Q2 2020 Earnings Call
Great. Thank you Josh and good afternoon with me on the call today are Doug Merritt and Jason child.
After market close today, we issued a press release, which is also posted on our website. This conference call is being webcast live via webcast and following the call an audio replay will be available on the website.
We also note that supplemental materials have been posted on our Investor Relations page that.
On today's call, we will be making forward looking statements, including financial guidance and expectations.
Putting our forecast for third quarter and full year of fiscal 2020 trends and expectations regarding revenue mix operating cash flow operating efficiencies and margin improvements.
Statements and benefits regarding our recently announced acquisition of signal FX, which we expect to close in the second half of fiscal 2020, so subject to customary closing conditions and regulatory approval.
And our expectations regarding our products technology strategy customers market and the industry.
These statements reflect our best judgment based on facts currently known to us and actual events or results may differ materially. Please refer to documents, we file with the FCC, including the form 8-K filed with today's press release those documents contain risks and other factors that may cause our actual results to differ from those contained in our forward looking statements.
These forward looking statements are being made as of today and we disclaim any obligation to update or revise these statements. If this call is reviewed after today this information presented.
During the call may not be current or accurate.
We will also discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. A reconciliation of historical GAAP and non-GAAP results is provided in the press release and on our website. So with that let me turn it over to Doug.
Thank you Ken Hello, everyone and welcome we are extremely proud of our Q2 results and our continued hypergrowth at scale, particularly our 46% soccer revenue grew 33% overall revenue growth and 80% cloud growth.
And that 25% of our business was cloud this quarter and we expect it will grow at a 50% over the next few years.
I'm also going to tell you about the acquisition of signal effects that we announced today.
As you know there are two kinds of M&A transactions.
Consolidation deals and troubled market categories and acceleration deals in growth categories.
Make no mistake, we are proactively positioning splunk for growth and long term value creation.
Splunk is on a mission to become nothing short of the strategic technology partner to the world's most data savvy enterprises.
Before we get the details the acquisition of I can give you a sense of where we are now and where we're going.
I want to be emphatically clear our business is firing on all cylinders and executing at the highest levels for a little data driven context.
Only a handful of enterprise software companies in history have had 2 billion in revenue, while attaining greater than 25% revenue growth.
The likes of Microsoft Oracle Salesforce service, now Vmware and workday.
Splunk is on track to join the short list by the end of this fiscal year.
Not only is spot on that cost him joining these elite company has.
We've done it concurrently well, making massive investments and new cloud technology and executing on a full business model change.
As you know customers today want to consume software as a service or a new whole business model makes it easier to do business with and in fact customers have adopted <unk> faster than expected, increasing our mix <unk> from renewable by more than 10 percentage points in just one quarter to a stunning 95%.
We've also evolved our pricing approach and make it easier for customers to splunk much more their data.
Our contracting and pricing changes are making a big difference for enterprise customers.
And our new pricing meaningfully expands the opportunity for Splunk all data worldwide.
For example.
Door to actually be able to provide enhanced experience to all of its users from consumers to merchants to dash yours through at Splunk cloud expansion.
Door Dash partners. This block across teams such as Dell box I T ops and business analytics to connect consumers with their favorite restaurants in power adapters to earn more money faster and help merchants grow their business.
It'd be group a global technology leader, we are driving the digital transformation of industries selected Splunk for security through a new predictable pricing program.
Maybe we'll have splunk and spunky asset the hard at their global Security operations Center.
A large multibillion dollar separate company significantly expanded on Splunk cloud to take action on data across the entire business without the ops security data set tops and emerging business use cases.
I'm also very pleased that this customer is able to utilize a new pricing program that gives them predictable pricing with no data limits.
Stay tuned for much more about pricing from Splunk throughout Q3.
Also our ecosystem continues to flourish.
We recently expanded our strategic relationship with Cisco.
