Splunk (SPLK) 4 Mar 202020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Splunk, Inc. Fourth Quarter 2020 Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Ken Tinsley, Corporate Treasurer and Vice President of Investor Relations. Thank you. Please go ahead, sir.

Great. good and Dillon you, afternoon everyone. Thank on Jason Child. me the call and Merritt Doug are today With After today, also posted market which on release, close our we issued website. press a is the we supplemental have Also webpage note material that on well. as Investor posted Relations being be conference will webcast and audio on our website. live following This broadcast via call, the is an call available replay

and the file differ forward-looking release. risks forward-looking documents contain SEC, Form today’s our statements ‘XX, documents acquisitions not On guidance are our quarter investments. judgment products, accurate our statements. and with expectations is results the known factors disclaim including the events Please regarding made our presented first technology, we our today, reviewed today, call this revenue or and we statements. cause or factors and press with of in ‘XX, as to X-K our Those update may on statements today’s strategy, after year to duration, best those any forecast customers, our call, fiscal we results may will long-term obligation call and contained market, this during actual other and actual information be including and These contain revise these making current materially. and being or expectations, may forward-looking and statements, to including reflect of filed us currently full cash financial These differ that based refer mix for If ‘XX, information. from flow to

the release of is accepted website. discuss with are and accounting A We on GAAP not reconciliation press non-GAAP in our will presented generally which results measures, non-GAAP provided and accordance also principles. financial in

over to me let Doug. that, With turn it

grateful of Splunk. us. last we very flow. I’m and Ken introduced for our revenue transformation Thank the year. report for when over of our partners. of annual quarter $X.XX great you, what last We billion, trust everyone and and to customers up team, commitment with proud cash our this I’m year metrics and and end year for forecast and recurring we happy quarter and operating of It was the results I’m ended joining a that ahead thanks ARR XX% of our is

these now a Our Data-to-Everything complete on opting every of over made contracts. growth. our a for now to cloud product have pace renewable our question, to driver model ‘XX. reaching of over squarely shift few to perspective. as customers pricing of The business our And of and action. this cloud are options total at a data new XX% software XX% past do year, and and and the focusing as and is was for from to in term mindset of predictability FY we decision next XX% we’re our it cloud our bring predominantly expect phase business customers with flexibility bookings strategy strong us business years, easier ramp cloud Cloud-first become model has both next and software

is there the that digital the a five global digital and humanity’s makes I’m becoming is for over biggest powering Digital on increased and public. go And an every sure us, in initiative. navigate transformation, that excited model digital successful we organization technologies and start-ups fuel opportunity confident some another security discussion back, digital clear of elaborate Stepping enterprises will is a business we planning transformation know digitization it extremely real challenges. global Jason has must see ability am next I our to or the of organization. solve help focus for shortly. Board-level organization, ahead years, critical tangible is what about This become to to to a data as a become

to with IT they We customers Security our time see empowering markets anywhere we’re opportunities tremendous Operations that development. of the it actions, And that whether all data our can’t regardless across we’re At of investing most. value else. relevance core extend in at Operations, they of Splunk and and simply get they Splunk, customers’ or products and decisions else in the and need the the technologies capabilities application need Splunk’s sits somewhere index

skilled proactively amounts Event organization focusing frameworks, search by are. ensure or customers across as natural can mobile interface sources and such to And Capabilities analysis action deployments ensure real management, provide on capturing. take customers processing, it and Splunk and that orchestration, stream, data our overview non-Splunk and like and much on a moves their we’re landscape the before. can automation collaboration, at stream time federated than user entire in issues data processing, and speed they across a of to higher design, we’re of adjust capability in regardless consumer-grade how massive that access searches insights new their value technical scale language than of refine remediate data learn, working the from everyone help data the users get holistic data our

vision bring Data-to-Everything is Our customers. to resonating with our

reputation competitors, confidence capabilities. customer customers. order. importantly, win a scale our Data-to-Everything delivering That to to us new processing our that metrics combination to enterprise to the and an huge give part needed enterprise unparalleled portfolio logs to completed order demonstrates signal our in our report commit Thanks proud company the in enabled and and with I’m this our power traces, we clarity This effects and mission most massive the the scale that of portfolio, pricing on example, large value largest our plus customer brings value recently combined for beat data to of history. while our As to portfolio streaming, stream XX

who and visibility including Channel, engagement highlights the few Discovery, of racing as well of capture technology HDTV, investigative Food brands, of Splunk customer Data-to-Everything data their environments. TLC, Splunk’s their and gain Splunk Inc., Racing, network infrastructure, analytics solution racetrack. and streaming their Racing delivery on their monitoring to central, McLaren into more real-time as consumer Cloud expanded the off Enterprise quarter our experience. Network include organization, McLaren innovator help video for platform. or A Discovery provider more, use in And will is when purchased wins and Splunk, across resolution powered the issues improve mean view occur with faster customer team, prominent the application server IT and improve the racing time offerings. global a and to and experience by streaming analytics to Splunk including Platform provide television direct-to-consumer

by governmental future protect is security agencies, a monitoring key visibility, Splunk to cloud the Australian the Government, security Security, gain and response into platform state. agency’s Phantom transformational real-time agile XX% Macquarie UBA over Government’s trusted Enterprise IT security Splunk Enterprise, of will purchased player nature and multi-year and the Office well to code, in Australian used Macquarie journey, harmful threats, be fraud as from data spam. help support as of and environment their the Taxation

our QX mentioned we build for new momentum saw pricing I that Earlier, in programs.

