Splunk Inc (SPLK): Does This “Big Data” Stock Make Any Sense?

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Data analysis specialist Splunk Inc (NASDAQ:SPLK)‘s first-quarter report was a bit of a head-scratcher.

Splunk Inc (NASDAQ:SPLK)Splunk Inc (NASDAQ:SPLK) shares took a 4% nosedive when the report was published, because its revenues came in strong but earnings were merely adequate. Revenue jumped 54% year over year to $57.2 million, easily topping Wall Street’s $54 million target. The adjusted $0.06 loss per share was right in line with analyst expectations. That’s just not good enough when your last three reports absolutely crushed Street targets on the bottom line, at least in percentage terms. The backlash was strong enough to suck data analysis rival Tibco Software Inc. (NASDAQ:TIBX) down into a 1.5% drop in early Friday trading. There must be something wrong with this supposedly robust market, right?

Well, wrong. After taking a moment to think about Splunk Inc (NASDAQ:SPLK)’s results, investors came back for more. The stock ended up jumping as much as 4% higher on Friday, making for an 8% span between daily highs and lows. Splunk Inc (NASDAQ:SPLK) is now back to carving out fresh 52-week and all-time highs. And yes, Tibco Software Inc. (NASDAQ:TIBX) shrugged off the morning’s downside action to trade right in line with market averages. For TIBCO investors, it’s as if the Splunk Inc (NASDAQ:SPLK) report never happened.

And that’s the right reaction. It’s hard to complain about 54% sales growth as the company makes its way toward break-even and then profitable operations. The company knows how to deliver on the metrics that matter:

SPLK Revenue TTM Chart

SPLK Revenue TTM data by YCharts

This quarter was a though slough for most enterprise IT specialists. Oracle Corporation (NASDAQ:ORCL) disappointed in its latest report, citing poor sales execution against a difficult macroeconomic backdrop. International Business Machines Corp. (NYSE:IBM) followed suit, blaming its unusual miss on soft government orders and a “once-every-10-year event” in China. Both stocks plunged after reporting results, 8% in International Business Machnines Corp. (NYSE:IBM)’s case and more than 10% for Oracle Corporation (NASDAQ:ORCL).

Splunk Inc (NASDAQ:SPLK) CEO David Conte acknowledged these headwinds but wasn’t concerned about their effects on his own company. “The software sector, overall, I think had a challenging period and not so much for us,” he said on the analyst call. The federal government has its inscrutable order patterns, but “overall, we saw strength across the board.”

So Splunk is finding growth traction where even established IT giants like Big Blue and Oracle are failing. That’s an impressive feat.

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