Which is capitalizing on integrations with this block platform to rapidly bring to market new differentiated solutions that will be sold on Cisco's global price list.
The newly available security solution generated from this relationship Cisco endpoint security analytics built on Splunk is now Orderable and will be featured a cisco's internal global sales kick off next week.
We also just jointly announced an expansion of our strategic relationship with Deloitte risk and financial advisory.
So Lloyd fusion managed services offerings now incorporate Phantom, which provides automated security monitoring and response capabilities to help clients address evolving cyber threats.
According to how do you see by 2025, the average person will interact with it connected device nearly 5000 times per day.
Further there will be 175 is that a bite of data five times more than today.
And 90% of this data will require some level of security.
But less than half will actually be secure.
The future is clear data represents the biggest opportunity and the biggest threat to businesses governments and frankly to humanity.
Splunk strategy is simple and powerful to bring data to everything.
Hi, bringing data to every quick question every decision and most importantly every action.
We are committed to delivering the technology platform acquired to instantly connect all forms of data from any source in any format instantly, enabling the new approaches required to produce data outcomes and stop security threats.
All that ferocious speed at massive scale.
As part of our ambitious growth agenda.
Today, we announced our intent to acquire signal FX, a SAS leader in real time monitoring and metrics for cloud infrastructure micro services and applications.
Signoff acts as a cloud centric business that gives us the best in class massively scalable cloud monitoring and we believe makes US a leader in observe ability and application performance monitoring for organizations at every stage of their cloud journey.
The combination of Splunk and signal FX will give application developers and I T departments, a unified data platform that allows him to monitor and observed data in real time, no matter the infrastructure or scale in order to cut costs boost revenue and improve the customer experience.
This fit is not just from a product lines, though.
I'm incredibly impressed with Karthik route their founder and CEO and the signal FX team.
We share a passion for customer success, and our company culture, a strong match.
We look forward to having them as part of the Splunk team accelerating our cloud growth strategy.
In conclusion, we are very proud of our Q2, we are executing in the cloud we are executing on hsas.
We are executing on our product and technology agenda.
Most importantly, we are delivering real measurable economic value for over 18000 global customers.
Splunk as a company to liberate the new approaches to make the right things happen at the right time to produce the right outcomes all with data.
As a result, we're on track to become one of just a handful of enterprise software companies that had 2 billion in revenue while growing in excess of 25% by the end of our fiscal year.
I want to personally thank our customers our partners our investors and most importantly, our people for working hard to turn the promise of the data future into reality.
Thank you all for your time and attention and partnership.
We look forward to seeing you at Cop 90 in Las Vegas, and now I'll turn it over to Jason to take you through the quarter.
Thanks, Doug and good afternoon, everyone. Appreciate you joining us today, our Q2 execution was strong highlighted by a faster transition to renewable than anticipated rather than provide a detailed line by line readout of the financials I thought it'd be best to point out a few key highlights, especially those that are the best growth indicators for the business.
Which you can reference on a new slide deck that we published on our our IR site for today's report it's important to note that all Q2 results reflect virtually constant duration of about 33 months on the TCD basis compared to Q2 last year.
Second quarter revenues were $517 million up 33% year over year cloud revenue was $70 million up 80% over last year and Q2 software revenues, which is total the total license and cloud, we're up $350 million up 46% year over year.
As Doug discussed customers are adopting term and cloud faster than anticipated and our transition to renewable is tracking faster than planned in Q2, 95% of software bookings were either term or cloud.
We expect the elimination of perpetual license sales will accelerate renewable mix to 99% in Q4 and high Ninetys for the full year.
As we previewed last quarter, the accelerated shift to renewable has a timing impact on cash collections as expected Q2 operating cash flow was negative given the more rapid growth of multi year term and cloud contracts. This translates to a greater cash flow drag this year as more of our contracts are paid ratably.