an that data our our As use flexible not data. predictable faster more turn Splunk ingestion. to cases, and even based find of more customers including customers Splunk on their it pricing increasing data those call to for set from options, This into from easier value for and bring making we’ve answered is

that given their of data ownership me total Splunk organizations. adoption business, This customers and within I’ve the across as standardize tell has options the overall quarter to on the them so cost new platform predictability have our which many had their pricing confidence, unlocked right

awareness for system use days real-time management post insights Arc early The digital examples. is all its content Washington few Post, platform their deeper me for flexible customer fast-growing and help expanded building, you Long-time experience. and for monitoring Although analysis their their data programs, pricing Splunk Leveraging uses Enterprise our properties Post still to Splunk improve Publishing. a overall Washington let and for and customer give of insights

over adding also and operational information monitoring NHS security Security help Enterprise With Splunk enhance care month of defenses Digital them Splunk billion services spine, patients quarter Systems. significantly security e-referral and another important detection, through and NHS Splunk already and of England. NHS this their expanded across to health dynamic across used their over X improve can Health National Data NHS. to is Splunk, XX,XXX systems healthcare deliver a health security social Processor messages XX,XXX includes across Stream helping for secure to to England’s networks. and threat Splunk and which uses and Splunk who IT strengthen securely use This network Digital Digital example, pricing, organizations indexes services,

was proud Splunk of milestone ‘XX. doubling In to summary, than bookings to it team. was a FY so finish a quarter our entire it more with cloud I’m the and QX, strong QX

We’re uniquely positioned Data-to-Everything the capturing are tremendous focused opportunity XXX% on now and we ahead. a in

customers We’re And committed most investing and massive to Data-to-Everything mindset. adopted We a growth scale, all, are we of opportunities. our innovation. exploit their for helping cloud-first

you. Jason, walk you to fiscal will over through now quarter results. more hand Jason to and year the to I in detail over

Doug, from for from us, today. good a comprised ended we last for maintenance was year year. joining and QX billion and $XXX highlighted a total everyone. We than up strong afternoon, ARR cloud ARR with to the by and of expected. faster cloud Thanks, shift period billion, $X.XX contracts. XX% Thanks term over us very capped $X.XXX of million license

cloud have contracts customers offerings. we last perpetual and faster new for anticipated, been we quarter, discontinued outlined term over we As perpetual opting because license than

term is software and result, cloud a model our renewable XX% of transition As QX, bookings or either a were in into complete.

predominantly a cloud to Our the focus shifts to model. now move

important an to have mix understand, bookings balance The becomes impact so a cloud it the meaningful can term between to financial statements. too and

about just software that And TCV FY year on of the basis cloud cloud, from contract was even revenue TCV year. recognized we term XX% ‘XX, significantly of is large into the cloud second a of expected the was demand less half yield bookings. we cloud from cloud closed, than ratable, Turns fully and a in Going sized comparably software contract XX% of most total contract. which significantly revenue came will a ultimately higher out would contribute a because

ARR ARR we’ve activity irrespective term, to because As of business. normalizes bookings our of cloud is evaluate or most the appropriate momentum metric overall said,

bookings RPO XX% which up $X.X of from to up with and full XX%. accelerating end, bookings contribution $X.XXX led recognize RPO over at from in growth XX% were the of current year-over-year. to of is as XX cloud QX whereas multi-year the total of billion, to slower term in over period bookings. is was $X.X up In QX bookings last total in a total compared billion, classified captured QX, contract contract Again, immediately. last QX year. non-current, XXX as year. ended year we ARR revenue this years being of $X were the expect a months, up $X contract up XX% a RPO cloud to normalizes XXX RPO out We than last in QX RPO recorded orders next This current for RPO greater The portion year mix The billion in due of pace QX bookings million billion, RPO, shift. we value, majority

Over compared QX. we the large skewed orders course booked year, in federal in overall XX the X-year several to the Recall than $XX with XX duration that million prior greater contracts year. term government of

average prior weighted duration months of QX. in expected, to As reverted levels period XX

over quarter revenue Now Full XX% full revenue total the QX year all at down slightly basis, software full full revenue year-over-year P&L. the million, gross flat million, on ‘XX. million, were and were year. relatively is and up are contribution. $XXX a and was due Fourth $XXX a year margin year Operating line basis over XX.X%, cloud margin gross revenues QX software On year-over-year, XX% to XX%. a plan. XX.X% revenues, cloud revenues XX% year, Cloud XX%. up to was $X.XXX up from proportion revenues QX license was were On with Full year. in up on which our of billion, year XX% fiscal cloud was margins, million, up XX% $X.XXX non-GAAP, for XX% greater both was were $XX last up $XXX margin billion, last year-over-year. in which of the

flow the expectations mid-year invoicing. also following to line with Finally, year operating our in a was shift negative for million $XXX cash annual

customer and this growth of we year, we are mid-XX% forward, ARR high-growth maintain the confident acceleration ‘XX. our for in and adoption guidance trajectory, fiscal continued Looking

overall mix bookings expectations current growth that substantially year, Looking operating ‘XX, to it given growth cloud little to further and Revenue from will software higher at contribute will and flatten ARR even related ratable high fiscal XX% we With out, fiscal to year FY flow trickier, ‘XX comes CAGR this as that ‘XX. cloud rates. billion is through revenue target ARR proportion for and revenue. a continue expect for in bookings this we our guidance $X variability the a high cash a follows that sustain reaffirm

contracts revenue renewal begin booked FY to should we the and sharply. As benefit ‘XX previously rebound growth ‘XX, in from of

the about and total $X.X in starting pattern the billion snapback ‘XX seasonal full in margin ‘XX. QX at ‘XX. So, half. year follow revenue revenue of normal front and $XXX fiscal our revenue of in XX% revenues ‘XX in growth and half fiscal With follows of we high-XX% anticipated FY expect that and revenue back million will annual ‘XX, range trajectory, ‘XX in in will trough we expect and it operating With both rebounding before this XX%

translate forward of through to excellent finish full transition a negative and operating on you business poised on and expect our of year we next the framework Meeting, phase cloud revenue momentum and it Investor to profitability year walking We as roughly the upcoming XX% this to In a and Analyst with a how QX was fiscal and provide target by look metrics fiscal degrees to varying closing, mix a strong our ramp ‘XX. we’re time, will we entering cloud of XX% details in rapidly. long-term of over to more breakeven ‘XX the margin for and At intend growth. is

it let’s for open With questions. up that,

Kash you, Rangan [Operator Our Thank from first Instructions] sir. go Please Bank America. comes of question ahead. from

than It significantly forward-looking what on guidance. higher the expected. looks and terrific absolutely Congratulations we

this So, get I want to right.

