Splunk forecast falls short after stock closes at 52-week low

Splunk Inc. shares declined in the extended session Wednesday after the cloud-based enterprise software company’s revenue forecast fell short of Wall Street estimates.

shares fell 5% after hours, following a 7.7% drop in the regular session to close at $111.70, a 52-week low for the stock. Over the past 12 months, shares have dropped 46%, compared with a 23% gain in the tech-heavy Nasdaq Composite Index 

Splunk reported a third-quarter loss of $343.3 million, or $2.14 a share, compared with a loss of $201.5 million, or $1.26 a share, in the year-ago period. The adjusted loss, which excludes stock-based compensation expenses and other items, was 37 cents a share, compared with a loss of 7 cents a share in the year-ago period.

Revenue rose to $664.8 million from $558.6 million in the year-ago quarter. Analysts surveyed by FactSet had forecast a loss of 52 cents a share on revenue of $646.5 million.

Annual recurring revenue, a software-as-a-service metric that shows how much revenue the company can expect based on subscriptions, rose 37% for the quarter to $2.83 billion, while analysts had forecast $2.82 billion.

“Q3 marked a significant milestone for Splunk as it was our first billion-dollar cloud ARR quarter, with cloud accounting for a record 68% of our software bookings,” said Graham Smith, Splunk’s chairman and interim chief executive, in a statement.

Smith took over for Doug Merritt last month, after the Splunk CEO suddenly resigned. At the time, Splunk provided preliminary financial results that were largely confirmed with Wednesday’s report, but the company issued new revenue guidance that came in lower than expectations.

Splunk expects fourth-quarter revenue between $740 million and $790 million and total ARR of $3.09 billion to $3.14 billion, while analysts had forecast revenue of $828.3 million and ARR of $3.12 billion.

Splunk forecast revenue of $2.51 billion to $2.56 billion for the end of fiscal 2022 ending in January, and total ARR of about $3.9 billion in fiscal 2023 ending in Jan. 2023. Analysts expect fiscal 2022 revenue of $2.58 billion, and fiscal 2023 ARR of $4.07 billion.