We are now expecting negative operating cash flow for the balance of the current year and expect fiscal 20 with 300 million net negative operating cash flow to be clear. There are two new drivers behind this production first that our renewable transformation is essentially complete with the mix at 95% in Q2 and expected to go to 99% by Q4 and second we are significantly reducing our upfront cash invoicing for term and cloud deals from 58% paid upfront in the first half of 20.
Slide 22, an estimated 33 per se per cent to paid upfront and the second half of the flight 20.
Again. This is all about timing, while we expect long term cash yield to return to the mid 20% levels. The timing to get there is dependent on our term cloud mix over the next few years.
Underlying the constant increase in mix has been the substantial uptake of our cloud service since introducing at just five years ago, a R.R. for cloud has grown from zero to over $300 million currently customer adoption of cloud is increasing rapidly and we expect momentum will accelerate from here.
So much so that part will likely represent half of our overall business within the next few years.
We ended the quarter with total RPL of $1.235 billion up 47% over Q2 of last year.
The portion of our PEO, which we expect to recognize as revenue over the next 12 months was 751 million at quarter end up 32% year over year. This is a new disclosure intended to provide greater granularity of RPL and its conversion to revenue over the next four quarters.
RPL bookings was 554 million up 19% from Q2 last year just to know this growth rate was understated by about four percentage points due to six so six related adjustments to RPL bookings last year.
In Q2, we recorded 93 orders greater than $1 million and added 500, new customers.
On margins, which are non-GAAP Q2, overall gross margin was 84% up two points on a year over year basis.
With such rapid growth in the cloud we are realized realizing anticipated efficiencies and scale in that business in Q2 cloud delivered over 50% gross margin, which is an important milestone on the way to our long term target of 70% or more.
Q2, operating margin was 9%, notably better than our plan driven by our solid top line performance and some investment optimizations.
Turning to guidance, we expect our high growth trajectory to continue Q3 revenue should reach approximately $600 million with a non-GAAP operating margin of 16%.
For the full year, we're now expecting total revenues of $2.3 billion up from 2.25 billion and we maintain our non-GAAP operating margin target of 14%, which to confirm will include the acquired operating expense run rate of signal that backs.
In closing it was an excellent first half and we're set up for a strong finish to the year. My first full quarter here has been a complete adrenalin rush.
Rounding myself in the model and understanding the dynamics in the business have been top priority with this I'm, even more energized about the massive market opportunity we have in front of us and our unique position to penetrate it enhanced with the addition of signal FX I'm enthusiastic about the completion of our renewable transition and the outlook from here is excellent.
With that let's open it up for questions.
Thank you ladies and gentlemen, if you have a question at this time. Please press. The Star then the number one key on your Touchtone telephone. If your question has been answered or you wish him move yourself from the queue. Please press the pound key.
To prevent any background noise guys see please place your line on mute. Once your question has been stated.
Our first question comes from Brad Zelnick with Credit Suisse. You May proceed with your question.
Great. Thank you so much and congrats on a great quarter, Jason just just so I make sure I heard it correctly can you just go back over your cash flow guidance for the full year, and perhaps double click a little bit deeper into it and bridge us back from the prior cash flow guidance that the company has given.
Sure.
So we actually previously had guided to positive 250 cash flow for the full year. The new guidance is minus 300 million.
And so the and the reason for that reduction we included on the website slides kind of just a.
Helpful overview of why this is happening.
But what's happening is one the perpetual business, which was previously anticipated to be about 15% of the total business. Yeah. We said a renewable at 85% that was our previous guidance. We're now saying renewable is going to go to 1% by end of year perpetual I'm, sorry, perpetual will be 1% by end of the year. So so that is in perpetual as you may know the cash is paid upfront. So if you take that reduction and apply that to the second half a year of TCV, which is just shy of 2 billion you're going to lose a couple of hundred million just on that change second we are changing the invoicing duration.