are So fiscal $X.X ‘XX, you about is what to saying in the doing are we billion. poised

I calendar a the is $X.X ‘XX seasonality XX%, some your But mechanics growth, RPO we billion ‘XX into And for XX% guidance Jason total based So on shift it if be in RPO bookings, of talking timeframe. high-XXs, to looks in through it fiscal numbers up CAGR it’s it the about your to like again. I them fiscal are revenue of take about lot of just your of you cloud. I guidance ARR were some ‘XX, growth got toward absolutely massively in you total some and flow know We with about there that’s talked up CAGR was It because thinking guidance bookings that the could QX? model revenue the the well that about your – It Congratulations rate. $X.X billion else the Autodesk light operating compounded what again. revenue question transition, similarly terrific like Could received. number in the shed looks reiterating bit respect better for And you next the looks year, stunning. a respect was to was cash for to even And think for numbers. which guidance your up $X XX%. are numbers, These XX% there? everything are about little is My guide looks you with expected? assumptions are the also to than clearly forward-looking billion.

Kash. Thanks, Jason. This is

the guess, RPO I tackle to So, just booking first question.

had XX% in that into recall it but – signal added was yes, the quarter. So QX, also we we effects

deals moves a it it’s what bit. quarters, bit to mix of on the get is last its so – in revenue plus in TTM that, now for see of over and seen because cause what a because And actually the kind on that at because down, volatile I is is, the And prior really in reason look could The kind looking have and into up you of bookings of larger that of we a way of we it couple is – bookings have it RPO when period. timing best The hit the actually up course, things are on the a think this, look new we deals. comping RPO a bookings, there’s deals that volatility. grew of around why is deals number RPO you seen And RPO, when the of number kind we normalize reality and move. reason you – of basis when we – change said down. add combination do That probably it, you as So, deceleration. the RP because if it lumpy for is against then and close, quarter, XX%. terms it’s you go a of a also, of four larger at larger that and depends obviously

we Now going than to the going ARR. to actually on-prem months. ARR better the going is say – it’s what whether get cloud. because that It’s it’s is as me whether timing And through to reason cut in it, revenue best when metric it’s it’s next of it’s the just or RPO whether delivering or are show is XX heard is you’ve bookings through closes, deal a

has then first for the of ago now quarter. And of so six stepping see quarters when from it’s row you in then the and reported from And growth year number. XX% guess that’s QX a in up accelerated was I a kind ARR now the actually quarter it been every

excited the really are growth and we So, number on. focus the I’d about that’s ARR

It Splunk looks made and in that should deal like long-term? win That’s against why this win from Splunk Thank win crowded, Doug, seems what you. mega makes in Congrats. companies the little XX it that fantastic. what market Splunk me. a

Thanks, softball you that for question. and Kash thank

was there – So is just a...

I ask hardball too. can

know. I

good. look They

impression, because Yes, proud super of impression really, I that we have really deal. are though. super

the in ton been app-dev/observability obviously investments portfolio have the security area. buying of across making centers, all We ops a the and

enhance it DSP incredible to is scale want boarding of and all effects And signal like nobody miles on massive, that capability even offerings and globe. log the chunks enterprise data when strong think signal further the also features effects automatic search. The around infrastructure this get in of the scale what our been the management this and of have to metrics, of We overall use There with stream huge and data you security, Splunk. and management was the could we processing literally testament the within I to tracing And distinguished done case They distributor then DevOps tracing they organization the extraction and next-generation was dollar of transactions of across things this center have the, leverage like throughput powers with but rightfully adding the dash even we’ve portfolio. and customer I driving large the the a was and massive a federated been paired that underlying with synergies what for fidelity customers what prime platform model, think, side. from that demanded. customer app-dev are the mission

So, was class it to enterprise been everything, for from investments we’ve this the in high-fidelity functionality high-capability to really tracing together that from making metrics to high-scale, customer. logging came streaming

Thank you.

Our comes go Suisse. Zelnick from Brad next from Please question Credit ahead.

Great. Thanks of a that know finish as the I Kash’s and large on the deal I guys. am you performance but as does it, echo do wins Kash congrats I And that about. much, nice especially as so I enthusiastic. lot talked a don’t can if strong

question, offer across the there now? Is So that ask very the your demand factors right all given guess, I the but is concerns what Doug, you’re I priority maybe budget to real just health just environment have anything high question. you my the there first business out terms global know in for time I outlook into verticals, about of for seeing

company, do able per any market. today. that excited What that volatility we know monitoring super what for of the kickoff in can this and the I ‘XX sales of as that are to us our every Vegas. and basis. immediate a from we gave happy we the are multiple have whether time in literally to about not. we’re – did and reactions something pull last all The to they available based outlook, seeing companies we then off outlook, am QX are Right on day I to other I as week a going we’re lot Las we is on reevaluating not everything subsequent impacts was moment, Like X-year see other and forecast the COVID for have FY or

a contract is think I new important. your entire organization, in a hard with a company. so suite annual lot your we the contract where for we and total product an aligned absolutely leaning have we’re ensure that’s year It’s go-to-market every so it dynamics has versus value are and brand pivotal on got observability communicating organization and to event is in got that especially value cloud the to pricing of difficult

driving was to forecast roughly So on the basis of of daily a over lot been X,XXX the course well. built as five the that a of part on forecast days people talking and calls we’ve

to Thanks, upon are and we about from you, Doug. just to conversion your as how to past uplift maintenance ‘XX you what we embedding should ‘XX of think as fiscal guidance, perspective cloud? term any get maybe And look Jason expecting ‘XX for out and you’re a customers licenses renewal transition

converted quarter, it’s Yes, that I term going I and much, going metric that it was metric within we to say, very question. perpetual of quarter expansion base That doing or great – we’re a next very, rate because either at I hasn’t more the X% the installed moved are gave think to I’m well to would but to I net the look had more last against think, for helpful is metric. metric a that provide you cloud.

