Splunk shares drop on light Q1 outlook
![stephanie-condon](https://www.zdnet.com/a/img/resize/f1474204f4afdd9e5d3e8a66676dd4bdae30d4c0/2022/08/05/bca73539-dbd2-46c5-8de4-f286b3d3e73b/stephanie-condon.jpg?auto=webp&fit=crop&frame=1&height=192&width=192)
Splunk shares were down in after-hours trading on Wednesday after the company reported a lighter-than-expected first quarter outlook. Splunk executives argued that the company's annual recurring revenue rate is the best metric by which to evaluate its growth.
For the fourth quarter, Splunk non-GAAP income per share was 96 cents on revenue of $791 million, up 27 percent year-over-year.
Analysts were looking for earnings of 96 cents on revenue of $783.19 million.
Q4 software revenues were $617 million, up 33 percent year-over-year.
For the full fiscal 2020, Splunk's non-GAAP income per share was $1.88. Total revenues were $2.359 billion, up 31 percent year-over-year. Software revenues were $1.686 billion, up 40 percent year-over-year.
Splunk's total ARR hit $1.68 billion, up 54 percent year-over-year. The company is targeting a 40 percent ARR CAGR over the next three fiscal years, according to CFO Jason Child.
"We expect our cloud products could represent more than 60% of our total software business in the next few years and during this shift, ARR is the best metric to evaluate our growth," Child said in a statement.
For the first quarter 2021, Splunk expects total revenues to be approximately $450 million. Analysts expect to see Q1 revenues of $526.7 million.