Or percentage of TCV, that's invoiced upfront for customers such that we're now effectively invoicing on a ratable basis. So invoicing annually. So typically our our deals are three years. Our average duration now is about 33 and a half months. So we're building a third a third a third a third upfront a third after year one at third after a year or two and so we previously in the first half of this year, we had a higher collection closer to the on the combined basis. It was about 50%.
The second half we think on a combined are we project on a combined basis, it's going to be closer to 33%. So if you kind of add all that up it's about a 25% reduction in cash paid upfront on roughly $2 billion of TCV in the second half of the year, that's roughly 500 million reduction and again, it's all timing, we will be invoicing that that cash now really on an annual basis instead of upfront or less of it upfront. So we will get that cash back next year, but.
There will be headwinds for the balance of this year.
Thank you so much for that and Doug if I could just follow up congrats on Cignal FX, It's a really high quality company from what we know.
But just to ask.
Right now what other alternatives might you have explored and and what can you do I can screening the company into the fold versus you know the partnership that you already had with signal FX. Thanks.
Thanks, Brad Good question and yes, you're right there are a number of customers we have their joint customers.
We as you'd expect we've been in this endeavor segment really since the founding of the business.
We spend a lot of time perusing all the different alternatives in the segment and I can't I can't think of a company in this in the overall nexgen dad than APN segment that we haven't personally met with Andrew are investigating deeply.
As you suggested we view signal effects as the top tier asset for the things that matter to our customers.
Which is.
Incredible scale.
Hi high accuracy around metrics and deserve ability in this very ephemeral next gen cloud architecture that everybody's leaning into try and get application velocity across ABS, TCP and azure as well as openshift.
The compliment that we see between the two and and this is proven out a number of these big companies that use our best in class best scale log aggregation and metrics extraction with the more real time streaming metrics kicking a signal that FX had.
Is.
A world class a flight instrument deck as you're flying a super high speed plane, which just ignore facts to make sure that you are going the right direction combined with a world class investigative capability and that when that instrument data signals something at the high accuracy that signal effects is able to.
Trouble taxi very quickly dive in I understand what the root cause is whether you should be paying attention to it or not and then remediate it accurately and so it really helps us if you think about this.
Hi, Paul generation of ITC systems, which are generating the data that is so critical to companies.
At the backbone, having logs metrics and tracing as a three core elements that all need to be done with high high accuracy incredible scale and enterprise enterprise grade features across that suite and we feel that this is a highly strategic and important addition to our portfolio.
Very exciting and congrats on all the success. Thanks.
Thank you thanks, Brad.
Thank you. Our next question comes from Raimo Lenschow with Barclays. You May proceed with your question.
Okay perfect. Thank you.
Congrats from me as well on Cignal FX and if I can stay on it like how do you talk how do you think about the product integration I would have to think about this like you having to bring the product together are these going to work side by side like how does this kind of come together. Thanks.
And then a follow up.
Hey, Thanks for the question.
So again going to go into it to handle these customers. We spent time with it as we say over and over where a customer success first and very customer centric. So in addition to all the the great investigations when doing the meetings, we've been having listened to our customers helps a lot.
And when you're dealing I'll give you. An example, there is a fortune 50 world class consumer retailer that uses splunk as the backbone for everything they are doing across their expansive.
Online portfolio and use a signal effects as well.
And they're they're working very effectively side by side right now signal effects or what do you think about any big consumer introduction online you wind up getting quenched with both human activity and bought activity signal effects as it really nice job of.
Provided that instrumentation, so that they know what they need they need to pay attention to anything and and we can optimize the revenue that they're trying to drive with one of these great introductions and then spark is right. There by his side as anything is being signaled to dive in and help them understand.
What the reality of that situation is and what they should do if anything to make sure that they keep their revenue customer experience going in the right direction.
I do you believe that there is.
Obviously, we believe.
As part of the acquisition that there could be some significant benefits to tighter integration between those two.
