Stocks climbed on Friday following a speech on financial stability by Federal Reserve Chair Janet Yellen, who warned against removing regulations implemented in the wake of the 2008 financial crisis. The S&P 500 (SNPINDEX:^GSPC) and the Dow Jones Industrial Average (DJINDICES:^DJI) both delivered modest gains, effectively erasing yesterday's declines.
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GameStop's mixed quarter
Shares of GameStop fell 10.9% today after the video game products retailer announced underwhelming results for its fiscal second quarter ended July 29, 2017.
Quarterly revenue climbed 3.4% year over year to $1.69 billion, including comparable-store sales growth of 1.9%. Within that, new hardware sales climbed 14.8% thanks to strong demand for Nintendo's Switch products. But new software sales fell 3.4%, and pre-owned sales dropped 7.5%, driven by weakness in Xbox One sales. That translated to adjusted earnings of $14.9 million, or $0.15 per share, down from $27.9 million, or $0.27 per share in the same year-ago period. Analysts, on average, were anticipating higher earnings of $0.16 per share on slightly lower revenue of $1.64 billion.
Looking ahead, GameStop reiterated its full-year outlook for earnings per share in the range of $3.10 to $3.40, while comparable-store sales should arrive at the high end of its previous guidance in the range of negative 5% to flat from last year.
All things considered, this wasn't as bad a quarter as the market's initial response seems to indicate. But it wasn't an overwhelming success for the struggling gaming retailer, either, and it's obvious investors were hoping for more.
Splunk posts another beat and raise
Splunk stock jumped 8.5% today after the operational-intelligence platform provider exceeded expectations for the 11th straight quarter.
Revenue for Splunk's fiscal second quarter of 2018 skyrocketed 31.6% year over year to $280 million -- above guidance for between $267 million and $269 million -- including a 23.5% increase in licensing revenue to $142.9 million, and 41.3% growth in maintenance revenue to $137.1 million. Quarterly billings grew 32% to $303.4 million. On the bottom line, Splunk generated adjusted net income of $11.5 million, or $0.08 per share -- significantly above the $0.06 per share investors were anticipating.
Splunk also added more than 500 new customers this quarter, bringing its base to over 14,000, including new and expanded relationships with big names like Verizon Enterprise Solutions, the U.S. Department of Homeland Security, Athenahealth, and Shutterfly.
"As I traveled across Europe, Asia and North America over the last two months," said Splunk CEO Doug Merritt, "I was excited to see businesses, governments and universities adopting Splunk across multiple departments and use cases."
Furthermore, Splunk increased its guidance to call for full-year billings of $1.45 billion (up from $1.425 billion before) and revenue between $1.21 billion and $1.215 billion (up from $1.195 billion previously).
With Splunk up nearly 20% year to date as of Thursday's close -- but also down around 9% over the past three months despite its similarly strong report last quarter -- this beat and raise was exactly what investors needed to help Splunk stock resume its upward trajectory.
Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Splunk and Verizon Communications. The Motley Fool owns shares of GameStop and has the following options: short October 2017 $22 calls on GameStop. The Motley Fool recommends Athenahealth. The Motley Fool has a disclosure policy.
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