Splunk Inc. shares experienced a significant decline after hours Wednesday, dropping as much as 7% after the cloud-software company reported fourth-quarter earnings that fell short of Wall Street estimates. The company closed the regular session at $102.48, barely budging from the opening price.
Splunk Inc. reported net income of $269 million, or $1.44 a share, for the fourth quarter. This was a stark contrast to the loss of $140.8 million, or 88 cents a share, that was reported in the same period a year ago. After adjusting for stock-based compensation and other costs, earnings were $2.04 a share. Revenue rose to $1.25 billion from $901.1 million in the year-ago quarter.
Analysts surveyed by FactSet had forecast earnings of $1.14 a share on revenue of $1.17 billion. Splunk Inc.’s outlook for the first quarter and full year also fell short of estimates. The company expects adjusted earnings of $1.15 to $1.25 a share on revenue of $1.2 billion to $1.21 billion for the first quarter. For the full year, Splunk Inc. forecasts adjusted earnings of $4.50 to $4.90 a share on revenue of $4.9 billion to $5 billion.
Wall Street had been expecting adjusted earnings of $1.22 a share on revenue of $1.21 billion for the first quarter, and adjusted earnings of $4.95 a share on revenue of $5.03 billion for the full year. The company’s outlook for the full year was particularly disappointing, as it had previously forecast adjusted earnings of $5.20 to $5.40 a share on revenue of $5.2 billion to $5.3 billion.
The company’s stock tumbled after hours, with shares falling as much as 7% in after-hours trading. This is a stark contrast to the stock’s performance during regular trading, when it barely budged from the opening price. Splunk Inc.’s shares have been volatile in recent months, with the stock soaring to an all-time high of $119.95 in October before dropping to a low of $89.98 in December.
The news of Splunk Inc.’s disappointing earnings and outlook have sent shockwaves through the tech industry, with investors now questioning the company’s ability to meet its full-year guidance. Splunk Inc.’s stock has been on a roller coaster ride in recent months, and it remains to be seen whether the company can turn things around and meet its full-year guidance.
In the meantime, investors will be closely watching the company’s performance in the first quarter to see if it can meet its revised guidance. If the company can meet its first-quarter estimates, it could restore investor confidence and help the stock rebound. However, if the company fails to meet its estimates, it could spell trouble for the stock.
Overall, Splunk Inc.’s fourth-quarter earnings and full-year outlook have caused investors to take a step back and reassess the company’s prospects. The tech sector is notoriously volatile, and Splunk Inc.’s stock is no exception. Investors will be closely watching the company’s performance in the first quarter to see if it can restore investor confidence and turn things around.