The constant transposition and learning that happens between logs metrics and traces goes back to the framework that we've been talking about with you guys on the pillars of this next generation data landscape. We've got to have an effective investigated pillar monitoring analytics, an action set of capabilities and those four working in concert provide the ability for the organization said that real time central respond approach.
Im says, we get full approval for the acquisition and the teams could actually start working together at the detailed level I'd like to.
I fully anticipate and Tim totally our CTO and had development anticipates that we will see some very interesting and rapid integrations being developed and delivered patent market between the two products perfect and then just a clarification. So Jason thanks for all the extra disclosure and the one thing I wanted to double click on so you said the current up 12 months that is different from the 24 current definition to Chad before I just want to make sure that you moved to 12 months. So because that's kind of the very good step in the right direction.
That's right.
Okay. Thank you that's really helpful. Thank you welcome everybody you are keeping that guidance. So thank you for getting that feedback early in the year as well.
Perfect. Thank you.
Thanks.
Thank you and our next question comes from John Difucci with Jefferies. You May proceed with your question.
Thank you.
So Doug.
Thanks, Jason from going through the cash flow details there because that's really important but you made a comment in your opening remarks, you said that the new pricing expands the splunk full data can you expand on that a little bit is there some new pricing out there that I don't know.
Just recently.
You know as you know is leasing and investment community. This is always one of the things that's talked about with Splunk, probably more so than even the customer community, but if you could expand on that a little bit that'd be great.
Yeah, absolutely John So we did release pricing internally to our teams that we'd be broadcasting much more loudly over the course of this quarter said everybody understand what what how we've shifted.
There are two dimensions the pricing and.
When I went through my examples Abbey was one of their large multibillion dollar software company with each other.
One is for people that.
Have digested the data volume piece, if we've got contracts there today, but they like it or not they understand it and their comfort with it we've crafted a predictive pricing framework.
That very clearly illustrates organization of any size, what their unlimited footprint looks like and move people to much more core screened terabyte side bands.
We get them to unlimited much more quickly what were trying to show them is that there is a a terminal value for the core Splunk enterprise boxing by terminal value I mean, there is a logical point after being in business for so many years, where we're at with today's offering and features and functions, where we know that were on the X percent of a software budget and we want them to understand that we know that they know that and that data is not mitigate for them. So that they can stop worrying about filtering data.
Alternatively, we also been rolling out a infrastructure based metric kind of a virtual CPE use splunk virtual core type thing.
That has no data to it at all and that just allows the customer to use infrastructure. They want to they can add or delete as much compute and then pay for storage separately as they want and therefore, they can process unlimited amounts of data.
The only difference is the speed of response or the overall.
Got that interface that people have with assess time you add more infrastructure you get fast response, you had last you get a bit less less response, but and we've heard loud and clear through the years that.
Pricing, we need to be more thoughtful on pricing, we've been integrating an iterative through that three and half years I've been in the seat.
And a piece of that of that Theres iterations, we're learning what customers will really work for customers no pricing is perfect.
The other piece that is continue to expand the portfolio beyond the index.
If you really look at our portfolio and I said this during a lot of meetings that we've had with you and your peers that past couple of quarters.
The only product.
The only three products that are priced on any version of the index are index based enterprise security Ita signed Splunk enterprise everything else that portfolio is now priced on a different metric and we just came out with a alternative metric to data volume with the infrastructure based metric for the core enterprise stack as well.
Very important move I think for our customers and as we rolled it out internally in Q2, we saw some very positive response from customers.
I predict you will see the same even probably more positive response in Q3 as it becomes more well known and the reps are a bit more conversant with it now and we go external with it as well so that customers are leaning into same time their reps or are helping them with that.
That's great that is.
That's really interesting and thank you. Thank you for that detail Doug.
And I guess, it listen and just a quick follow up the numbers look really good trait and.
And I'd like to follow up another product question.
