Splunk (SPLK) 24 May 182019 Q1 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Splunk Incorporated First Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today’s conference, Mr. and of Treasurer Relations. Corporate Tinsley, Vice Investor President Ken Sir, begin. you may

and afternoon, Bruce, the for Merritt today issued and you, our of Thank posted after everyone. press call Conte. release a and Doug it on Great. market me good Thanks close We With joining are on is Dave website. me.

in after reviewed this or accurate obligation update is current or to information based file best forward-looking contained statements today's statements. today, contain regarding be any available disclaim we events our materially. and making our call, an documents to audio call this call being on is this and the financial this may are the including conference release. statements, our forecast call call and and including These On broadcast those will with forward-looking forward-looking other following Form of on documents and be guidance Additionally, Please we including may that website. fiscal XXXX XXXX. statements deal expectations statements. will investments contain and press live actual second factors our via webcast presented results revenue refer our of expectations, revise full-year from fiscal we X-K may Trends to actual the Those replay and quarter for These to or expectations the model filed and being information. results expectations trends in markets, size us the made our risks regarding for reflect from our not and as today, as partners, differ and our and operating judgment our well cause investments products technologies. If SEC, during strategies with expectations mix, customers, as these resulting currently regarding planned and and known acquisitions, factors differ our trends

reconciliation with website. We Principles. Generally the which release will our non-GAAP results is accordance provided in in not are A Accepted of measures, also GAAP financial Accounting press prepared on discuss and and non-GAAP

me over So Doug. that, it let to with turn

welcome Ken. delivered Thank year. both revenue, year you, call. million to and We over up innovation. in in a solid the to XX% Hello, total everyone, QX the terms product of $XXX and field start execution was last

is bring a product We of of with their also or on-prem that the opportunity of to it's we our teams cases variety Throughout IT. through data enable to both DevOps. sitting, nerve security, data a positive in Conference, and announced What overwhelmingly orchestration had and to the the portfolio. series as ability use recent expand like discussions on to that of solve Splunk’s in leverage At many capabilities matter developments acquisition, cases received security a solutions and customers a of for I continued and the Splunk’s us capabilities meet came partners. other CIOs to Security, our platform center leverage our in ITOps and and CSOs, use where out that the feedback importance the of use Phantom and role QX, which simultaneously their no cloud, will our validation and automation RSA

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investigation and security in process automating Healthcare without the by Phantom to at significantly contain a allow will they data result, expect costs playbooks resources. large the Change they a increase requiring amount orchestrating As of many new ingest. steps

to am Oliver, to I to the value Area into with month. our our We customers Phantom they the innovation. integration and how forward our Sourabh will and Bay as accelerate deliver excited continue we on are welcome pleased moved team to strategy offices is our build/buy/partner lean last going and

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solutions first to release and packaged opportunity. availability us address QX, market Asset companies. rolled that at Intelligence, Splunk solution targeted are our our IoT a limited industrial out we During new We products announced at helping Industrial

identify delivers We've real-time of environments. been uptime, Industries, automation analytics help improved working Shaw enabling issues, to including Our and monitoring in floor availability insights quality solution real-time customers, and adopted beta their Splunk with analytics, factory implement operating engineers and diagnose performance and metrics. giving to process who them and production

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We expanded capabilities intelligence also across our portfolio. product artificial

just predictive threats prevent new use Cloud enabling customers the better Splunk Machine learning monitor for UBA models, of latest any thing view, Splunk and more security to provides ML problems AI and features and status about Splunk the our apparent Enterprise added help technology outages ITSI, evaluate address to to health. increasingly customers. is and time-sensitive that Learning in identify Toolkit, that's and of customers it experiments. With free results making insider latest machine our control, The release enhancements of service the release other can easier One through becoming analysis of quickly. ecosystem Splunk Splunk to

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sets use of best already positioned in environment. IT use and Delivery. our apparent order who federal sense customers that data Splunk easily complex and are saw customer use Enterprise management their releases, With aligned this Wins availability quarter data, monitor continued and to real-time and University with of in agency to a customers these App platform agency to their business who and on their platform and harness expanded Splunk different customers, asking and and gain by data and services Splunk to the improve to view questions same include in with with that operational cloud market single in in ITSI With is their our is better alert Splunk from future to In data the focus. upgraded our make both data a Splunk citizen It's premises Starting QX, enable search, outcomes. these to to improve North the for cases. can learning multiple a to predict uptime portal. both large we their and a provide Carolina, Splunk's on data cohesive the and intelligence solution centers, increasingly security Enterprise multiple online of correlate stability across Splunk, its information the systems; Charlotte, of group to of of the ITOps momentum student security

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are XXth the is that the culture. well focus again our named was I in the year a of testament our front Area XXXX. in solid success Work and has opportunity am a awards to their positioned our consecutive the and people customer team. Places I'm Splunk one it pursuing a helped recognitions of summary, number people testament capture Europe to Splunk priority, In team happy one to to partners. great us uniquely and us the to our was and fill Asia. to are Bay know, company fiscal for you a and it aggressively. similar of entire and our quarter to we proud As start as and We're in and as commitment customers that These very tremendous Best are

thanks in to early customers. their customers and their growth. We're high are platform to for all we the all and thanks data awesome and and cloud. are as in We for our adoption Splunk our partners of value machine and scale our both Again, Splunkers. of investing journey, our expanding of analytics, on-prem to We're delivering

