Splunk Earnings: Booting Up Fiscal 2024 With Robust Sales and Profitability

We are raising our fair value estimate for narrow-moat Splunk SPLK to $125 from $120 after the company kicked off fiscal 2024 with strong financial results ahead of our above-consensus estimates. While the macroeconomic backdrop continues to be dreary, we are impressed by Splunk’s ability to navigate these murky waters by prioritizing operational discipline while continuing to grow its top line. As the macroeconomic conditions normalize, we believe the firm will see a rebound in customer demand for its cloud solutions, which should result in stronger top-line expansion in fiscal 2025. Despite shares trading higher after hours, we believe long-term investors can benefit from owning the stock provided that they are willing to stomach the macro-induced volatility in the near term.