the why we through a that’s exactly the of FY kind able I have renewal of is cycles that terms growth ARR ‘XX. XX% to now CAGR we in which know expectations, was ARR is what we like, definitely there say So, why confident in look the – from and are

part be big a growth. certainly of So will that

is certainly, think but We logo growth today be course also way the well, growth continued ARR. – is best look I of to to going as there new overall, at

support guidance we help as combination think we those two will the that you expansion The I gave. rate some shortly give of metrics well. will

the there could And for is any number we to year number. X% a that nothing either the that different we of to incentivize conversion. sales other base doing to pay in this was I conceive drive that that is try and with year were there that nothing and see And doing can customer are nothing there special you force or really within doing

customers, PERP, paid rightfully term they have We than to they more happy are and on or cloud top something for layer of own.

said, We come But and contracts maintenance from. what where growth are really the that’s expansion is this success and term Jason rate dollars. cloud overall we’re happy is on core all as of to focused for and the going those

Congrats much so Thanks Great. again. guys.

Brad. you, Thank

Brad. Thanks

Thank you.

next Matt question comes Markets. RBC from from go Hedberg Our Capital ahead. Please

guys. Hey, the congrats ARR Thanks. I’ll my outlook. echo on

dramatic that’s a about thinking. in that’s pretty if quarter I any seen questions. of better wonder think XX how One, predictive the talked increase were their that you I of have I there’s lot progressed than more customers pricing update give guys much conversions? footprints. another us and us sort and last early a could of of on Two know it’s sort converted sort really still quarter. to sort of you an you’d

group X on infrastructure-based heavily it’s we on, pricing pricing, over Sendur, of focused the days. of marketing our course Actually, whether visibility reechoed pricing that that expect of new Head to hey, focused team reechoed keynote volume, have then got have pair sure on Global Head Yes. it’s with the that scale. that predicted in Kristen, is to pricing each to whether bring at pricing your I you is and and and it then and reechoed important of really this bans Product, Field, a customers the Susan data the very customers My high exposed making or driving them it

doesn’t of to new that that decision that that are right they’ve big for and customer yet this lot feel encountered every made has customer that’s a we a we is have not positive at digested advantage There it seeing is Virtually signs. one, pricing has, them. them. the looked So, a

a volume number cases, right, cases at highest looked really feedback equation I’m value to was making and I change value to return and a they and piece, thank the But and which went was got for to predictive But what went sure way. company. use all the then based I the back the of want focus can data and them. consistent people it, focus other they is, I’ve you, I that others had infrastructure what went pricing the Some across back now gotten driving on, want use

call, evaluate this said extremely on we best to the there. know extending our making that focused decision, every So, pricing customer are reps perspective, to the as satisfaction and I so a customers perspective, out that an and awareness from we last tooling how and customer perspective, make are sure

quarter? the to accelerate I’m new expect forward, new to XXX we – Doug, XXX And next has follow-up. per would with as know always you pricing, then if large and versus is the a But have as couple I expand, of expansion wondering, debate there obviously from new just we adds great. maybe the on the with in with we a adding move opportunity That’s years, of quick the a I say, been guys customers base. the know customer both there land you kind perhaps guys historically want been

we what $XXX are of in on we the that was ended quarter. thought expectant said to decent revenue, from ended this XX% to look the renewable would over our super cloud the – We at on a revenue We in exceeded XX% we really we’d upper revenue. still Cloud relatively million. I going being range, finished we million When over to a forward, overall have for hit at for XX%. margin op we on predicted am lean past XXX and closed over-achieved year. XX% company, than billion said to thought year, $X laid billion. XXX, $X.XXX million end for we target. delivered impressively $XXX I metrics of just the we three The aggressive XX% We just what XX%, a deeply years at predicted We overall at we are gave we deals cloud since less software of just bunch movement. $X bookings, XX% We we try just do convert we at we’re at XX%. We percentage how done move just XX.X%. we what

much much momentum this so entice that look understand offerings, metrics within get that all to to in they constant achieve. of the know just tells as we are to that push easier attention has value tension kind net as partners at cloud they be I no cloud. find long what we been a So help, rate have expanding me because customers. to need of metric what one pay news, people But at to do to the our we And try the ways going the think all are with to customers I new up gave that and and And reps is current now, to for matter has going the us to there customers the there it’s stuck. is

excited done. Well A about. to lot be

Thank you.

Thanks, Matt.