turn let’s the Dave Now call CFO, our to Conte. over

for you, a Thanks everyone. strong quarter right. afternoon, the the Doug. and All report joining I'm Thank to year. call. solid pleased start first to Good

adoption. XX-orders product provided with orders. of drive last on recorded the success. were XX% continue which First Cloud of also will in revenue than $XXX report indication growing year. orders software provide adoption total $X up quarter more of this that as was over basis QX XX% XXX,XXX. annually one revenues scale Starting $XX and orders were last both revenues, of QX Historically, value increase cloud, to large indicator we To QX our and a XX contributed our XXX of new is than million, XX%. number over an within we customer our the million, end, an QX last a years. initiative seven-figure $XXX million we've prop recorded up of Education of year six-figure and base. or in Related which to broad we license XX% total and of going XXX this increased QX total over million revenues. suite, we instead Overall, operations by customer revenues as metrics awareness to of nearly forward, year. provided International our services order the and million, X greater of customers complemented added compelling professional represented and compared XXX-figure growing greater XX%

than free our using million, count outlook a solid and basis. turning flow was slightly shares. flow representing driven $X.XX the Operating on Now million, or $XX per margin of profitability all Operating while are loss which XXX was gross comparables. XX%, QX on to $X.X loss overall our of negative was million $XX performance. all and Net XXX.X a for topline share a million. year-over-year share non-GAAP cash weighted basis was QX a other comparable by X.X% average including margin $XX.X cash was million better results,

period which the ended for Phantom acquisition. cash the also after payment billion $X and almost in is cash investments with the We

balance their of Now now have Analyst the impact deferred Accordingly, all in in full of at which values our accounting entirety detailed can recast that Meeting you sheet, we turning XXX. revenues note change March. retrospective following on again see the our been to adoption the

XXX XX. of our of As revenue RPO. totaled about you results our backlog April by RPO starting compares of quarter XXQ first deferred called up and to the as will XX. see is disclosure $XXX million new or heads a aggregate this as further obligation a million Simply remaining And with and January $XXX performance with required

Now turning to guidance.

non-GAAP million operating QX of a revenues and and million $XXX between expect X%. of positive margin $XXX We

For the rate please assume approximately non-GAAP run billion margin with is expecting from and acquisition count EPS remaining to expense fully share for full-year guidance. Phantom we year, margin $X.XXX use up $X.XXX a maintain important profitable diluted remember average quarters be to XX.X%. of op total we're of incorporated for that this revenues non-GAAP to the billion, the into we the our now Since target calculations. It’s our weighted we your note expect

As billion to and were XXXX continue of service in goal $X expand partners. scale to fiscal we toward drive of our revenue of the capabilities our eager

delivery partner that Splunk focused revenue element success increased revenue to their and not customers parts time, critical directly services Specifically expect ensuring own delivery adoption partners We on our that the journey. P&L. more our over organization customer resources to will best our that their we our on is and data. deliver know service capabilities. available and expansion versus we our take of helps have aid trade of the all and teams customers toward important derive the drive industry related enablement have their end, To value This our a from this is new in it them

off the and In a The for to the EDU have greater PS from result XX% revenues and are year. away total to of delivery top end service partner start we shift ranged over historically X% revenues. our between will in PS Now time. and closing, range revenue of this moving EDU good

is field our and overall capability. investments product driving our success are enhancing expansion customer execution Our

is working machine time the continue analytics. to questions. fuel pace and and we adoption strategy as standard drive make well for Splunk With we open much to up Thanks Our will it that, of for data the for the interest. we

And from [Operator line first America Rangan the of Merrill of our Kash question Lynch. Bank from Instructions] comes

is line now open. Your

revenue, a it comparable so earlier, million disclosed numbers looked billings [backlog you us you year your if substantially. is you quarter. on looks apples-to-apples looks like growth ASC like in Congratulations you have whatever that again. record Can looking congrats and] how the quick some I what very deferred I then had much ASC an a guess the you number less less $XXX just rate and basis? backlog Can to backlog guys. That's of like that? one. phenomenal which but would of billings Thank the from aggregate reported, math, be about relevant, Dave, it's finally, the just grew And the just, calculating the at to know the revenue, deferred you do talk more be [indiscernible] XXX? towards recap right, it straight XXX I much is that set Street shift When it is and context for Hi. top should end from billings we Thank

I And [indiscernible] miss that Kash. your part the Thanks do so of Yes. get will next quarter. question, for

back. come I'll

We will come to back that.

I So there into see them me probably if roped so down. can let three were or four questions that, knock

no software longer guidance under metric. you're XXX First relevant less right. We that the it’s with in billings and of because along others just we many provide industry all a suspended

actually recognized be And will think being remaining that about You what’s more perhaps or that really is it's we have the obligation. in that we statement the performance a unbilled. metric when better revenue income is providing relevant

say XXX wanted fourth how a as be billings. instead seasonally compares guiding of about more to financial was we that becomes look we to we'll that really that flows guide, million. QX, all think to $XXX we strongest statements, baseline as able So yet, – not terms over it year at listen establish to metric terms in the $XXX the acclimated quarter of but million of of become balance in better through to that We're the after with our

was are would I well bigger it have if seeing, the impact XXX. you it think what been

slightly provide have about just So we to you the And overall we consciously whether more statement directly XXX at been greater greater it I’ll the it's a of the financial been we accelerate it's of and that of you're to subscription we value on and of end and sheet, more amounts coming, in two tied – it's were has is months, for quarter, all the those one to the to been objective disclosure, and yields without being four to of XX%. just was to that year above XX% overall elements when extremely years impact get look subscription yield or are questions of the into roughly We've With moving an under contract even balance for different to probably years duration talk just contracts. statements, worked going remember, and having at those categories. towards It the declare income have XX moving We is to but fits IPO last retired. to the that the everything that life. subscription whether all average of fully equal duration that, comparability is XXX. are about XXX hard

So consistent duration that with provided to for very customers is quarter that's cash be I fiscal you have, the guidance to think move more tendency around the flow the also but XXXX as annually. we on have the billed to subscription more about shorter, and how fourth

forget So really understand metric, billings the – if billings do XXX, XX% you're thinking how I under isn’t really XXX XXX, moving from XX% about versus right but we're to well subscription.

way Dave through summertime blues. I’m the finding

Thank you.

