SPLK - Embedded Expectations Analysis - 2020 07 23
Splunk Inc. (SPLK:USA) currently trades near recent averages relative to UAFRS-Based (Uniform) assets, with a 10.1x Uniform P/B. At these levels, the market is pricing in bearish expectations for the firm, and management may be concerned about RPO and market growth, their sales team, and their ability to sustain margins and cash yieldsSpecifically, they may lack confidence in the sustainability of RPO bookings growth and the potential of their Workload Migration Program with AWS. They may also lack confidence in their ability to predict customer demand and in their enterprise sales team's ability to complete deals. Moreover, they may be exaggerating the critical nature of Splunk for their customers and the benefits of on-prem to cloud transition services. Furthermore, they may lack confidence in the effectiveness of their Omnition control framework and may be exaggerating the growth in demand for data. Also, management may be exaggerating the tools available to their sales team to secure customers and may have concerns about continued margin weakness, as well as their ability to generated expected cash yields
Splunk provides software solutions that enable users to investigate, monitor, analyze and act on machine data. The company's main product is Splunk Enterprise, a machine data platform, comprised of collection, indexing, search, reporting, analysis, alerting, monitoring and data management capabilities. The company's Splunk Cloud delivers the capabilities of Splunk Enterprise as a service, while Splunk Light provides log search and analysis for information technology environments. The company also provides services that include maintenance and customer support, training services to its customers and channel partners, as well as consulting and implementation services to customers through its services team.
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