Thank you.

next question from Fargo. go Wells Winslow from ahead. Phil Please comes Our

Hey, taking a and questions. quarter thanks outlook. great on congrats my Two and guys question for

maybe a then lower last changed that essentially chart after flow, you one on or negative line, effectively quarter’s you ‘XX. quick one directionally that? and in at give trajectory from fiscal us an ‘XX, all deck, cash showed a First flow for one bit just Doug Jason, cash than Has guided In fiscal that ‘XX little maybe sense for the a to gave ‘XX. operating operating to

Phil. Thanks,

that and on first I’ll is time ‘XX. year should it, last last same or cash, the cash So FY with or look said and what Q it, I’ll FY was reaffirm stick as ‘XX’s that we that

minus were $XXX we million. So

in occur That forecast ‘XX. starts So good to the this middle for of that’s year. snapback a

will change in then approaching no so billion to flip the then guidance. So we ‘XX, we $X cash be the will positive and

Great.

is and now there interest in follow-up with has change Doug, your no give hearing Wonder been past, conversations data if our as well And just on obviously, the stream the So, perspective you there in customers? could that of a a from customers. processor, comp DSP you question a right. lot as for what bit, data us then out are

to patterns. metrics with more Yes, I have And and processes extraction customer the happened of like indicators observed drive. without the not assurance the the the DSP think company transactions and high could really be This positive millions a world. QX, any in talked observability than buying month customer able in per across name think have transaction transport of that in key deals that and a was was quarter that I lot just about second can history suite, second the per fidelity a that It we with would I a number stay included metric DSP. to customer biggest of they a about

think the important year. and I very critical it’s the So, investment. track we we will absolutely the a made data Streaming complement rest. I And is at course over to think something of right

which deal, because just data with I will environment specific bead volume IT DSP get landscape cases incidents traction is app-dev think next-generation and is certainly key what big this real and with well. one important the that across AI current see is a use the attaching thing that events be and the ops on real-time same that in that the happening as ops the we to security we an saw is to trying and component system’s to of

guys. Thanks Awesome.

Phil. Thanks

you. Thank

you. Thank

from Lenschow Raimo from comes question Barclays. next Please go Our ahead.

excitement the kind much talk of on a see momentum. to But surprised the in little locking and gravity a about terms I’m also Let Kash’s pushing term, side. the have year, of well because we it? you shift, huge data as still transition about change in of that a Can this on a the salespeople numbers. on going huge what’s you bit that cloud that’s see question echo Quick me

And drivers so talk bit about can the amazing. a you there? That’s little pretty

on really to the was a we we even level be And ever it FY guidance a the model, deal-by-deal term, year to – consuming of is past highest pattern you ‘XX for interesting see give were on in did higher probably decelerant that interesting model through full FY for QX. The need it have basis, forecast, ‘XX. with a But Jason it’s really seen difference thing a that predict. to that term, the surprised this in was, And the it the a saw one beginnings of we need ‘XX push even reluctant It because of to Yes. seen ever the little And why wrong an ‘XX equivalent cloud – a we’re behind – we with spike stand than FY QX because FY And thing rate to are cloud value and hard was year commission between the at force. me tends QX. will there – sales the has the we and is that was we’ve a QX. bit cloud providing despite in fact had infrastructure. service credit contract further we’ve in I a – had largest and a

right of a like years, get and PoC public is of of that us are has actually foresee So that and from we your me can’t being of exactly the where production and when customers that, the health tells offering to buy But providing workloads to looks go what be you a to where part on rich return XX% continued on-prem the X that X.X cloud features you think underlying to Audubon ever means to years that is in flip unique I that within option not I cases instantaneous the the on things call that pricing progress as done is, want value. and I we’ve XX this cloud. just next There quality to cloud. interesting to you interesting lot preview that, think really said rapid at just They one, are and industry the some to and going Despite we’re characteristics a use probably program that estimates cloud. the really piece for I’ve that five see thing least XXX% years years.

we to some don’t think to to FY is revenue, that begin – lap of I is the think driving cloud our we get as by which immediate target of we there ‘XX. now will that number FY that we’ll to – but benefits, So ‘XX, XX% FY impacts get will on if some ‘XX, XX%. XX-plus-percent in But

at terms it’s operating ‘XX, obviously for situation change FY and of then in the revenue was Jason, terms situation? kind margin see look for, a in And had obviously, your impact. investment if revenue a is But any we or and we there one I the focus that’s follow-up perfect. just just Okay, like, of like what’s in – reflection margin of the operating what cadence this of guidance change

down Revenues get been because going to the of It’s The to of we cloud to we’ve points the improvement ‘XX why by that XXX-or-so a XX%. in is revenue. guided reflection FY targeting, you’re of XX% shift. reason you coming basis if layer a target of kind

transition. effect kind of So, cloud GAAP of it’s purely the a

GAAP income effect. statement

Yes, yes.

Congrats. perfect. Okay,

Thanks Raimo.

Thank you.

Our Thill Please question from comes go Brent next from Jefferies. ahead.

quantify could us Good largest think you questions upcoming Jason, lot for the ever, afternoon. And that to exact ballpark deal just the hear will into this and existing how a if tease base Doug, of you migrate, now is I you that help the factored installed the but guidance maybe there the us with how you. and not Thank also pricing help around year? everyone it. for size, wants change

Thanks, Brent.

was I nine-figure a guide want up was you eight-figure biggest now ‘XX, hidden So one in guys, been a – move. to a ever sharing been deal. have been to million we’ve this which to deal. the internal getting to X-figure from internal plus my ‘XX with close. share – in nice had to was it’s deals $XX gone excited which tune My us trying post, deal And nine-figure obviously have see be goal We million FY $XX deals. has It

not line as the well. billions manage that far number, the So that so And requirements of million, and that organizations like you your very then importance business. mean contract unified as are a means proud feels it’s of you of that. having your required app-dev then is $XXX business that the their company, portfolio, are what everything allows as when much and million to entire online that fully the ask. for I to of digital architecture to to online, reasonable business dollar centers billions and implication is And from a security data ideally $XXX the it’s

said There of it’s – And the say, contract. are – as as base pricing that so other contracts percentage PERP – the for as a that relatively baked that PERP had about into on motion it’s thus I relatively far. expanding expanding question is the earlier impacts in three a as who moves in the of have a of of they’re the kind adding PERP would terms ARR we’ve slowly. that the questions, We’ve one that’s assumptions of top well small course something been or years, new base installed on the I installed transition guidance, second on moved folks we the

