Is Splunk (SPLK) worth $105.32?
Mr. Market loves Splunk (SPLK) he paid $105.32 for its stock on 3 June 2022. So, what is Splunk and is it worth $105.32?
Splunk (NASDAQ: SPLK) is a data analysis company. To explain, Splunk provides an ecosystem of apps that searches, analyzes, and visualizes data. In addition, Splunk claims its ecosystem can stream, collect, and index any amount of data.
Splunk’s products include a cloud platform, Splunk Enterprise (an on-premise solution, Splunk Enterprise Security, Splunk Infrastructure Monitoring, Splunk Application Performance Monitoring, and Splunk Information Technology (IT) Service Intelligence.
Splunk SOAR
The also offer Splunk SOAR (Security Orchestration Automation and Response). SOAR is a package of apps that automates many data analysis, security, intelligence, and IT tasks. They claim SOAR can speed up operations, and reduce costs by automating data security.
Among other things, they claim SOAR is an end-to-end security operations solution. SOAR is available as an enterprise solution and through the Splunk SOAR Cloud. Some SOAR features include automated playbooks, app integration, scalable security automation, built-in threat intelligence, case management, and flexible deployment options.
Splunk claims SOAR can save a company 35 hours of work a week, and presumably eliminate the need for one employee. They also claim SOAR can complete processes that normally take 30 minutes in 30 seconds.
They claim Splunk SOAR works with Amazon Web Services (AWS), the Google Cloud Platform, Microsoft Azure, OpenSoft, Kakfa, Kubernetes, Apache Cassandra, MongoDB, NGINX, and other solutions.
What is Splunk?
Splunk (SPLK) claims its products blocked over two million security threats in the six months ending on 31 May 2022. They also claim Splunk can reduce repair time by 70%, double the number of online delivery slots, and increase application development speed by 96%.
Splunk claims to have over 2,200 partners, over 13,000 active members, and over 1,800 experts participating in its network. Splunk claims its customers include Domino’s Pizza (NYSE: DPZ), Care.com, the NASDAQ, the University of Illinois, Tesco PLC, Honda, Aflac, QuantumMetric, and Lenovo.
They claim the Splunk Platform offers over 2,400 Splunkbase Apps. In addition, customers can build their own custom apps for the Splunk platform.
Can Splunk make Money from Cybersecurity?
Splunk’s area of expertise, cybersecurity, is a growing business because the treat from cyber-attacks is growing fast.
For example, Gartner forecasts that 45% of organizations worldwide will experience attacks on their software supply chains by 2025. Moreover, TechJury estimates 64% of companies worldwide have experienced a cyberattack. Tech Jury claims there is a new attack on the web every 39 seconds.
Data is one of the main targets of attacks. TechJury estimates hackers breached over 20 million records in March 2021. Data breaches are big business, Government Technology estimates 63% of data breaches in 2020 were financially motivated.
Any organization is vulnerable to hackers and malware. TechRadar reports Crytpo.com, Microsoft (MSFT), News Corp, the Red Cross, and Block’s Cash App, were among the organizations that experienced major data breaches in the first six months of 2022.
Is Splunk Making Money?
Splunk Inc. (NASDAQ: SPLK) loses money. Splunk reported a -$291.69 million quarterly operating loss on 30 April 2022. The quarterly operating loss grew from -$78.69 million on 31 January 2022 but fell from -$435.35 million on 30 April 2021.
In contrast, Splunk reported a quarterly gross profit of $471.93 million on 30 April 2022. The quarterly gross profit fell from $705.51 million on 31 January 2022 and rose from $330.14 million on 30 April 2021.
Conversely, Splunk is experiencing high revenue growth. For instance, Stockrow credits Splunk with a revenue growth rate of 34.27% in the quarter ending on 30 April 2022. The revenue growth rate rose from 20.94% in the quarter ending on 31 January 2022 and 15.6% in the quarter ending on 30 April 2021.
Consequently, Splunk’s quarterly revenues grew from $502.05 million on 30 April 2021 to $901.12 million on 31 January 2022. However, the quarterly revenues fell to $674.08 million on 30 April 2022.
How Much Cash can Splunk generate?
Splunk (SPLK) can generate some cash. It had a quarterly operating cash flow of $143.35 million and a quarterly ending cash flow of $814.01 million on 30 April 2022.
The quarterly operating cash flow grew from $131.69 million on 31 January 2022 and $70.66 million on 30 April 2021. In contrast, the quarterly ending cash flow rose from $124.31 million on 31 January 2022 but fell from $1.845 billion on 30 April 2021.
Splunk is a heavy borrower. It reported a quarterly financing cash flow of $798.46 million on 31 July 2021. The quarterly financing cash flow fell to -$855.42 million on 31 October 2021, -$19.43 million on 31 January 2022, and -$65.44 million on 30 April 2022.
Splunk’s total debt grew from $2.555 billion on 30 April 2021 to $3.407 billion on 31 January 2022 to $3.866 billion on 30 April 2022. Thus, Splunk is accumulating debt as fast as it grows.
What Value Does Splunk Offer?
Splunk (SPLK) offers some value. It had $1.448 billion in cash and short-term investments and $5.210 billion in Total Assets on 30 April 2022.
Those numbers fell from $5.791 billion in Total Assets and $1.715 billion in cash and short-term investments on 31 January 2022. Splunk had $1.865 billion in cash and short-term investments and $5.298 billion in Total Assets on 30 April 2021.
Hence, Splunk has less cash and more debt than it had last year. I calculate Splunk has lost value over the past year. In the same period, Splunk’s share price fell from $120.28 on 1 June 2021 to $105.32 on 3 June 2022. I conclude, Splunk is not worth $105.32 because it is losing money and generating less cash.
In the same period, Splunk’s share price fell from $120.28 on 1 June 2021 to $105.32 on 3 June 2022. I conclude, Splunk is not worth $105.32 because it is losing money and generating less cash.
