Why Splunk Shares Spiked

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of data management software specialist Splunk (Nasdaq: SPLK  ) soared 18% today after its quarterly results and guidance impressed Wall Street.

So what: Splunk's second-quarter loss widened, but a big beat on the top line -- revenue surged 71% to $44.5 million versus the consensus of $39.8 million -- coupled with upbeat guidance for the full year eases recent concerns over its exposure to slowing tech spending. In fact, the company added a whopping 400 new customers during the quarter, reigniting plenty of optimism about its growth prospects going forward.

Now what: Management now sees full-year revenue of $183 million-$186 million, up nicely from its prior view of $174 million-$177 million, and expects operating margins to improve as well. "Overall, we're pleased with our Q2 results, product developments, and increased customer base," CFO David Conte said in a conference call. "We're looking forward to continuing to add the best field reps available and expanding our platform breadth and capabilities." Given Splunk's still-speculative nature, however, I'd remain cautious about buying into that bullishness.

Interested in more info on Splunk? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

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