I probably rate. expansion look at is going And better so forward why to metric that’s think the going an be to

let’s summer. say, then And actually sort pricing So back quarter. within of that, of in providing terms I’ll tested be we impact, the last this that

kind the kind And of then digest actually elasticity all kind so of ability help see of see think, then exactly how of to something actually able of we’ve some that – we’ve while. to that and been the it, been customers impacted, that’s the impacts, watching understand I kind for field’s a that and closely

seen confident provided. what has feel baked that been we the the kind in and of thus about pretty So, we’ve experience we far forecast

you. Thank

Brent. Thanks,

you. Thank

go Our Turits from next question Michael from Please comes ahead. Raymond James.

Hey, guys.

Brent’s more and is quarter, kind XX% the some Brad that next that know much dead of question. think a this XX%-plus for rate ARR just us sustainable growth in so really I horse, tell the clarification you what of migration ARR? is the in with risk of how quarter the from we beating Can and

And customers moving to you mean cloud? migration, from by are either or PERP term

the Correct. that And expansion ASPs. think there, of increasing that’s the impact impacted I both then [indiscernible] the inorganic and

and turned if that look turned term X% their we or PERP all in license. cloud at a X% in provide license number, transition perpetual we for licenses. why So

the point metric X% it’s between as and at still below QX percentage We’re QX. X

a to do for benefit reps Going sales do to back not it. there’s to for – are no is customer incentivizing, benefit where There no it. we

give and a contracting customer single get that trying the all where get at and when want my give PERP back. cloud, I’ll So say, – looked you offering vehicle. to license a me moved, those you’re I go, I X%

customer-driven decision. And so it’s a very

all They’re or FY cloud. customers their ‘XX, organic of licenses factored term cloud. in for purchases term our For for trading or zero and we’ve PERP QX

have those – of to come to get will PERP program but customers, pay come them to for from is them there. some and there And no have existing

Okay.

de is impact or from ARR to PERP minimis just guide, words, from zero your PERP clear, is in there zero So in other the migration be into forecasts?

Yes.

signal bookings, just was last from this And quarter? know it quarter. inorganic on the what was one we effects clarification RPO contribution Okay. What

So point, this last quarter the we’ve partially it we absorbed quarter breaking quarter. actually was disclosed out. integrated we the we’re it, it offering, the and At because through not so first it

Doug. Jason. Thanks alright. Thanks Okay,

Michael. Thanks,

Thank you.

Our comes question next from UBS. from Fatima Please Boolani ahead. go

officially structures, price incentive off sales the within one I partners sales the the of will as thank rolled planning the one off changes responding Doug, I roll coming out the what us to for and imagine, if is just for you’re putting sales I’m partner with and Jason. you pricing you’re and wondering which sales transition, in Doug, well taking to the that? have Jason. follow-up software thereof the question. the magnitude And heels books have force of kick you in metal both how talk channels, the sort pedal your into new Good and you, now I and how can two for the about you, afternoon how to on organization to cloud

Great questions.

especially have – years, So CEO excited come to business. comp had half of the clarity have both then and the guess, me have that company, up plan you SKO but how are the excitement to simplify if I the at the about most of people was and I palpable. ever you expressing are we vision going ultimately

been guess able the are going a a core to finally or are TCV PERP cloud. to move license the because from, trying you we have term so is ACV think compensation structure. you comes I an or to of excitement to tricky

reps way up year sales to two year, science me. one and very inexact the a do could clear. frustrating for is a or is and from three ACV it the all year, it’s and You And simple and everybody

deals line gets full term cloud, larger be I a This so look because we larger. cloud them up, trying size infrastructure-based into it’s virtual cloud within when environment, And leaning for pricing, Splunk cloud the the be it’s for to cloud. them And will to a also that of year straight at sight have credit tend a cloud Last I than cloud, of size and term core or that the because I the TCP the discussions. infrastructure It used really year, buyer to think makes to on they’re to usage which a metrics the think decelerant more the neutralize decelerant tends we data Azure so AWS native that year. had is cloud credit, are commission term or it’s XXX% already architecture whether of a a took deals sense where advantageous we since volume based charges. than for

is a I that pricing deal, a So, of use cloud all data [indiscernible] on depending customers as you’re SVC and well. just choose think we’ve when the seen about the case the talking SVC to volume predictive them, although tight is partners cloud over for very fit

about just lower. Fair basis the us trajectory gross the we moving a that this can if appreciate front for help shift, is that? a point, mechanical that compression jumping-off and output using on the software enough. think you, we revenue then operating just on year-over-year as cloud margin should But to think you. the Jason, as bookings you of mix about cloud margin transition with how a And Thank

Good question.

the which expect milestone had margin compression in gave to kind quarter, change. come, The XX-plus-percent cloud, come was update is the XXs So of XX%. in the cloud it business quarter obviously the gross we that Last achieved range don’t in gross and being will what year. last the has we up last that from been margin margin said substantially has gross on-prem that the where obviously

I – few are next the We said we to to over get to XX% XX% we were think going years.

this to the then year expect gross approaching the by would year. into Our range the next expectations, margin see probably we of be by XX% XX% of the cloud and get end range end

what’s your is question the then So mix gross overall the assumption. margin, on

XX% XX%ish get flow somewhere gross around you to you there. that So, can if a take XX%, of margin number then the that. And And can and the you of assume kind at rest through. of or margin XX% gross

can I where it think see you comes.

to still then, go-to-market, we and – able be efficiency XX% that well. obviously, we it’s and to going margin, to do across expect gross of hit So kind see G&A, as to be gain R&D to further that happen some have

That’s Thank you so super helpful. much.

