Splunk stock crashed Thursday following a third-quarter earnings report by the data analytics company that was full of disappointments.
XSplunk (SPLK) revenue of $559 missed Wall Street estimates of $613 million. For its fiscal fourth quarter, Splunk expects revenue in the range of $650 million to $700 million. Wall Street expected $777 million. It reported earnings late Wednesday.
Splunk stock plunged 23.3%, closing at 158.03 on the stock market today.
The company is undergoing a cloud transition to a software-as-a-service business model as it faces increased competition. Splunk reported lower-than-expected bookings and annual recurring revenue due to a drop in the rate of closing deals, especially large-sized transactions. That was partly due to pandemic uncertainty, the company said. It also withdrew guidance for its fiscal year 2023.
In addition to its 11% drop in revenue, Splunk reported an adjusted loss of 7-cents per share, vs. estimates of a 9-cent profit.
Ratings Lowered On Splunk Stock
"After multiple quarters of challenging trends that were quickly dismissed as a 'cloud transition,' supporting the stock's 37% rise year-to-date, there was nowhere for Splunk to hide last night and we suspect more pain is in store for the stock in the coming day," Moness Crespi Hardt analyst Brian White said in a note to clients.
"In our view, Splunk should embrace this crisis and implement radical changes before it is too late because the leading next-gen vendors are growing stronger by the day," he wrote.
Splunk's software is designed to help organizations monitor large volumes of data in real time, a field known as data analytics and Big Data companies.
Concerns Over Execution Issues
Mizuho Securities analyst Gregg Moskowitz lowered his rating on Splunk stock to neutral, from buy. His price target fell to 180 , from 235.
"We continue to find Splunk's technology valuable and differentiated," Moskowitz wrote in a note to clients. "However, we are concerned that these results could point to deeper execution issues that could take some time to resolve."
Needham analyst Jack Andrews maintained a buy rating on Splunk but cut his price target to 275 from 310.
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