Splunk is a great play on data growth. We first wrote it up in 2017, it is now a $30bn EV company expanding rapidly into the cloud.
Our conclusion is that Splunk is creating a platform, it is by no means done, but the pieces are there to compete in the most critical spaces. R&D and M&A spend has been significant (~$3b) to make this happen.
We expect Splunk's cloud product to be very successful.
Underlying demand for Splunk's core product remains strong
Although Splunk is not a pure play on streamed data, it has the product to compete and there is plenty of room for multiple players.
We believe SPLK will be able to reign in costs and deliver its targeted 20% operating margin in CY22 (from break-even in CY20) and recurring revenues of ~$4.7bn. With a 25%-30% growth rate and CY22 FCF close to ~$1bn SPLK is an attractive proposition in our opinion.
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