I'm going to say please signal FX is you had a couple of those but you mentioned Phantom two and you know in the world of security.
And orchestration.
Santander.
As you know <unk> customers are just I think overwhelmed by all the security products that needed to two.
Two used to protect the enterprise and you have companies like Palo Alto and checkpoint that are trying to put everything under one roof and fantastic quarter. This was like neutral thing that brings everything together and still like choose a best of breed those companies would say they have best of breed within their own roof, but.
Is that that I've always thought of that as kind of a nirvana that you should be working towards and I guess my question is how close are you to that sort of Nirvana like how how.
How broadly Isnt is phantom being used in an enterprise in some of your like I guess, even the ones that use it the most.
Across our entire security product portfolio.
Great Great question, John So one you're leaning right into 10 and engineering or.
Approach to pass them as much as the or part is as important maybe even more important in the store part of the sunny or how much is working orchestration and automation are critical whether you are an eye whether you are from an IP departmental security department to manufacturing Department.
Sales and marketing.
And part of what we love about Phantom as the elegance the architecture.
To be able to extend the orchestration automation as part of the overall platform no matter what the use cases are.
The other part that we really loved about it as all the security content that makes it a security orchestration automation response framework.
And I agree with you completely that.
We can see a landscape in security and really I think it is also but in this security use case, where you're not going to have a lot of volatility.
There are so much changing so quickly that new products will come in all products to go out on a continuous basis and whether its splunk or Phantom split. This Splunk index for Phantom are now increasingly next generation metrics and tracing stores, our job across all areas to try and be the abstraction framework that allows all those critical transactional elements that are both preventing add detecting and trying to manage that security landscape.
To be at the control of the customer they can swap in a swap those out whenever they want and we will continue to work to make sure that there is an automation orchestration routine it ties in the existing stopping in a new stuff and that there is an effective correlation.
And.
Decision framework of brain to tell that nerve system, what to do but viewed the core splunk products as the brain Phantom US a nerve center I know you still need the muscles, which all those different products.
From firewall to.
Virus, an endpoint protection et cetera that need to actually do it a ton of the work and and I think part of the acceleration of the entire skirt security portfolio is it really helps that security leader feel like they're in control the landscape and the landscape isn't in control of them.
Okay, well it sounds like it's as the journeys really and process here, but thanks, a lot Doug Jason.
Thanks, John Thanks, John and good luck on your next gig it's been great working with you.
So you save here Ken.
Hi, John .
Thank you. Our next question comes from Keith Weiss with Morgan Stanley You May proceed with your question.
Excellent. Thank you guys.
Excellent quarter, and really nice acquisition.
That makes a lot of sense in the portfolio.
It's good to be with this acquisition you guys are sort of.
Weighing in on the debate on whether monitoring and.
For sure for monitoring log monitoring is going to be consolidating into one platform with this acquisition and seasonal effects.
If that's the case is there any other pieces of the puzzle that you need to put into place to get that complete monitoring view.
In that consolidating environment.
Good question, Keith Yes, the India.
On the four pillars, we talk about three of them are very data centric and one is fed by the data.
Investigate monitor analyze and act.
I think that the one platform thing is interesting because if I go underneath the covers the way that an investigative.
Framework has built the Splunk index as an example.
Its purpose built what why we're so effective is purpose built to be truly world class and in a category of one for that scheme or less high speed high card analogy investigative suite that you need to drive that is a different architecture that and what you need for that same scale of monitoring.
Where you've got instead of a flattened set a kind of random logs, you've got very well defined but many many many points of data in a metric flow and that's different again then much more.
Rich multidimensional OLAP framework, so you wind up with different technologies across the pillars. If you really want to be best in class and that was part of the the real excitement of signal effects and these guys learn.
The hard way.
Inside Facebook in one of the highest scaled organizations in the world what it takes to monitor these ephemeral environments back before that was a common buzzword observe ability is being talked about outside the walls of the facebooks and googles and twitters. So they've had a lot of experience. They have built a truly world class framework.
