Balance sheet stands at net debt of $1.8bn which means leverage of 2.8x TTM EBITDA - that looks a lot for a public company but it's negligible for a leveraged buyout, and since this is an LBO-by-stealth, hiding in plain view on the public markets, that's just fine.The same is true of unlevered pretax free cashflow (= EBITDA minus capex minus change in net working capital) which was at negative 21% on a TTM basis in the July 2020 quarter and is now up to positive 9% on a TTM basis.If like us you have no outside interests and just like studying this kind of thing? That's a work of art right there. EBITDA margins stand at 18% on a TTM basis and the margin progression is a thing of beauty - look at peak margins of +18% in the October 2019 quarter which then dip down into the negative as the transition from upfront licenses to subscription takes hold, then stepwise up every single quarter since the trough of -12% in the October 2021 quarter.Gross margin is up to 78%, a level not achieved since the July 2020 quarter.This is not at all the norm in software right now where by and large companies are showing decelerating rates of growth. TTM revenue growth moved up to +37% vs the same quarter a year ago.the majority of software companies' fourth-quarter numbers, it's barely down on Q3 - whereas most other software names have seen material declines in growth rates. Revenue growth came in at +39% which is not only a huge rate of growth vs.SPLK Fundamentals (Company SEC Filings,, Cestrian Analysis) We see the adverse stock reaction as an opportunity to consider adding to existing positions if you've been looking for a moment to do so, or to open a new position if you're minded to do so. The company just reported a killer quarter. The company is, as we have said many times, an M&A target sat right there in plain sight. The Splunk shareholder register includes two Thoma Bravo peers, being Silver Lake and Hellman & Friedman, and the financials are setting the company up perfectly to be acquired by a buyout shop or shops. The choice of such a background is not, we suspect, a coincidence. The new CEO, Gary Steele, was formerly CEO at Proofpoint, a cybersecurity company which enjoyed success as a public company before being sold to the buyout firm Thoma Bravo. Now, recently the company fired its old CEO and CFO and replaced them with new, hard-charging blood. Over and above those notes, we've covered the stock extensively and in real time in our Growth Investor Pro subscription service here on Seeking Alpha, where our fundamental and technical analysis is enriched and added to by one of our community members, who has a professional background in technology company turnarounds. And watch how our view changes as the company gets ahold of the problem over time. Read the oldest article first, where we are very critical of SPLK's failure to keep up with the shift from perpetual licensing to subscription in the enterprise software world. Start by reading the stuff we posted on the free side of Seeking Alpha a hundred years ago. ( NASDAQ: SPLK), dating back to when the company was in difficulties. If you really have nothing better to do, read up on our prior notes on Splunk Inc. On The Way To Becoming A Business School Case Study values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients.
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