Fatima. Thanks

Thank you.

Montreal. from next Our question Bachman go comes ahead. Bank from Keith Please of

thank Hi, you. had also I two.

us I see than, the bookings rate cloud next RPO really there over growth us about total tend to just is the term to heard the to say migration bookings, how the be the the about understand could trying growth deals. going the rate? I’m how to XX And impact Doug talk RPO say, I deals you Jason, larger the On months the next the the to XX just total if And does over pointing of trying follow-up. to. But call-outs to RPO months? the how bookings any want ARR, think you’re you’d a which know – then is I’ve

sales mean I of are honestly, model, that. important we team in And got because RPO our as to on a bookings, piece aligned the an harder question. plays good – forecast right that now so completely versus we’re duration our of little a we’re forecast. TCV of sure confident driving – It’s is such we’ve ARR the really on more again, focused making growth the ACV kind

going of is around. to because so duration move And that

volatile. as – course timing, And and is so then said, of already I

might It that more numbers I year, growth way. they not would have you a I to probably result, probably then things. a overall some at that expect if duration unlike there’s kind as look volatility it lot it where rate. going if – of makes across going So be see start the it, to and last see complicated, of we’re to adjusting will decide you you but will quarters on focus look need

will talk Analyst about So, that that’s at Day. I probably something

cloud duration term, it right? And the of is will... shorter So than

three think clarity. years that’s the reason little – view whatever see absolutely the of kind to because and effectively the guidance next we’ll more is, if is The Well, duration of the going so translate one CAGR we for is. gave make can today, we’ll to just a would what’s we thing certain determine I create the ARR I

in see you what’s what bookings to going we’re whatever so And RPO deliver ultimately ARR. an is

relates ARR. you that in of wanted to And is all so duration the focused guidance stable of volatility durable, it that that what the the delivering. – more really to revenue on that’s bookings, of when that timing more ARR, – ultimately I create whatever regardless not or give hit honestly the reason can ARR And actually to is to I to – wanted complexity, translate you’re RPO see what sure comparing regardless because multi-year that of make ARR and reason to we’re to – and deals does volatility it one

less why be but it And all push this ratable, on so be complicated, of a toward obviously you’re us to focusing hear we’re transition. ARR. to continue going period we’re won’t in that’s – Once will

rudely. Well, let me me ask my cuts before second question Ken off

wanted wondered just ‘XX. talked any to gave – you if and I margin a ‘XX in you about referring a sign You you to. about – I’m margin, business talked snapback operating

on Just give word against any of targets. how about your you’re thinking snapback that kind dimensions longer-term

to It – cloud of relates the totally to relates speed transition. it the completely

which the mix have we’ll So would will year GAAP if more metrics than the then even be snapback shorter. plan, it and incredibly fantastic goes current outstanding higher an confusing our this well, make for cloud and business,

on how going us. ‘XX the customers to fast hard know how going not it’s – is, should tell to consume, don’t reason because to our it’s – what go, tell we’re just I’m focused I I they’re to they So say going

in And to a see. the to so point going harder where we’re be as halfway is a in ‘XX result, we’re the But on little very confident about at – where ‘XX. we’re at

for So we did. that’s we guidance the why what gave

you. enough. the Fair I will floor. Alright. see Thank

you. Thank

Thank you.

you. Thank

from question JPMorgan. Mark Please go Murphy comes ahead. from next Our

Doug. you, Thank Yes.

on up earlier question. an Following –

You had said that history. you company largest recently order your in closed

in try QX, wanted that I that think to just in understand – QX? was fiscal I’ll size to of then a ARR chance and there you in And all terms So you part have but sized up that am follow-up? Can it of any clarify, are presuming was help TCV? I at then that of to the were that roughly is us that you

Yes.

a – then purpose than market have up ops mission the years outcomes the for, is security in to from already in was which looking it the lean global in other the volatility are infrastructure it closed nice customer this itself app doing to the in a why to of craziness bring DFS the and transaction at acquisitions, of markets DSP and testament was QX, is willing portfolio January, had fold despite some the again of we I that So that and that deal, SignalFx that It’s imagine specific environment to focus which security at and management it not the this by enterprise deal, and overall not we and size – TCV being but dev grade can they features that three drove that DevOps. disclose the we deal, annual be market reemphasizes brought did. an was, on are IT of we large to it to the won’t dynamics and Phantom that very, transaction deal, that very a may you and trying eight-figure – looking going to ARR

understood. Okay,

safeguard think problem impacted you on pulling to reason conferences, are the work travel could of of grow? you some employees if topic the own that of the doing to try are a to to latter. for and taking to if are you any actions out some follow-up As them, your coronavirus be at continues restricting just Is on-site what the implementation the you are respect there example, with point,

health other like again customer It’s companies, our is assuming number and our employee Yes. priority. many one

to or one, health – they – feeling mind. honor and travel. issued of that our we even and top and number at we’ll it’s make internally the guidance are to get If employees restrict someone health and/or is if business sure safety please employee And find there uncomfortable, safety, choose any customer the we have critical we critical, business managers we’ll that business to travel that so, value keeping

move some begun to have For non-critical we those internal meetings, of to be virtual.

are not to and so external are. Security timing retract. SKO on For really deemed enough again our walls happened United the the some we need their Group to got issuing we we’ve that probably States, and latest it good before far lucky we per times of multiple Safety day. we that within updates conferences have I where And guess

do work wherever makes it move wherever a that professional this of on as of possibly top virtual to world any virtual, lot can to we In can, medium if our more things we is we rotated to as work, customer as staying around And that a gate sized We’re on have and something success and the possibility Asia-Pacific, of dynamic again all services the ability there be. sense that top everything customers. other other larger company locations of There and given can, deploy rack but daily to hardware know the keep our that there head calls are of we’ve customers with some it’s as Splunk. we’re stack we got usually might going how possibly our to environment is.