I think tracing is a really good important expansion area there as well.
That's a little bit different architected to much happier metrics and then I still we still really are excited about that whole OLAP journey I mean look at things like data fabric search the point of data fabric searches to make sure that whether you choose our core technologies and those pillars or a third party. We can still be the interface for the end user to take advantage of that data wherever it lives.
Because for us to compete in that data next generation data warehousing area. That's tough that's that's a really specialty set of skills.
So let's make sure that whether we think we've got the best in class solution like signal effects, now and splunk or whether that best in class solution is it some other platforms. Some of their company, we can still help our customers extract value.
Got it it makes a ton of sense and then one follow up.
New customer adds that that's one KPI that that hasn't been hitting kind of the targets that you guys have laid out previously can you talk to us about the efforts in place to.
Ramped up sort of new customers coming in the door if you will.
Yes, absolutely.
Yeah, we had.
500, new customers. This quarter, we think that we're on track to exceed 2000, this year, which gets us at 20000, Mark that we had forecasted for your guys a year and half go at analyst day.
We continue to lean in a bunch of different activities to make sure that our products are viral at the low end. So that we can get that rapid immediate footprint, but the strength of Splunk and decision that most companies have to make on their journey is bright vitality is awesome, but at some point in time, if you've done it properly it becomes a critical set of infrastructure that critical set of infrastructure, usually now spans the entire organization usually carries a higher price tag. So there is a constant union Yang of.
Touch less which we still have happening with cloud trials in downloads across the entire splunk portfolio and the important element to convert those lightweight touches to pervasive enterprisewide deals.
How much is why now that 2000, plus mark per year as always could be important for us the conversion of those 2000, and making sure we get effective wallet share and that the overall asps within our existing accounts continue to go up if I give you the more important motion from revenue and overall growth perspective.
Nice job on the quarter guys.
Thanks, Ken Thanks, Keith.
Thank you. Our next question comes from for Timo Boolani with EUV. Yes, you May proceed with your question.
Good afternoon. Thank you for taking the questions I guess, maybe to start with you as we kind of think about bigger picture trends around enterprise procurement, we started to see a lot of the center of gravity on procurement shifted developers so as it relates to the signal FX acquisition. How do you feel this could open up a buying audience that you weren't maybe necessarily tapping into is optimally.
And then I have a follow up as well.
Yes, I think that.
That's one of the many exciting parts about the signal effects addition to fold we did by Vic drops roughly a year ago and that certainly has helped and going back to net news and Keith question. We still are trying to be maintained consistency and that news around the core Splunk products.
And big drops as much more of that viral load touch true developer centric footprint. That's had some nice traction for us, but I think that combined with signal effects.
Now gives us a much more interesting footprint for direct developer approach, but then ultimately development team is tied back to actually ops team someone's got to whether it's yes true next generation Sørensen CD or there's a dividing the classic IP ops and Deb and desktops world.
Those two activities talk to work together, so ITD Psi and core Splunk combined with.
Signal effects and Vic drops I think gives us a really interesting and then coverage, whether we're leading with the individual developer or a manager of drug development team all the way back up to the head of engineering It had about t. ops across the complex infrastructure landscape.
That makes sense and maybe just dovetailing that into some of your very specific comment around pricing and being more flexible with the customer based on the pricing front.
With the two key data points that you have how should we and investors think about maybe the pricing delta versus the traditional data indexing model because I think maybe the perception is that your your pricing power or if maybe coming down as you change some of the metrics and some of the underlying.
Uh huh.
Infrastructure things that you anchor to you. So if you can just comment on pricing.
And how.
Capacity based data ingestion world that compares to some of the newer things that you are trying out from an infrastructure perspective and that would be super helpful. Thank you.
Sure.
Thats good question for Tim when I when I look.
