![]() In other words, it's primarily subscription strength, and not go-to-market weakness, that is eating into near-term revenue estimates. As we'll discuss in the next section, Splunk's cloud mix has spiked tremendously in the third quarter, leading to a cut in the near-term revenue forecast for Q4. In fact, the more customers Splunk can switch to cloud, the worse revenue will be in the short term. Even though Splunk will derive greater lifetime revenue from these new subscription contracts, near-term revenue will suffer. For investors who are unfamiliar with the mechanics of how this works, the simple way to understand this is that deals that were previously structured as one-time, upfront license fees are now being split over longer periods of time. Let's address the first issue first: recall that Splunk is heavy in the midst of a subscription transition. Graham Smith, the company's board chairman, is filling in temporarily as CEO CEO transition: Doug Merritt, who had led the company since 2015, stepped down suddenly, with no replacement named yet to date. ![]() ![]()
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