that. much. very Appreciate Thank you

Mark. Thanks

you. Thank

from Securities. Please question Our from comes Wedbush go Steve ahead. Koenig next

question. and question quick product financial One Thanks. gentlemen. one Hi,

financials, us mix the mix metrics, some the with shift a for going key just do you per toward the modeling On be think like wondering, progression understanding share that’s we impact with and don’t point know this Should really I’m we the of about surprised helping ARR understand forward. XX% revenue, on what Can how is I getting other so that? linear cloud the of can planning do what’s you’re year? the or or keep that it and that We metric give business. some us calibrate us of and

Day we’re So think XX to in days. going our I Analyst have

think just say of level XX% XX% how little we a plus from kind this in more into what next went those high on certainly XX%, I to year. we I shed mean, going – XX% ‘XX range we’re it year. will to probably So expect exactly the to will I – light about to things. be

and that’s predict. metric And the most little one that’s so customers are so tuned, to the important how it’s hard it’s – it’s that I’d going ARR to why is because linear that’s of say is to hard in really again focus choosing terms a And be, to stay it on.

it. Got

much from prem and of how Okay. between apps use for de cloud cases, Thanks, you, as us cloud used on versus can apps of maybe being security, what and does how on color kind it’s And novo you a mix. being of Doug the the little mirror Jason. of deployment option mix does the kinds due your adoption, the give just premise IT ops, it kind forwarded data is

So, just some understanding it’s being of used what for?

go seen A we’ve regulated and definitely cases a then ago, And on with and but the was security excuse to of healthy workloads with that, relatively people that. they’re of years moving going and to become ago, environment, the Phantom data, cloud of Okta your few in the into use three larger. within deployment I the – shift come security other companies XX in cloud. complement comfortable with and smaller the well you’re other very with if AWS months Workday cloud and What and data again the are in and data cloud, the more cost me, three component force as years having as being hybrid the seeing seen I’ve and go into say gathered is cloud-based The of more growth or either industries center big enterprise growth data cloud data security would with sales moving would some on-prem majority into conservative, a even as that use that cloud probably say Yes. depends in to was it data and the mix past higher case IT it’s data. a were comfort, I but we

guys. Thanks Great. it. much Got very

Steve. Thanks,

you. Thank

you. Thank

go comes Keirstead Bank. Deutsche last Our Please Karl from from ahead. question

then fact customers cloud, as that that how occurring that larger the change Native other Doug, on change? starting such seeing you the for on in Cloud two you second pitch me maybe ask are see or the Splunk is as some Azure sense assume for you. in my and field Doug, seeing One would all Splunk just and one Thanks comment Azure deployed on fitting wondering mix. can I’m clouds? mix alternatives does such Doug this see start might cloud it a Thank you’re AWS evaluate bulk competitive a on you your or on and to of might your And I’ll Splunk you of as all. cloud. of some set result, if Microsoft, Splunk on

Absolutely.

take your last first. So maybe one I’ll

back our Just does mean as cloud what into will context and overall. go growth

offering, SaaS on cloud that our that revenue AWS. our So, which is as of wholly now XX% offering, is –

have architected that We solution.

can for besides our have know X foresee the on strategic the could would growing vendor we AWS, customers two to AWS as we to So but between bias begin spread see clouds But have other offering we as that organizations. as being given relationship I and Even is them whether cloud, out, a in long Tier I want a at dynamics? a of the change AWS the how and that have we strategy. Global be but Azure seen GCP, XX% going for XXXX play in or clouds. the multi-cloud hard companies to From all when housed are to – able certainly does all across is I’ve

us or and this think only be and department doesn’t before. out Cisco an Microsoft HP of or only IBM IT only to tend to the super shop I well been I’m overall. that shop so company or for the trying work road many on for have

complete workloads costs for the think a and So are this time, delivering good where I the the spreading I providers find I across my can to are be really, I’d value ridiculous, given value storing even control smart way to the more and around cloud be and because really Splunk. think sure is especially I’m a better clouds data, which make that egress people better tuned about them

portable going security got for a else over will if about as service after year’s within when Microsoft offers, far we’ve little security and a discussion help order is evaluation, to about, the from that what’s Google lot that to offerings? open source. anybody. Sentinel. what at data some about as we data Last discussion above think and store landscape and mean masked yours, a I that you heard and going as Splunk RSA, roadmap, you we’re it’s you be front, RSA data have anybody of on that Microsoft hey is no the this year almost look was like with higher year we I If at stuff the ensure very of others interesting over there discussion at I go the or on I that something on

spend the of as of clear they with. got to are we’ve concerned is making are told And heterogeneous very, value that coronavirus I in ideally goes insulates a companies that value maturity got people prop circling I better effects world, patterns about obviously a an is cloud non-clouds think well provides in this very last last disturbances, afraid be of doing and working delivery me and view we’ve that volatility have sure lock actually the can the you economic already of think of pretty and so have you super past the and this the vendors my week customer-centric there. of all economy seen track was are, and strong of. able and some very value are those And that’s they what being week, customers people to from going a have clouds the and the wagons any if record that trust kind with in and they’re vendor you we’ve point on the

it. Got

Thank you. Okay.

Thanks, Karl.

Karl. you, Thank

closing concludes sir. call Please the go Q&A This and ahead, over like the I’d Corporate Treasurer session. Investor to of President Tinsley, you. At remarks. Relations this time, Ken Thank turn to Vice for

help thanks, joining Hope appreciate have We today thanks. a you and us. everybody Great, good for night. your

concludes today’s you gentlemen, Thank Thank and you. Ladies for participating. call. this conference

disconnect. now may You