This will be a step change from the previous "premium pricing" the company was known for in the industry. Basically, the more data a company analyses and uses the more they will be charged, similar too many other cloud services such as AWS. The company is currently going through a major business model transition, to a " workload based" or data usage pricing model. While machine learning can be utilized to spot anomalies and help to stop cybersecurity threats. The data captured can be observed via dashboards and visualizations. Splunk's platform dashboard has two main functions "Observability" and "Security". Splunk's mission is to turn this "data into doing", by helping companies to observe, track, analyze and secure the data. This data is often kept in "silos" and thus isolated and not utilized effectively. ![]() These include public clouds, on premises data centers and the network edge. Enterprises are producing a vast amount of different data types from an array of sources. Splunk is a leader in data monitoring and security. Let's dive into the business model, financials, and valuation to find out more. Given these factors the stock is now trading at the lowest price to sales multiple (PS = 5.6) relative to history and is undervalued intrinsically. The company also has a high customer retention rate (132%) which indicates customers are staying with their product and spending more. Splunk is poised to ride these industry trends, they have increased R&D spending substantially and free cash flow turned positive in 2021, which could be an early indicator their new business model is gaining traction. Thus the global Cybersecurity Market was valued at $133 billion in 2021, and is forecasted to grow at a rapid CAGR of 14.1% from 2022 to 2027. The rise of remote working and the increasing use of cloud applications means the "attack surface" is even greater for hackers. Big data isn't going away, and neither is the need to gain visibility into this data and ensure it's secure. While enterprise IT software spending is expected to grow at 9.8% this year, reaching a value of $674.9 billion. ![]() The first is the abundance of "Big data" which has been called the "new oil" and is a market forecasted to grow from $162 billion in 2021 to $273 billion by 2026, registering a CAGR of 11%. The good news is the company is poised to benefit from three major macro tailwinds. ![]() However, the stock price has now slid down by 54% thanks to increasing losses and rising interest rates, which is negatively affecting the valuation for growth stocks. In 2020, the stock price went on a major bull run and increased to ~$200/share. However, there has been major volatility and multiple declines over the past few years. Since then, the share price has been volatile for investors, it increased by 145% up until 2014 and rose to $93 per share. The company was founded in 2003 and had their IPO in 2012. Their mission is to help enterprises turn "data into doing" through dashboard visualizations and machine learning. Splunk ( NASDAQ: SPLK) is a leader in data monitoring and security.
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