Splunk, like Cisco, has been shifting its business from selling on-premises software with traditional license pricing to cloud-based software sold on a subscription basis in a move that has been transformative for the company and its channel partners. a GAAP operating loss of $780 million in 2021. Splunk, for its part, plans to use the cash to continue to transform its business for the cloud era. 4. Craig Galbraith. Sign In. Concurrent with Silver Lake's investment, Splunk said it will also begin executing a new $1 billion share repurchase plan (which should help offset any future conversion of the debt into new stock . Frisco, Texas, United States. Even though its cloud revenues zoomed 77% in the year, its overall revenue was down 5% year-over-year, and its operating cash flow was negative $191 million with free cash flow of negative $228 million. The acquisition by Cisco could provide much-needed breathing space for the company to invest heavily in cloud, IT security, and data observability platforms and digital transformation initiatives in the year ahead. However, as Splunk gets further through the transition, revenue growth will gradually track closer to annualized recurring revenue (ARR), which includes the annualized value of all cloud, on-premise, and maintenance service contracts. The ongoing business model transition and growing competition at Splunk could present additional challenges for Cisco if they pursued this acquisition. Ciscos offer comes when Splunk is actively hunting for a new CEO following former president and CEO Doug Merritts departure in November 2021. Company Location: U.K. Press Release: 1/30/2020 Xerox Acquires Arena Group, Expands Presence in European SMB Market. Ciscos $20 billion acquisition offer, which is $13 billion more than its highest acquisition ever, comes after the company announcedOpens a new window a 17% rise in net income and a 6% rise in revenue in Q2 2022 against Q2 2021. Splunk jumped up 16 percent post-market on reports of the takeover bid. Ciscos planned acquisition of Splunk has received favorable reactions from industry analysts. Transform your business in the cloud with Splunk. According to a report by GlobalData, 24,689 deals were announced worldwide in H1 of 2020, which marks a 15% decline YoY. The Motley Fool owns shares of and recommends Datadog and Splunk. He is best known in the industry for his stint as the chief financial officer and later executive vice president at Salesforce. When submitting your ticket, please include the RayID detailed below for a faster resolution. Splunk is currently unprofitable, and the stock has been unable to bounce back from last year's challenges with this interest rate cloud hanging over it. It's obviously a nice thing when someone is interested in your stock, but as a recent Splunk shareholder, I'm hoping the company doesn't sell, if the offer is in fact close to $20 billion. Palo Alto also bought security orchestration, automation and response player Demisto, a direct competitor of Phantom, in 2019 for $560 million. Got a confidential news tip? John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. At the end of April, the company had $1.88 billion in cash, equivalents, and investments, offset by convertible notes of $2.33 billion. Aug 22, 2019 . Network gear maker Cisco Systems Inc has made a takeover offer worth more than $20 billion for software maker Splunk Inc , the Wall Street Journal reported on Friday, citing people familiar with . See here for a complete list of exchanges and delays. So Splunk appears to have staying power, and is bound to benefit from the growth of the enterprise data analytics industry this decade. Our servers do not recognize your request. Ciscos market capitalization is $227 billion. Splunk (SPLK) Q4 2023 Earnings Call Transcript, The Nasdaq Could Soar in 2023 -- 5 Stocks Down 57% to 91% to Buy Before It Does, Why Splunk Shares Gained 10.8% Last Month, 1 Monster Growth Stock to Buy Hand Over Fist, According to Wall Street, 2 Reasons to Avoid a Roth 401(k) for Your Retirement Savings, Want $1 Million in Retirement? VictorOps acquired by Splunk . Should a deal for Splunk be consummated it would be by far Cisco's largest ever. Data is a real-time snapshot *Data is delayed at least 15 minutes. Vlocity gave . Its past deals include Acacia, a maker of optical network components; Luxtera, a semiconductor company; and ThousandEyes, a cloud intelligence company. A challenge for Cisco in its transformation is the heft of the current $50 billion revenue base focused primarily on networking equipment, making it mathematically difficult to find the subscription revenues to transform the business, she said. IDC forecasts data creation and replication will grow at a 23% annualized growth rate from 2020 to 2025, and that acts as a powerful tailwind for the industry. Pundits speculate that Google parent Alphabet could acquire ServiceNow, Atlassian, Splunk or perhaps Zayo.. Finally, Splunk attracted tech-focused private equity firm Silver Lake last summer, which invested $1 billion in Splunk in the form of convertible preferred stock in June 2021. While the revenue has been growing consistently, it has not grown at especially remarkable rates. Billy Duberstein owns Amazon and Splunk. Opinion: Yes, Theres a Housing Crisis. As for Cisco, Newman said the company made significant investments in cloud, software, and other higher-margin offerings, and the Splunk deal could help it achieve further growth in these bitterly-contested verticals. