Splunk (SPLK) PT Raised at Drexel Hamilton Following Solid Q3

Drexel Hamilton analyst, Brian White, published an earnings review of Splunk (NASDAQ: SPLK) highlighting numerous details about the blowout quarter. The analyst raised his price target to $80.00 (from $70.00) while reiterating a Buy rating.

Notes follow:

Splunk reported 3Q:FY16 revenue of $174.4 million (up 50% YoY) that handily beat street estimate of 160.2 million. Pro forma EPS of $0.05 exceeded street consensus of $0.01.

Splunk added over 500 new enterprise customers (vs. over 500 in 3Q:FY15), while deals over $100K came in at 371 (vs. 290 in 3Q:FY15). Splunk's 3Q:FY16 license revenue of $104.2 million was up 45% YoY, and maintenance & services revenue was $70.3 million. Finally, deferred revenue of $348.9 million increased by 9% QoQ and up 52% YoY

Splunk increased its sales outlook to $650 million from $628-632 million (Street is at $632.6 million).

Splunk exited 3Q:FY16 with $950 million in cash (vs. $927.1 Million in 2Q:FY16) and no debt. The company generated $36.4 million in operating cash flow during 3Q:FY16 and $21.1 million in free cash flow.

During 3Q:FY16, Splunk added over 500 new enterprise customers (vs. over 500 in 3Q:FY15), above the mid-point of our estimated range of 475-500 to more than 10,500 customers, while deals over $100K came in at 371 (vs. 290 in 3Q:FY15), within our 370-390 estimated range. Average selling prices surprised on the upside, coming in at $70,000 and up from $50,000 in 2Q:FY16 and well above the $40,000-$50,000 average in recent quarters.

For an analyst ratings summary and ratings history on Splunk click here. For more ratings news on Splunk click here.

Shares of Splunk closed at $62.76 yesterday.

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