregMcDowell(Analyst-JMPSecurities):
Thankyou.
Operator :
Thankyou.Thatisallthetimethatwehaveforquestionstoday,soIwouldliketoturnthecallbackovertomanagementforclosingremarks.
Godf reySullivan (Non-ExecutiveChairman):
Iwilltakethislastopportunitytodoonemorewrapup,whichisjusttosayIamso,soproudoftheteam,andI'mproudofeverybodyintheCompany.Theemployeesherehavedonearemarkablejobofbuildingsoftwareanddeliveringcustomersuccess,anditisstillwhatweto.Thankyouforallyoursupport.Doug,congratulationsonthepromotion,Dave,Ken,thewholegang,congratulationstoallofyou,andlet'srock.Thispartyisjustgettingstarted.Thankyou.
DougMerritt (President&CEO):
Yessir,Mr.Chairman.
Godf reySullivan (Non-ExecutiveChairman):
Thanksverymuch.
Operator :
Ladiesandgentlemen,thankyouforagainyourparticipationintoday'sconference.Thisnowconcludestheprogram
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