At These Levels, Are Shares of Splunk an Opportunity Buy?

Source: Thinkstock

Source: Thinkstock

Splunk Inc. (NASDAQ:SPLK) is a provider of the leading software platform for real-time Operational Intelligence. The stock had rocketed higher in the last two years, up over 200 percent by early in 2014, but has since lost over 50 percent of its value. This is somewhat of a surprise given its customer base. In fact, this year the company signed more than 400 new customers, ending the quarter with more than 7,400 customers worldwide.

New and Expansion customers are from all parts of the globe and include: 99bill.com (China), Betfair (Australia), California Institute of Technology (Caltech), Chang Gung University (Taiwan), Constant Contact, Creative Artists Agency (CAA), Github, Hospital Corporation of America (HCA), Idaho State University, IDEXX Laboratories, LATAM Airlines Group (Chile), Living Social, Mentor Graphics, MindTouch, Ministry of Education (Taiwan), Ministry of Science and Technology (Brazil), Net Entertainment (Sweden), Net One Systems (Japan), Nexon (Korea), New York State Unified Courts, Norsk Tipping AS (Norway), Overstock.com, Survey Monkey, Taishin Securities (Taiwan), Telecom New Zealand, U.S. Department of Energy, U.S. Department of Health and Human Services, WEG Industries (Brazil), William Hill Australia. However, the Street is quite disappointed with the guidance the company gave, although the quarter was moderately strong.

Revenues were up huge year-over-year but the company is still losing money. Total revenues were $85.9 million, up 50 percent year-over-year. License revenues were $51.3 million, up 42 percent year-over-year. GAAP operating loss was $50.1 million; GAAP operating margin was negative 58.3 percent. Non-GAAP operating loss was $3.6 million; non-GAAP operating margin was negative 4.2 percent. GAAP loss per share was $0.43; non-GAAP loss per share was $0.04. Operating cash flow was $18.9 million with free cash flow of $14.7 million.