Why Splunk Inc. Shares Plummeted Today

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 operational intelligence software specialist Splunk (NASDAQ: SPLK  ) plunged 18% Friday despite its better than expected first-quarter results.

So what: Quarterly revenue rose 50% year over year to $85.9 million. Meanwhile, adjusted operating margin was negative 4.2%, which translated to an adjusted loss of $0.04 per share. Analysts on average, were looking for a wider loss of $0.06 per share on lower sales of $80.74 million.

Splunk expects current-quarter revenue between $92 million and $94 million, with adjusted operating margin between negative 2% and negative 4%. Analysts, on average, were modeling a second-quarter loss of $0.02 per share on sales of $91.6 million.

Finally -- and this explains today's pullback -- Splunk raised its full fiscal-year revenue guidance to between $402 million and $410 million, up from its previous guidance for fiscal 2015 sales of $400 million. Curiously, though, adjusted operating margin is still expected to be roughly zero. Analysts, for their part, were already expecting a breakeven year on sales of $406.9 million.

Now what: Splunk certainly wasn't kidding a few weeks ago when it said investors should expect "strong fiscal first quarter FY15 results." But it's obvious the market was hoping for a bigger guidance increase based on analysts' full-year expectation going into the report. And with shares of Splunk priced for perfection at roughly 19.5 times trailing 12-month sales and 300 times the next year's estimated earnings, investors were understandably demanding blockbuster results on every metric. As a result, while this certainly doesn't mean Splunk's long-term story is broken, I have no problem continuing to watch this one from the sidelines.

Top dividend stocks for the next decade
In the meantime, why not put your money to work in something a bit more stable? In fact, the smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.


Read/Post Comments (0) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2977419, ~/Articles/ArticleHandler.aspx, 11/26/2014 12:30:24 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 hours ago Sponsored by:
DOW 17,814.94 -2.96 -0.02%
S&P 500 2,067.03 -2.38 -0.12%
NASD 4,758.25 3.36 0.07%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

11/25/2014 3:59 PM
SPLK $65.63 Down -1.33 -1.99%
Splunk CAPS Rating: ***

Advertisement