Can the good news mean more than just a temporary pop for Splunk?
Data analysis software company Splunk (SPLK) rose after hours last night on higher-than-expected earnings and news of a pending deal with SignalFX.
After spiking over 9% to around $140 per share, Splunk eventually moved back down to $130 and change … But that’s still a gain of 1.3% from its value at the close of the market day.
Positive Earnings Report
The company reported Q2 earnings per share of 30 cents, beating estimates of 12 cents by a wide margin. The extent of the overshot is getting attention from both financial and tech media as the firm essentially doubled its projected EPS.
In addition to impressive earnings, revenue for Splunk grew 33% year over year, with license revenue the biggest portion at $279 million, beating estimates by about $29 million.
Splunk Will Acquire SignalFX
In addition to all of these good numbers, Splunk seems to be getting a one-two boost with the announcement that it’s acquiring cloud-monitoring firm SignalFX. The San Mateo firm has its own proprietary take on streaming analytics and a track record of innovation in cloud-vendor services as well as cloud-native app design.
The deal is worth a reported $1.05 billion and can give SPLK control of a real-time monitoring solution on the vanguard of predictive analytics work. Specifically, SignalFX touts its NoSample tail-based distributed tracing as an exclusive part of a platform gaining attention in the world of cloud-vendor services and smart Enterprise Resource Planning architectures.
SignalFX also offers “lift and shift” services key in the world of legacy migration, where the goal to move traditional applications to the cloud requires considerable brainstorming, legwork, and an eye toward helping firms move toward a DevOps business process model.
SignalFX takes data from applications and cloud infrastructure to provide real-time monitoring and problem detection, with debugging, root cause analysis, service mapping, and more.
After raising $178.5 million in a Series E round of funding, SignalFX is now poised to become part of the Splunk organization.
Company Reactions
“I am excited by our strong quarter, tremendous cloud growth and our agreement to acquire SignalFx,” Splunk CEO Doug Merritt said in a statement, according to The Street, in response to the news of the acquisition. “I am particularly pleased with how quickly we are accelerating our business transformation to cloud, and the impact cloud is having on our customers.”
Looking at the longer-term chart analysis, yesterday’s values show a major improvement over most of the prices seen over the last month. SPLK started out August at under $125 per share. Over the last six months, the equity has hit similar highs no less than three times, once in late February, then again in mid-May and late July.
Realistically, the new numbers are all-time highs for the stock. And although Splunk traded down in pre-market trading to around $123, market analysts see potential in the recently released quarterly numbers and the acquisition.
According to reports, Splunk has risen 24% year over year. Now, the breaking news of positive earnings and the move to acquire SignalFX has this stock on the tech enthusiast’s radar.
