![]() ![]() Splunk expects fourth-quarter revenue of $740m–$790m and total annual recurring revenue (ARR) of $3.09bn–$3.14bn. “(The third quarter) marked a significant milestone for Splunk as it was our first $1bn cloud (annual recurring revenue) quarter, with cloud accounting for a record 68% of our software bookings,” Smith said in a news release accompanying the earnings report. On an adjusted-per-share basis, the loss increased to $0.37 from $0.07.Īnnual recurring revenue, a closely monitored software-as-a-service metric that shows how much future revenue the company can expect based on subscriptions, rose 37% for the quarter to $2.83bn, Operating expenses increased, as did interest and other expenses. The net loss widened 70.4% to $343.3m from $201.5m a year earlier. Splunk’s revenue for the three months ended 31 October rose 19% to $664.8m from $558.6m a year earlier. Investors and analysts have been seeking more insight on the company’s switch to a cloud-based business model – as the global digital transformation ramps up – from one that aims to sell on-premise computing solutions. The analyst also expressed confidence in Smith’s ability to sustain business momentum and drive “cloud-transition growth” until a permanent CEO is found. “We are confident that the board will find a strong permanent replacement for Doug Merritt in timely fashion,” Mielczarek wrote in a 15 November report that he provided to. ![]() William Blair analyst Kamil Mielczarek believes Splunk can weather the uncertainty surrounding the CEO position. The conference call marked the first time that Smith has commented on Merritt’s resignation. The board concluded that it would be best to keep Merritt involved with the company while it searched for his successor, Smith added. Smith said Merritt is also assisting new president and chief growth officer Teresa Carlson, who joined the company in April from Amazon Web Services, with fourth-quarter business matters. We got to the conclusion that it was time for a change.” “We have aspirations to be in the top 10 software companies of all time. “For years, we’ve had very open and frank and friendly discussions with (Merritt) about how long his tenure would be, and where was (his) sweet spot as a CEO? “If I could just put my board hat on, the job of the board is to represent the shareholders and, ultimately, build long-term shareholder value,” Smith said. Smith indicated that the company now needs a CEO with additional skill sets than Merritt could offer. Merritt attributed his resignation to the company’s large revenue growth in recent years while commenting in 15 November news release. The board, he added, views the company’s fundamentals – cloud computing and annual recurring revenues – as being relatively strong. So we certainly looked at that and considered that this was a good time to do it.” “Most salespeople are working deals to bring to fruition in the fourth quarter, so there’s a momentum in Q4 that probably doesn’t exist in any of the other quarters. “I think (the fourth quarter) generally has a momentum of its own,” Smith said. ![]() He noted the company replaced two CEOs at similar times in the past. Smith said the end of the third quarter is typically the best time to make a CEO change. ![]() He was CEO for six years and joined Splunk in 2014 as Senior Vice President of Field Operations.īy Splunk chair Graham Smith on abrupt resignation of former CEO Doug Merritt Analysts question timingĪnalysts have questioned the mid-November timing of Merritt’s resignation – and continued to do so Wednesday on the conference call. Merritt has remained with Splunk in an advisory role until a permanent CEO is found. Always better, I think, to make that transition at a time of relative strength.” The company had strung three great quarters together. “It was simply that now was a time of strength. The chair is acting as interim CEO, while the board searches for a replacement for Merritt. “There’s no mystery behind this,” said company chair Graham Smith on Splunk’s fiscal third quarter earnings call. The stock nosedived after the data-to-everything platform provider announced Merritt’s resignation on 15 November and has struggled since then. San Francisco, California-based Splunk was up more than 2% at one point in after-hours trading after closing on Wednesday down 7.69% to $111.70, near the 52-week long of $110.28 set on 2 December 2020. US software company Splunk’s stock price gained slightly in off-market trading overnight after the company’s chair shed light on the sudden mid-November resignation of former chief executive Doug Merritt. Splunk shares rose in after-hours trading as chair Smith shed light on former CEO Doug Merritt's sudden resignation – Photo: Shutterstock ![]()
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