Splunk to add 2000 customers this year as "big data" thrives

Reuters News
Posted: Apr 04, 2013 3:00 PM

By Sayantani Ghosh

(Reuters) - Data analytics software maker Splunk Inc expects to break even on an adjusted basis and is looking to increase its customer base by about 40 percent, or 2,000 customers, this year, its chief executive told Reuters.

The company, which had 5,200 customers and 736 employees as of January 31, 2012, has enjoyed high revenue growth rate for the last couple of years. But it is yet to record a profit as it continues to invest heavily in adding employees and new products.

It expects employee headcount to grow at least 40 percent for the fiscal year ending January 31, 2014.

"Our investors are encouraging us to continue to run at a breakeven pace so that we can capture fast moving market opportunities," CEO Godfrey Sullivan said.

"They are pretty pleased. You see that reflected in the stock price," said Sullivan who earlier headed data analytics firm Hyperion Solutions, which was bought by Oracle Corp for $4.5 billion in 2007.

Shares of the San Francisco-based company, which debuted at $17 on the Nasdaq, have more than doubled since its IPO made a splash with in April last year.

Splunk is one of the first "big data" start ups that caught the attention of investors and has now made the term a much-used, much-favored one in the data analytics industry.

The company's high growth rate has prompted speculation about takeover interest from rivals like IBM Corp or VMware Inc, but some analysts say that its rich valuations might prove a deterrent.

"Some customers are enthusiastic about us because we are an independent company," said Sullivan, who admitted that Splunk received some offers before it went public.

Splunk's return on equity has jumped more than five times in the last year, according to Thomson Reuters StarMine data.

The company counts Riverbed Technology Inc, Verisign Inc, Autodesk Inc and the Liverpool Football Club among its customers.

Big Data is expected to drive $54.59 billion in IT spending by 2016, compared with about $27 billion in 2011, according to data from market research firm Gartner.

Splunk's software indexes and manages machine data from computers, servers and mobile devices and uses a Google-like interface that makes it easy to search and navigate a company's database.

The company later changed its name from the mundane Transactions Engine to Splunk — inspired by "spelunking," an American term for caving, or pot-holing — a reference to the fact that it allows customers to mine data they can use real-time to make better decisions.

Splunk's revenue grew 64 percent last year and it has forecast a revenue growth of 31 percent to 36 percent for this fiscal year.

The company, which also competes with Hewlett-Packard Co and start-ups like Sumo Logic and Cloudera, expects to sustain a revenue growth rate above 30 percent in the long term.

Sullivan, who said Splunk is working on an app for smartphones, expects data from websites and mobile users to drive the next round of growth at Splunk and its rivals.

"Now just like we make it easy for you to look at your server traffic, we can show you your web traffic or mobile traffic and you can analyze that just as easily," he said.

"This is the next generation of business analytics."

(Editing by Joyjeet Das)