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. People close to the company said the talks occurred recently, according to the Journal. Th ecompany serves four primary markets: wired infrastructure, wireless communications, enterprise storage, and industrial & others. TechCrunch. Initial filing by director officer or owner of more than ten percent. No, You Cant Build Here, Opinion: About Those Free Tickets to Hong Kong, Opinion: China Remains the Worlds Pandemic Risk. In any case, the reporting suggested the offer was more than $20 billion. Graham V. Smith, the chairman of Splunks board, is currently serving as interim CEO to fill the leadership void. However, now it's coming through the other end of it: Even though Splunk is now past the bottom of the transition, revenue growth according to generally accepted accounting principles (GAAP) is still lagging behind the real recurring top line the company is taking in. The analyst believes Cloudera shareholders are getting a good deal with the private equity buyout."We note CLDR has been the target of acquisition rumors since mid-2020, and thus we view the . Never Miss a Revenue Moment With Intent and Pre-Intent Data, 10 Actionable Data Trends in 2023 To Nail Your Analytics, How Technology Is Digitally Transforming Ad Operations, Three Ways Enterprise Architecture is Driving Digital Transformation, Seed-stage Companies Can Create FOMO to Gain an Edge in Fundraising, Correcting the Course of Failed Climate-conscious Planning with AI, Cloud Cost Optimization as a Lever Against Inflationary Pressure, How Simulations Can Help Us Solve the Climate Crisis in a Way That Benefits Everyone. He said mergers such as Invesco's 2019 acquisition of OppenheimerFunds, Janus's 2017 deal with Henderson, and even 2020 Franklin Templeton's merger with Legg . Splunk (SPLK -1.40%) has been a severe underperformer in the last year. The Company's most targeted sectors include internet software and services (50%) and software (29%).. Join Mergr and gain access to Splunk's M&A summary, the M&A summaries . Cisco CEO Chuck Robbins. Dropbox is a 9.3 billion market cap company. Our Standards: The Thomson Reuters Trust Principles. Though it's been beat down in the last year, Splunk operates as the leader in a growing industry and could be a real long-term value for those who can patiently wait out the inevitable bumps in the road. The Wall Street Journal reported the potential deal earlier on Friday. Cloud annual recurring revenue (ARR) has been off to the races and was up 83% year over year in Q1 fiscal 2022 to $833 million, but these changes have throttled overall revenue expansion. See here for a complete list of exchanges and delays. Splunk's acquisition of TruSTAR extends its leadership in security analytics through cloud-native threat intelligence integration and automation. Not surprisingly, when asked about the rumored acquisition during the earnings call, Robbins was coy, refusing to comment on the rumors and providing no hints in either his comments or . *Average returns of all recommendations since inception. Daily chart of Splunk stock. The reported Cisco-Spunk deal could position the company as a much more formidable security player with competitor Palo Alto Networks. The positive reaction from investors has some logic to it. However my wife wants me to stay at Uber (5a, 450k, 5 yoe) since she sees the high TC and rising stock price soon after COVID . We are constantly evaluating potential opportunities. Splunk makes acquisitions that are aligned with our business strategy and enable us to expand our product portfolio, address a broader set of customer challenges, and enhance our market leadership position as the platform for turning data into action. Cisco did not immediately respond to a request for comment, while a spokesperson for Splunk said the company did not comment on rumors or speculation. These rankings reflect its credentials and dominance in the space. All Rights Reserved. His clients may own shares of the companies mentioned. Splunk's software has gained popularity as a tool for spotting security threats. Company Location: Mount Laurel, NJ. . The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. A deal may not happen at all, but if talks resume, Cisco could pay more than $20 billion for Splunk, one of the people said. These are used to let you login and to and ensure site security. Momentum Just Isn't Happening. