Splunk rides machine data wave, expands enterprise footprint

Summary:Splunk is turning departmental deals into enterprise wide license agreements and becoming a machine data staple for many companies.

Splunk has managed to ride security and a bevy of other machine-data use cases to emerge as an enterprise-wide platform.

splunklogo

The company, a big data play that revolves around machine-to-machine information, reported a strong fourth quarter that included a series of large deals. The short version is that Splunk added more than 400 new enterprise converts to hit the 5,000 customer mark.

Splunk reported a fourth quarter net loss of $5.9 million, or 6 cents a share, on revenue of $65.2 million, up 51 percent from a year ago. Non-GAAP earnings were 3 cents a share. For fiscal 2013, Splunk reported revenue of $198.9 million, up 64 percent from a year ago. As for the outlook, Splunk sees fiscal 2014 revenue of $260 million an $270 million.

The results and outlook were better than Wall Street estimates. Also: Tapping M2M: The Internet of Things

But the inflection point for Splunk revolves around how it enters an enterprise doing one thing---say monitoring events on a network or data center---and quickly expands to do more things like scope out security events. A partnership this week with Palo Alto Networks, a security company that's also landing enterprise accounts at a rapid clip, will also further Splunk's security chops.

On a conference call with analysts, Splunk CEO Godfrey Sullivan outlined the company’s first megadeal.

One particular customer when, in Q4 that I'd like to call out, is an eight-figure, multi-hundred terabytes per day transaction with a technology company. It stands as the single largest transaction in Splunk history and it represents the kind of adoption we've discussed before where we enable our customers to standardize on Splunk. We have a team of people who report to work there every Monday and we operate as one team. This is a result of a six year relationship that grew from departmental to multi-departmental, driving ongoing customer success and we are now the standard for managing their machine data. Use cases includes security, infrastructure, customer authentication, content delivery and overall customer experience. It's all in the logs and it's all in the teamwork.

Sullivan noted that eBay's StubHub also standardized on Splunk Enterprise and licensed the company's enterprise security application. For fiscal 2013, Splunk landed 25 deals in seven figures, up from 11 in fiscal 2012. One deal in the fourth quarter was $20 million.

Evercore analyst Kirk Materne noted:

In our view, the strong increase in large deal metrics demonstrates how Splunk is moving from a department-level IT solution to an enterprise-wide data platform.

Here's Splunk's playbook in a nutshell:

  1. Get into enterprise account via a department;
  2. Develop the use case;
  3. Garner returns and word of mouth inside a company;
  4. Land in more departments;
  5. Ultimately bring home a multi-year enterprise license agreement.

That play seems to be working well repeatedly for Splunk. Sullivan added:

We continue to drive the majority of our revenue from our core markets at management, infrastructure and operations and security compliance. Introduction and expansion of Splunk software in these core markets is giving us traction in emerging Splunk markets within our customers such as web intelligence, business analytics and industrial data.

You see where this is headed. Splunk will do well as long as sensor and machine data proliferates. If successful, Splunk's software will be the recipient of all systems inside an enterprise. Given that data is only going to soar in the years ahead, Splunk looks like it's on the way to becoming an enterprise staple.

Topics: Big Data, Enterprise Software, Security

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

zdnet_core.socialButton.googleLabel Contact Disclosure

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.