Thank you for explanation. the

Okay, Kash.

bet. you. You Thank

Kash. Thanks,

question Turits Michael the line next Raymond from comes from of James. our And

is Your line open. now

Two to back way to in customers some to are competitors not I that? the any pricing in and anyway of that’s being which on and question. from back if whether push is come plans and have there whether or there's And to an accounting old – then from there's pricing topic any aggressive of plans in in adapt questions, or I’d not any change changed guys. way is Hey, like one, not pricing the or your any

to is data, for Hey, different on The is cuts based different users data, Splunk we're with stored continuing on app as of have Splunk monitored we out [indiscernible] number of of pricing Michael, that amount number different based and/or not active Insights Ransomware users. ingested and something decided so as like solutions of or SII we metrics. roll Infrastructure

quarterly based that spend rollout of tools seen challenges we how that to price categories delivered what options, like sure the talked mechanisms our strategy data with other help awareness value that that of different a) and continue is customers feel with of be to similar capabilities sense about Our other them bursts some and to they all we're customers Splunk mercy a better got of the with offer of have are What predictive type pricing enterprise, that in and of what term that any options, instead [indiscernible] could at the is spend we've and of Splunk. make makes do that adoption I as well. on way on they’ve could

I continue in I've think So variable seen Splunk some cuts we in of accelerated have that of some of packaged fees get different that offerings from more come away the decrease energy Splunk. continued be would the have slow But a more to around through as and that would to pricing.

buried lot XQ XXX so out we then Dave, pretty are this I XXX deferred have and accounting Okay, do but – Q, sure it out number didn’t I'm somewhere comes have XXXX, of question. on we and but in the numbers the now? the a – for revenue been see, there on basis because may a year-ago

We out XXXX, have of do balance as no. not fiscal of a sheet XQ

that get we Q? the Do Okay. in

I is think Q the to Q. compared sheet. the sheet comes in year-end to that The have balance QX don't balance going the

Okay.

Similar yes. to press the in the table release,

all Okay, Thanks guys. much. very right

Thanks, Michael.

Michael. you, Thank

next Wells question our line from Winslow Phil the of comes And from Fargo.

now open. is line Your

this of start the Obviously, hone there, years. wanted to on of taking comment, my Congrats you're deals I just a trend past your but this great over Yes, Dave, couple just the on in just a guys large year. questions. thanks just not continued seeing for actually quarter, quarter. on

the force very and and getting those on got question of can sort big of it's through you a balancing because, think deals update Obviously, you've terms sales it, is to obviously, side. well on versus give So you existing a an of just the about us on sort where on, and focus customers of sort just deal both. new call net in focus you But Doug just larger customers.

our of is fit and within new go deals the up, accounts, where up, volume of on you I the asked. land focus initiatives higher questions across across renew that whole One When there's motion and actually adoption look transactional really the and other into size two is exactly of increased the just Company, important getting that type expand that's that's are And go customers. adopt higher accounts. ASPs see the net

ensure up. do talked a customers Splunk But lose of also make to from want about, on and investments more as we've whole within net traction, that we and moving As commitment not we we're are we're series more that current have accounts. our their to needle continuing the new overall excitement that to seeing value focus

they're – X.X initiative models number almost like as as it’s and literally So two cohort and and far number three. virtually importance X.X driving. the that they're overall tied on They’re business because we're

hey Dave. Yes, Phil. It’s

March, I from success. how all and of to fiscal delivery the had driving XXXX orders you on-prem see discussion capabilities of end are target. deploying We think of large out resources number customer that, the we’re point how continue our but we're delivery is the adoption both out a sorry, of the work correctly that doing, that grow we’re those perspective, and mile if Analyst customers. you priority in to of marker around XX,XXX by in and Susan as strong cloud laid to the together overall reckon we I'm product lot tracking We Day tied the pool a at one the then in a that and of indications back to both product all also

guys. Got it. Thanks

Phil. Thanks

Phil. Thanks

line Lenschow Barclays. the from of is question from next Raimo our And

is open. line Your

Thank you. me. for questions Two

for I what's and I you Dave. track, number wait for RPO going Or at you are – but Since give mean terms run a you the best that you bit heavy. hear making way, side? they just have of one the didn't First the And four question you structure you it on off services us best was multiplier are second Thank QX? not you what’s so, and way you. think was exactly I like the say about in talk little the your should number, incentive more, What's partners to the then incentive about your is little going one year-over-year to you for on were in to we is Doug times revenue QX? Can talked I look Is I on – if partner the conceptually very or it? to a that would the ASP multiply. are should story six then and a service say for bit

