Credit: Splunk.

Splunk (NASDAQ:SPLK) is set to release third-quarter fiscal 2016 results this Thursday after the bell. With shares of the operational-intelligence specialist down roughly 14% over the past three months as of this writing, it's time for investors to start thinking about what Splunk's latest quarter will hold. 

Underpromise, overdeliver?
For perspective, analysts' consensus estimates predict that Splunk's Q3 revenue will rise 38.1% year over year to $160.2 million and translate to adjusted earnings of a penny per share. And though Splunk doesn't provide specific per-share earnings guidance, management did tell investors during last quarter's call to anticipate adjusted operating margin between 1% and 2% and revenue between $158 million and $160 million.

To be fair, though, Splunk has demonstrated a knack for underpromising and overdelivering, so don't be surprised if the market shrugs off another beat. Shares fell last quarter, for example, after Splunk not only outpaced the market's expectations on both its top and bottom lines but also increased its full fiscal 2016 revenue guidance to a range of $628 million to $632 million. The midpoint of that range represented an $18 million increase from previous guidance, and a $14 million premium to Wall Street's models at the time.

Naturally, Wall Street has ratcheted up its expectations going into this week's report and now wants Splunk to achieve fiscal 2016 revenue slightly above the high end of its latest guidance range.

Digging deeper
So what else should investors be watching when Splunk's report his the wires?

For one, look for healthy operating cash flow and free cash flow. In particular, Splunk management has insisted that while it continues to eschew bottom-line profitability in favor of investing for top-line growth, operating cash flow is expected come in at roughly 20% of total revenue this year. Meanwhile, Splunk will almost certainly continue piling money into both sales and marketing (up 39.8% year over year last quarter to $111.8 million) and R&D (up 41.3% in Q2 to $48.3 million).

Those investments should bear fruit in the form of new products and hundreds of new and expanded customer relationships. For perspective, Splunk added over 500 new customers last quarter to bring its total to more than 10,000 worldwide. And Splunk announced several notable wins in recent weeks, including implementations of Splunk Enterprise Security at both regional networking solutions company Integra and Canadian securities marketplace CanDeal.

Next, listen for updates on Splunk's acquisition activity, which last quarter included spending around $143 million to acquire IT anomaly-detection company Metafor Software and behavioral-analytics company Caspida. Splunk hasn't disclosed any new acquisitions since then, but at the very least it should offer highlights on the integration progress of these two companies and their respective software technologies.

On guidance
Finally, in keeping with their past patterns, Splunk management will almost certainly offer a look at expectations for the current quarter and may also provide initial thoughts on next year's (fiscal 2017) revenue, investment, and margin targets. 

On the former, hitting the midpoint of its fiscal Q3 revenue outlook (at $159 million) would leave Splunk approximately $197 million in fiscal Q4 revenue to reach the middle of its current full fiscal-year outlook of $630 million. That's 39.7% growth over fiscal 2014. As I suggested earlier, however, few will be surprised if Splunk delivers slightly more when all is said and done.

On the latter, consensus expectations call for Splunk's fiscal 2017 revenue to rise 31.6% year over year -- a deceleration, mind you, as Splunk builds from its larger base -- to $832.2 million. If Splunk indeed expects to deliver anywhere near that level of growth, it seems safe to assume the company will also remain in investment mode and continue to put aside bottom-line profits for now. In the end, that should sit well with patient investors as they watch this innovative company make itself all that much more indispensable to its growing list of customers worldwide.

Steve Symington has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Splunk. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.