Data Is King Among Companies; Splunk Capitalizes On That

Data has become one of the most valuable assets for scores of companies and Splunk Software and its investors know that. It's one of the reasons the company’s stock is up double digits this year and is among the fastest growing Bay Area data focused software companies.

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Splunk, which came on the scene in 2003, makes software that enables customers to make sense of all the data they amass, providing them with more insight into their customers. With its software, companies can not only collect and organize data but they can search through it and analyze it to make better business decisions. It doesn’t hurt that the software is simple to use and Splunk offers a 60 day trial period before purchasing. The company also has a cloud-based subscription service, giving it a recurring stream of revenue.

For its second quarter, which Splunk reported in late August, revenue of $388.3 million was up 39% compared to a year ago while software revenue saw 43% year-over-year growth to $239.7 million. During the three month period, Splunk said it signed on more than 550 new enterprise customers including ADP, the California Department of Technology, Grab and U.S. Department of Defense. “Every organization needs to monitor, analyze and investigate data to make faster decisions and take action,” said Doug Merritt, president, and CEO of Splunk in a press release at the time.

Growth Continues Unabated

It's not surprising that Splunk is seeing brisk business in recent years. Data has become king, but with companies collecting a massive amount of it, many are left unsure of what to do with it all. That is where the software companies like Splunk come in. By helping the companies deal with all their data Splunk and others like it become a valuable and important partner. Investors have rewarded that even though profitability continues to escape the company. So far this year the stock is up more than 34%. Wall Street is also bullish on Splunk’s prospects with the consensus calling for sales at the company to increase 32% in its fiscal year 2019 and to increase 24% in 2020. Meanwhile, analysts predict EPS will increase 77% in fiscal 2019 and 41% in 2020. The average price target for the company is $130.84, implying upside of more than 10%.

Splunk Luring Talent Its Way

But it's not just Wall Street that is singing the praises of this software as a service data company. Splunk is luring top talent its way by offering average salaries that rival the likes of Google, Intel, and According to the Silicon Valley Business Journal, the company pays its workers a median salary of $256,370 a year, which is nearly $16,000 more than the average worker at Facebook and $43,000 more than a median Google employee. Its strategy appears to be paying off. Earlier this month it appointed Jake Loomis, the veteran technology executive who hails from Apple, as its Chief Digital Officer. Loomis, who reported to CEO Merritt, was the Engineering Director at Apple for more than two years. Prior to that, he was an executive at Yahoo!.