Dave. you of consistent can for think to it’s get a Thank is ago of your sheet amount And you XXX the question. Michael a as balance I it's well with work what's and Hi, tremendous imagine. year under there Raimo, which

best develops I really comparatives for give to can on we the about try the patience metric conscious the were it, to way the number. to All as sequential think think is this that the I and and of shows matures RPO seasonality some the impact over ask balance the year.

it’s the it, but interpret best today sequentially. I all way think I out figure collectively think to we'll

the the force. overall incentives for sales Raimo and services And on

emphasizing in business we triple to ensure made the very and continued strides As behavior eventually, I that to think and but a that been we've be our would driving has so at not least this and Services about, that presenting are plays get commission we're something year term on so we with year-by-year, type model commission augment we of been cloud, reps it additional talking term with par plan is has movement and/or stream to interested a we that versus perpetual cloud. it, right reps. shift for it's that the And have, our overall.

to trying software and success ecosystem our of and How we've as partners people This loud success, back that in coverage us are do reach. drive around partners core both to on fits Splunk health revenue in a on to working far customers educate the they Dave from talked our very and and our core empower our are is goes focus continue we to us implementation can focused as success accounts. with step that different focus and services revenue services, they with and those up revenue have balkanized one no areas and as and and services well let's making software telling get so to are on growth story to heard on continue partner software Our more delivery. create Splunk to through is the that interested clear What empowerment business. the our understand and of of customer that's on build are is and but as help actually shifts we Splunk,

from Okay. well. Thank congrats me and Perfect. you as

Thanks Raimo.

Thanks Raimo.

next And Meisner from Susquehanna. comes of from line question the our Anne

is now line open. Your

Doug, question. year's a circle Hi. to Thanks user my last wanted for to taking one I conference. quick back just for you.

just You functionality. enabled in the us you're new were of you're seeing if of And that believe since kind and something for. for seeing whether and what I'm unveiled do it use response asking customer base was that cases wondering can sort update customers being I the metrics there you

you're response use well all decreasing as of a as make architected – the metrics index was the cases, Splunk or read that serve. on Thanks deriving do it sampling it's to schema use and part rapid so Anne. an infrastructure both then to very not much in the time that is queries, costs across of capability metrics those create that doing which different technology Yes, would get leans capability. basis, on so metrics. store Customers driven for taxing some increase was type could aggregations, to metrics of sure and as were new they that really by the The although rollout Insights the for that case using on Infrastructure actually infrastructure

XX to efficient quicker – framework even wanted had around do in lean monitor, as response and months time, more fabric, think in and So the is more by you that data lot is alternatives more aggressive moved far the Splunk continued even What say a the to different let's set leveraging investigate and doing one XX us. cost elegant to more get capabilities detect really I and you're the what see technologies customers orientation is to metric time exist a and of results capable of coming index and basis. on real of as seen size more that you’ll in we that hope from

follow-up million Dave annual grow sheet It a toward I assumption? like quick backlog much number, total faster you given the performance backlog, than should balance balance for on is then roughly invoicing. backlog, fact a the Very a $XXX obligation. is off fair looks that that you. expect for the Thank And Thanks helpful. assume that off disposing sheet just that. trend

I be is, hasn’t think on what that between the income invoiced? Again, face and revenue invoice challenge is statement out. can performance remaining Anne if of the on contract, the the even difference the a obligation on there's term what a gone is

combination performance to backlog. isn’t revenue backlog be the unbilled it's So deferred i.e. performed remaining be which is to its of amounts, additional why recognized, a purely revenue and

I see.

that explains. Okay, Great.

Okay, thank much. you very

got it. You

Anne. Thanks

from Jaffray. our question of Zukin from line And Alex the Piper next comes

now line Your open. is

if sales Taylor Hi. Reiners wondering This early kind I Phantom you to question. give could and Phantom the make to of us with was that Thanks. you're Alex. year. the is throughout on changes the you've seeing been an year? ramping next my any for for at then you around taking Thanks cross-selling maybe looking update opportunities how organization over the plan And

the to what excitement incredibly on of enough to automation We orchestration bit the as anyone of spending really bead What grow. use continues of capabilities to have faced the well the orchestration actually energy established I on with in launched the Phantom underlying brings level learning loop a Thanks seen It’s the Splunk can into have impact. in that driven was base that leader the already a to. responding And capabilities the the that's platform, analytics the closed interest, are by adding we problems been the when overall visibility by see cybersecurity increase our increase cross-sell Phantom to Initiative, involved as platform is Taylor. how with on security all continue we customer we and and around insight, and security cases. Response is definitively little early Adaptive analytics. initially so is key think I of to that’s that executed focused right, We've is and automation security behalf the customers high

I of any operation to Phantom's House in you was seeing automation? terms quick And side capabilities wondering just opportunity orchestration to of a it. and Got then follow-up. extend are the the

is to But I'd our about. the apps leverage equally incidents, the on for beginning of is, can there's and elements described all ability which content as our Absolutely. are thousands other we're security piece and market exciting ensure create, that to ITOA, Phantom groups, the the related excited way well. what the is, have analytics, possibly hundreds in there any even two group Phantom but to focused to more were put into The of business content One of giving or layer that market custom in platform the just as that security playbooks customers is them leverage. automation importantly think I automation the tap orchestration IoT, more bucket, that security effective on that I capabilities that

Got again, congrats quarter. Thanks great and on a it.

Taylor. Thanks

Thanks.