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. However, an ability to package Splunks leading Security analytics and ITOM solutions with other security offerings, further optimize distribution and pricing, could present very interesting potential M&A synergies for Cisco, Marshall added. Splunk . Several years ago, Splunk began to deploy its offering via the cloud on a subscription basis. In fact, many large companies use multiple vendors for internal data analytics. Speaking of Splunk and acquisition rumors, I was surprised that Robbins wasn't quizzed more about the rumored Splunk acquisition. The company has been pivoting to a recurring revenue model by shifting from traditional software licenses to cloud-based subscriptions while also steadily growing the customer base. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Splunk has acquired 14 companies, including 8 in the last 5 years.. Splunk's largest acquisition to date was in 2019, when it acquired SignalFx for $1.1B. Statement of changes in beneficial ownership of securities. My core competency is finding out people's issues in business. Robbins also cited the company's policy not to comment on rumors or speculation regarding the reported Splunk acquisition. Learn More. Opting out of these cookies may impact some minor site functions. . Cisco is using acquisitions to help it grow . Listen to article. Deliver the innovative and seamless experiences your customers expect. According to a follow-up report from Bloomberg, talks between the companies broke down in recent weeks. Mobile World Congress (MWC) is back in a big way and delivered the 5Goods (my clever play on words) on many . The Wall Street Journal reported that Cisco offered the data observability and security information and event management (SIEM) provider $20 billion. Splunks acquisition of SignalSense enables Splunk to further innovate in our market-leading machine data platform and expands Splunks expertise in machine learning and cloud applications. Microsoft said last month that it was planning to acquire the video game company Activision Blizzard for nearly $70 billion, and Salesforce acquired the workplace software company Slack last year for $27.7 billion. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. [Related: Cisco Powers Hybrid Work With Private 5G, New Wi-Fi 6E And Catalyst Series]. Then there's also the balance sheet. However, cash on hand and positive free cash flow will fund that new $1 billion share repurchase program, which should help boost earnings per share over time. acquisition-related adjustments, amortization of intangible assets and . This allows me to propose solutions that help my clients. At the peak of its after-hours move, Splunk was valued at more than $20 billion, up from $18.2 billion at the close of trading. Published Dec. 1, 2020 Updated Jan. 4, 2021. Ciscos Bold Move to Boost Cybersecurity M&As in 2022, Sapana Maheria, practice head of Thematic Research at GlobalData, believes that if the acquisition goes through, it will. Cisco Systems has put down a takeover offer for Splunk worth more than $20 billion, according to a Friday evening report published by The Wall Street Journal. Splunk named after spelunking, the sport of cave exploring mines data for insights, including security threats, a business that grew in importance as the coronavirus pandemic quickly forced many workers online. Press Release: 6/6/2019 Xerox Acquires Two New Dealers to Expand Presence in the Small-To-Medium Sized Business Market. (if applicable) for The Wall Street Journal. splunk acquisition rumors 2020; joaquin niemann sponsors. Splunks stock price fell 20% over a six-month period, and the company. According to Futurum Research, the deal would be. June 5. splunk acquisition rumors 2020 . You may cancel your subscription at anytime by calling According to Futurum Research, the deal would be a good fitOpens a new window for both companies. Invest better with The Motley Fool. Splunks acquisition of SignalFx adds real-time monitoring and metrics for cloud infrastructure, microservices and applications, enhancing Splunks position as a leader in observability and APM. The acquisition complements Cisco's strategy of developing networking solutions that integrate voice, data and video traffic. Already a member? Silver Lake's investment is via convertible notes, debt that can be turned into new stock later on. Customer Service. We continue to see incredibly strong demand across our portfolio, emphasizing the criticality and relevance of Ciscos innovation. Gina Narcisi is a senior editor covering the networking and telecom markets for CRN.com. for both companies. Still, it does not have currently have a . No deal is currently on the table, according to two people familiar with the talks, but Cisco could pay more than $20 billion, one said.
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