Brian question And line our from comes next Crespi. from the White of Monness,

Your line open. is

know your the wondering operating through if than think a bit lighter walk kept looks and you am I margin. you Dave second operating but the I little that could on annual quarter It little I a Great. Street, margins. bit we're modeling

So is is of more? impact something there integrating Phantom this simply the or

I Well, elements two Brian. there think is

You fair expense under of day half the seasonality we of over of the year XXX, recall, a might changes second amount how about and the a and revenue both last eight perspective. talking from spent ASC balance time

second first said that so a half, I QX And really the it change most But is, I impact. seen and what in of that we've is think you've think half. was

element. So that's one

for The QX. second embed Phantom we the element expenses full did quarter from a into is

combination. the really it's So

you this And you does Or a this on have? do the really security Phantom, position Splunk? open feel great. that TAM in for just your new Okay, up in the products like markets strengthens

not enormous bit why category excitement. an category. think looking has I in is an and little is category. that TAM that The automation is there a at time. But both. are overall lot this gotten This A orchestration It's of point of customers evolving new meaningful value for

that do take stage of pipeline. analytics, other Phantom that final actions effective effectiveness got that part of loop, data the of full are And a advantage key especially that the the a ITOps overall actions sure IoT of or the customer stages operations you other system I of and ensure pillar integrating case. from manufacturing lifecycle gotten is of organic effectively the to in we manage and additional fourth you've core take think action closing what that our think [LIBOR] and insights automated remediated in of about that we've the you that the on technologies is or to ML are protected set so driven need initiatives security the in looking the on more can an at understanding the with is for strong case making approach case do being efficacy to still to able while

has data? picture, the and Okay. an analytic And your that fiasco, Just impact how customers for Big about they're Cambridge on Doug. had thinking big

visibility lot well that as a that can on drawing for Cambridge This on The question. into data. think on visibility, a provide lot for people obligations we good of aware and have really has good as fans data is play happening our definitely out years and of they protecting for and Splunk can world hi, decision-making. Hi, more question. Where the thoughtful has. GDPR to last more is is in on better more got probably – two organizations comes organizations provide what what a data of have had visibility play there lot their of I are But a than of really insights we

guys. right. lot. Congrats a Okay, Thanks

Thank you.

Thanks Brian.

next UBS. our Boolani from question comes And from Fatima

line now Your open. is

the question. taking for Thanks

couple Just follow-ups, I of margin line, margin revisit may? business I'm about of you gross the if Should we discussion expect that the professional the kind earlier, had wanted partners? you to a Do in curious release gross to and more margin up services pass implication. on the and a

it’s Fatima, Dave. hey Yes,

where margin this trend I think driving. longer-term is Again, we're impact. a the

software. we of some are to kind in an enablement, bottom – P&L a can just to partners, that an standalone But successful those strategically I benefit more fact, we're we'll perspective important probably our utilize of from That's think my In of line, a perspective. contribution detriment. engage enable be like our or going may margin anticipate either – there enough math direct there's little with not overall with to about the customer thinking minimis, from a have opinion. to that bit really really But de don't success organization as ecosystem it to margin partners, the broad customers impacts to to But a a from us. get sellers

curious takes In maybe your of case there's cases operations we Fair awareness ITOps this vis-à-vis cake enough. use as your where market remarks, cases, use kind scale, maturity in security the like I'm on especially an And IT maybe versus around for can security, on we calls. are cruise prepared and the prior feels Doug, a drop studies control? of perspective it's more example more time your that question of which on terms for

because for have ITOps, and super, that urgency, visibility which other from. security, as next from turbulent side roadmap in in Cloud the increasing XX on-prem XX you'll Really, around centers that think, the really super to life, that comes drops to quality be the deployments visibility, increased all and types help of broader about we over continue that the challenging difficult ironic] and guys micro-services, taken I because obviously of the there's a addition ephemeral given center to in to constituencies the IT the developers, still. often complex really pretty of the factors those complexity DevOps, and data all I'm have benefit IT [so better And speed more Yes, infrastructural APT, in started, world needs organizations. and way the get CloudOPS on see the is, that within visibility boardroom well. operations, manage know, nature, the But has to happy all were that we excited stage, months around operations. the as definitely you And about folks landscape. only the that, with predictability,

now volumes Dave. think million If I with respect really provide going I'm has But to changing? coincident that $X if past, $X EAA. quick we that helpful. know I the That’s that for you. in or deals one it in explicitly read that don't million Dave, And to to said equate curious a should that you're every me. is as seeing? quarter, higher with changed necessarily Thank that's you're for you've the relationship EAA

a question. Well, fair it's

everyone are It's subset relationship the think synonymous Fatima, and come with important of a are as out, appropriately to for numbers. EAAs point EAAs you I the is seven-figure those transactions same. not

So this that at isn't point. relationship changing

next please. question Fatima. Bruce Thanks

And our next Abhey question from of comes Securities. from Mizuho the Lamba line

open. line Your is

relations What's expect Dave, you Yes, the in your the area was thank you. quarter for on that third how at happening now. that in consecutive payoff? investments customer the to And that net down new we when quarter year-over-year look should front?

focused seeing customers. really solid to a and is be year bring we're in we able we happy got and and the increase adding number that to XXX given new on do customers. we – even we've are think Why to adding TAM, more can increasing believe be number size start I the of the in new should the that

we area. XXXX. areas the that and in the been believe company number X-year making change a of have our target articulated and focus this ago by to end FY on we're sure we And track address that We across a I to investments of multitude hit on make that of

That's Doug, it about you flow you us how little in? helps bit we tell about and GDPR, it and should start if when for for a to benefits seeing can you Got me. mentioned some that

centered GDPR the But more those flag and We security monitoring is issues, from capabilities alerts industrial parsing structures grabbing our of to of come and other like back two ultimately seeing primary. cases. lots try app, something to analytics. remediations, potential a whole signals awareness intelligence the And predictive array seen cases that and through that with that for even use asset we've equipment compliance in use obviously, similar of elements ITOps, some are detection

one with data Splunk call visualizations and how thousands an if you of kind you probably start of use as go and front would of compliance grab you a, in cases with get you a compliance and of characteristics for and GDPR the can to sources Splunk within you of you to what issues could have use those GDPR want on lot We visibility. we Splunk I've implement should help shop a cookbook Splunk GDPR viewed what Essential, of kind the floor. would to organization. applied So have that be has do same

and seeing questions, AppDev? so me you GDPR help a, And me with of security help along with Can customers more hey, help can include of you benefits my me help me multitude can Can set with ITOps? as with we're Or customers. you you customer of can with use that more cases intimacy to use of or with some cases the help me work drive manufacturing analytics? aware make people Splunk for we can

Thank you.

Abhey. Thanks

comes from of question next Hedberg the our And line Markets. Matt Capital from RBC

is line now open. Your

Doug, the starting maybe Thanks done quarter. on guys. with you. Well

apps You of speaking how ITOM app IoT vertical continues up incremental we along in-house? sit applications guess, guys some some do platform? I security, like of about out out a and driver. to the on that vertical are obviously well also see broader building point might doing a in the graduate sort vertical think you cadence of strategy, take Splunkbase but guess, seems you of percolate lines as at nice guys I wondering, I'm that the

the around in definitely attractiveness mean, working I I Splunkbase. on ecosystem think we've emphasizing been we more –

and understand centered security see participate, growth we And platform, that to in solutions people contribute, more Splunkbase, yes, cetera. Okay, the IT, ITOps/AppDev. et steady exist still on in largely different

a my IoT emphasis in adds lot how can industrial that of so talking about used launch it that is main about for long. Our I solution, be asset I'm intelligence, been value, we've it excited while think of

it we those to how can business instigates analytics industrial Let's from that control. is solutions and and to The let's can think want IAI. or things in platform. as hopefully own we relatively do out through that coming defined with a created situations, is monetizable solutions/apps of minority as use three of attack view horizontal. additional benefit four there separate will to that inspires early in lot a and we're journey cases understand of be next still get But the There's team done more of IoT space. parties our But far I increasingly to that example different continue lot years do types now, them if to our piece relatively put that properly, really use they is And of people my these come Splunk or and a help a from in the many these for we over work combined I more think, beacon how solutions third as problems. to the that around think

XXXX you for this, one quick a last but cloud fiscal Maybe about I the billings. Maybe Dave. I quarter, helpful. Super think missed talked

or said think guys Did update $XXX QX? about I you million million. in after revenue those you $XXX about

guide XXXX for we cloud No, full-year for fiscal didn’t. for revenue million. is The $XXX

it remains it this what That's and was at unchanged point? that

Correct.

think billings million $XXX you then also, And quarter? said I last

That is last yes. we provided what quarter,

Okay. All right. guys. Thanks

you. Thank

line the from Moerdler Bernstein of comes question next our Mark And Research. from

is now open. line Your

potential Thanks. and follow-up. term gave for Congratulations if then this, thanks sure what but I'm licensing taking between quarter on was you mix the quarter? license the question. not and And a the the in

XX% Hey, Dave. which annual And trash we're update. we target, quarterly annual mix last providing year provide guide fiscal over Yes, just instead give then it’s look, of an is a this fiscal you for we about mix, and an year. quarterly to as up used just said, to from XX% going a that

you We're miss didn't So a providing it it. on basis. not quarterly

Okay.

that sense we of a cloud have of that licenses? the value about you on can term contracts more giving obviously you've can is? term contract a give contracts as think the can and lengthen how contracts to that how of average the out the maybe modeling the term term and And the what so been basis, On cloud consider we the us contracts, sense length frequent

Sure.

mean like terms consistent. It's than in that can quarter, a the be of our so and of smallest remember, quarter, So more I overall but seasonality up was the rate. is I on cloud pretty that for first orders duration That's handful our can been XX months. in quarter, by term have impact bit just duration quarter. an little seasonally the between contract in What impactful a fourth XX,

as old then to i.e. what's increase we important percentage plus note, The XX would is be term duration that and billings, equivalent an it around what subscription long the than those as look of the balance of metric smaller, that transaction. to is are first one-year perpetual shorter question cloud, business our maintenance composition months, sheet is transactions the around, and as

point, then that it's part renewal only for on the but at early it is with goes then and Obviously, those that? probably too some terms,

with certainly, true. Yes, that's these rates, growth

appreciate. you, Thank luck. Good

Okay, thanks.

from comes And the of Kirk question from our Evercore. next Materne line

Your open. now line is

Yes, much. thanks very

analytics, early, use use can bit ecosystem is Just we cases I’m feels little Doug, Splunk think one lead and touch in become bit of think about about perspective? getting global Are little operational for IoT? a sense get about to trying talk to first the to case on partner about other when try think if boarder sort partners a partner a ecosystem you cases? a just starting case use Doug, to a industry big with from use we of start come are now, very the When this they either but very, ecosystem partner you SIIs, that strong. like sort security your right it of

that is of deep group things tasked business I when analytics, - handful that AppDev, with. Yes, is knowledge market of One ITOps about and the a think security, and they IoT, are absolutely understanding domain segment. there's their leaders,

the The third want vertical of with other expertise the is verticals Enterprise prioritized solution areas. continue talk the corralling that whose awareness to are specific development attention each the definitely we need or as as I excitement us. then to start is at think were each a is overall duration, they for Splunk given those is much under dependent cases verticals. deep the responsible and UBA, people the stand of in pay vertical arena of use therefore, of any examples, [indiscernible] in of vertical, guidance well we particular, a degree and in and of one little some ITSIs IoT to different ITOps, Security, is as as on to as partners and technology higher and security seeing but domain of the going for, that seeing, We're with different And type much one expertise. to to that ecosystem might why more data out segment bit looks partners variety than you on We're those of

that and familiar housed relationships the that real, don't see I the we'd people have all be brand by is challenge strong a think the is we of strong expertise lot names that with.

really I with the leaning important So specialty close the and and this will others. But in we and delivery use the to cases. the they participants area. Accenture's on those mean and last SIIs think Capgemini’s keep to mile be are gap that partners help augmented effective have ecosystem Deloitte for I those

Dave, flowing a guys quarter? with good it expecting be backing then adds assume, Dave, net period sort wanted this And Are one for upside add know were first I you all. sort guys on bit you what pretty based a to are the good through, quick you off And of of basis pretty start know it year? investing I our a for heavily hiring of on little I track you gives a just was pretty I to but just in more to your

product for have strong to as us. increase to actually the we encouraging in course, candidly see No, It's really both hiring and capabilities of our really field. is continue in to

from was for really quarter organic strong. think hiring I the perspective, So an

so globally. Phantom quarter Of course, there, we addition we the the the ended headcount that some total in over with think I added employees team from then X,XXX

because to really So of on But pressure kinds I’m we effectively some those G&A rate all kind to boarding folks. have. putting sure of the that of encouraged a organization by onboard actually pressure that's the on – make good

we're start year a the have regard. good So in have start a yes, – really good that we to

for So question. thank you that

Great, thanks guys.

Kirk. Thanks

Deutsche the And Karl Bank. next our comes from from line of Keirstead question

is Your now open. line

for revenue Great. the then, Yes, Phantom one of for deal? Phantom, impact what drops cash of we flow, assuming revenue way back, On and And like and David, was to are what at XX% the I a about for on XX% two secondly, got you And David, deferred operating cash on quarter normally I’ve the One QX. flow super strong That When thinking. guide flow. as million. closing Phantom you. QX's $XX other cash on were in XQ full the above operating of go flow year. your that represents cash

to So either be could will it, just is jump that guide that $XXX great. low if but or for maybe cash you shift something too your to it happened, flow unusual is seasonality, tells subscription XX% million pinpoint this mix changing

Yes, pinpoint fourth tremendous company obviously very a could flow by what I cash a it would If it's was revenue the it, Karl. be percentage yield, agree, strong. performance quarter. in indicative as the I of the great. of But was really

of So strength. the were collection realized that be that capabilities off to

we If the you $XXX We'll as of quarter for for I of as cash of and customers you of progress through to continue then measure for well affirmatively billing that monitor fast update is said forward own characteristics operating million year, our And year have will the we're flow. is going of those us. our bigger our of to year. guys. the reiterate ahead the our And that the I characteristics, expectations something course, balance to the is with as invoicing, course, say, that should we expectation

it terms would realizing new is perspective I minimis, on not impact parachute almost statements, employees relates expense in from even we or on will modified biggest any and impact, in of internal our of say the operating impactful of to Phantom As deferred that once. at an we've the The impact course, really financial our how outlook. our adjustments as be de revenue then revenue is XXX

David. Thanks it. Okay. for Got that

Thanks Karl. Appreciate it.

the our Securities. Wedbush And of Koenig Steve from from question line next comes

is line Your open.

one taking question. Doug. my Hi, for gentlemen. for Dave one thanks and for Maybe Hi,

see. Let's

picture the questions last can we XXX get that if about the Maybe the on they answer the last. affect your like I'd Dave, revenue, factors So just really think – and on maybe big lumpy.

revenue it or reported addressed up which little negatively? XX% significantly bit. and But You like affect that year-on-year. term, comp are in positively to the able Things you the did duration a either us tell duration, mix you've and mix shift QX cloud already to cloud

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really prior because revenue under back and the go fairly we we once year. standard then reduction and – recast new the adoption revenues, in of year last you effect If the a in seasonality is had again, the change evident impactful QX of

played to retrospective, So cut our comparability differences the [pros us we can results didn't through last or from i.e. perpetual had perspective, those and for spots so you cons] term a but year's to try was we And all it in that's why vehicles, like cloud. wise, comparability important some quarter, comparable we and that full so do give in out. delivery

being and reflects the of cloud rate XX% all basis perpetual XXX term a the growth way. comparable again, same where treated So

Dave. Okay. Thanks Great.

one So you. Doug, the for

us give of mentioned your around going I – about in to those you the is comments concerning much at what maybe there the think on Maybe made I want You on Are on. technology, as progress ease-of-use, thing currently inside those do the most Day you've call, cloud? are product? Are the addressed hear cloud? the reflected this didn't call Kind that update an what – do et the of on features? of Analyst Company to initiatives you're looking cetera. you one updates transformation rapid you've the about in things

and and it's we're lean lot been done costs There's out Splunk. interest language infrastructure, try much have enhancements I the a that and always and approachability. Yes, to any usage in natural language. the that more doing ever that and in a in visualizations future don't associated injecting to processing we the of, We've I users new learning of business be casual will type think, that end. a any of there's decrease an increase whole people views, got product et targeted Splunk, coming we've cetera, mean, bunch with of

is so the that live on-prem, much we've road What on-prem. and we That very three better is or on-prem will cloud in and the better into and and they about the every invisible and So still, less for cloud. and see been from I cloud, think, the live they uniformly data with hybrid stop where the be because see in managed our right now, and we're better that five we why to so live angle. world. control my cloud cloud we lived more there's that now and attacking believe talking loss where Yes, years type have, talking because it bipolar is very governance belief is to they cetera. constantly long hybrid case. et prediction I people is And binary of map and on of you baked of product need and any use a And world or to live of physics want

So where you'll – continued what blurring to of drive is see you'd releases the as continue see a lines. we

[indiscernible] good really cloud. job has think living of done example that and a on-prem this I as

Well for it. Great. it. Got thoughtful thanks the I answers. appreciate

Thank you.

Thanks Steve.

And line our Goldman next from Hulsing Jesse question from of comes the Sachs.

open. now line is Your

to for industrial users see for in the and follow-up if one be potential security how data there sizes, to volumes quick deal trending bigger what relate versus are itself? have you. of then that at wondering, follow the follow data guess, When Maybe first Yes. and And the you Dave. operation? we you is Thank I early order a look And Doug volumes? in a you for I just app,

more to not is customers dialogue you'll solutions data so on been volume both see customers volume year we'll this for now, that data-driven. a I has on is, the are – the not availability well product always are options that data basis. continue as what iterations provide and underlying be different as framed platform talked to much and likely There see of Splunk earlier pricing. release and And packaging driven limited our the what beta way that Right different of in

the But value I skills line doing process the necessary, characteristics iterations can that security what that's are data today the data what and of sources user more smaller more business and we're analysts and the are of engineers what are technical addressing. traditionally our users ITOps like. and automating look tech it be iterations the the been given think different analysts and profiles, of all much depending be on I volumes we interfaces and can we capabilities, scenarios much larger think have and than versus that life casual different very the of the

So continued map road take off volume. pricing technology on release, and options more and you'll of road there's to data capability, start a see that will and just our the lens more of –

to people revenue be sense. billings versus that call. revenue makes answer you. thing growth would helpful for triangulate think most revenue is billings billings like XX%-ish of on then been growth? growth I you trying to of bookings Dave, And XXX it growth I Is growth of That to the have in If closer seems Yes. the calculated Thank high XXs. can closer the for XXX everyone. that, and

fair really way. sure I’m a answer That’s right question. how to Yes. not in the

is, XXX. all over this of become ASC pallet we under I move as balance the think what's will standard the of towards important year, disclosures what

will We retire.

important plus give why topline retire our revenue That's software is that of pretty and insightful for basically was felt a RPO measure XX%, more disclosure disclosure growth business the cloud to a for so cloud $XXX billings. performance XX% around XX%. revenue metric. gross probably everyone to at at the overall growth the billings as million will it of I a Obviously, think the is, can what replace is importantly, which solid I over quarter that baseline revenue think you the at on-prem start license, will we growth,

effectively guys today. the really you growing, thinking how if stare So about well, you measures are those to are at

in RPO, that rates? I quick from have year-ago, change RPO you And so Thanks. comparable follow-up provide we any then a growth – that guess to that, chance

provide we'll that the was the And develop do our measure make view of and today, best key We to the giving software course, I revenue. course you measure way Yes, will year to that and how terms to is metric want think we're the follow around of our how share sure revenue the progress. Today, really over progress. particular, with our everybody update ourselves externally. in and believe metric of measure our decision guys I today we we the the that change. to in sequential thinking to own we

Okay, Dave. thank you

Thanks Jesse.

from of JPMorgan. Mark last our Murphy And question comes line the from

open. Your line is

squeezing in. is Thanks Mark Hi, Matt Murphy. good afternoon. on for Coss for me This

starting last do low a quarter? be happen last rate? for And up million, CapEx spending expect CapEx catch-up relative little spending? to which Will run to the catch So $X.X next closer quarter any be year's to was seems to to year you

million start we Yes, about year, CapEx for in year. the for the the of set expectation $XX our

facilities Now globally perfectly not from tied two the be consumers things. two CapEx. to of One, to perspective. on it's it's Obviously, Those and boarding two are a happening of employees the large linear. the what happens rate

change So QX year model that for don't based $XX on results. anything for the million planned I estimate other than wouldn't and

for and you on year, couple XX% or maybe Okay. on target guide. a percent next timeline you I there? And latest of the guidance, limit then [rev] say XXXX a as your well, upper bookings XX% total, ratable fiscal this timeline a longer-term have this theoretical Is I a a you then was your get think think there of times when year,

we we've this theoretical that start that aspirational to we’re good point, the at progress is provided Yes, and off anything made XX% there in a isn’t quarter pleased what this which beyond fiscal the or we're XX%. in first with XXXX, for year regard. and

you. Thank

of Q&A End Matt. Thanks

for the I'd Ken like time, back this over closing at call And turn you. remarks. any Tinsley to Thank to

your thanks, a Appreciate Bruce. you, for questions Thank Great. evening. Have tonight. any And everybody help joining available you if us. today. We're good have

great have Ladies thank all program, in a Everyone may and does the disconnect. day. gentlemen, This you today’s participation for you conference. and conclude your