I must about two to 3000 customer actions now over the past five years since I almost six years I've been here.
And I have never once hurt one customer at any account say I have no more data that I, even know exists that could take advantage of it we've got the opposite problem, which is I am trying to be super thoughtful judicious on what data put into Splunk only because you've told me that should pay attention to that metric because it did have volume based pricing metric. So what we're trying to do what we've seen and we believe that why this predictive pricing with clear.
Guidelines to unlimited.
For people that are still not wrap their heads around the data volume piece is so important is we think that we are 3% to 15%.
Penetrated with the data that people would like to put through Splunk within organizations and if we relax that data volume piece and then we can really serve customers and going back to customer success being our number one focus areas as a company.
So I think that and what we see we saw in Q2 as we really rolled this out internally that we will see people take on the appropriate amount of data because the data volume pieces, along the scary element and we will see volumes go up dramatically through the Splunk backbone.
Just as a quick update our largest customer is ingesting over 12 head of bytes of data per day real time streaming data per day.
Up from less than four patent by the beginning of the year. So we view it almost infinite possibility of data.
Now you combine that with a non datav based non data amount pricing.
From signal effects from DSP from our downstream processor from data fabric search.
From parent from Victor ops, yet all those either deal with data or take advantage of data flowing through the pipes are lending and different.
Storage elements.
The value only goes up with those products. So the whole move was to just finally come clean with everybody Hey put as much data as you want and spark and either govern that through applying infrastructure with it or we'll give you a framework, where we just stopped charging you for data and.
Yes, again yourself in infrastructure cost that you manage that infrastructure.
So you can get to date.
Right amount of data not worry about the cost of the data.
Super helpful. Thank you guys.
Thanks for taking them.
Thank you and our next question comes from Kash Rangan with Merrill Lynch. You May proceed with your question.
Hi, Thank you very much.
I'm just curious if you have included the how much is going to be the revenue impact of significance in your guidance for the second half of the year. So congrats to karthik for use on the call here on the acquisition and secondly, with from a financial perspective.
It looks like the shift is mostly done so Jason you talked about a mid twentys cash flow yield.
What kind of timeframe are we talking about with respect to that kind of mid twentys cash will you could it be worse case calendar 21 are somewhere between calendar 2021, because we've gone through the shift and weve endured the cash flow drop so I would expect that as sharp as the cash flow revision. It's been on the downside. Its upswing should also be equally sharp on the positive side right.
Yes, let me start off by saying, it's OK to still lead with the rush quote a few on cash [laughter] Im not another heart.
As contract, we still like Russia, I did state I got her adrenalin rush on the job so [laughter].
Okay.
Well, let me that's the best part right. We've got said forget exactly yeah Taylor.
Non interest okay.
So first on.
On the question about signal effects revenue embedded in guidance.
We effectively didn't include the revenue in guidance and so.
Just as we did include cost because we know what cost we're going to be incurring.
In terms of revenue will update that when the completion or when we complete the acquisition.
In terms of the second question on the tougher one on cash.
Kind of snap back on cash so here's kind of the issue. The issue is youre for the term so perpetual now gone, which is hard on cash but much better on.
I think.
The long term durability of the business the downside on term we do recognize three years. If you take the average term deal for every $3 in revenue recognized in revenue you get one dollar and cash since we're building an annual EBIT receiving most of the revenue upfront. So it has a relatively low cash yield as you are booking it of course, you get the benefit in the later years as that comes now the so the problem is because we were booking a higher percentage of those three year term deals or receiving a higher percentage of that cash almost to each of the two thirds of the cash upfront.
Up until very recently you are now going to have that headwind through the balance of this year and really through the yes definitely we will feel the effect next year as well. The second aspect is as you move to cloud you will there you have a ratable business where for every dollar revenue you a one dollar cash so that's a high cash yield business. So the but the reality is we have to project that mix and that mix, it's been moving quicker than we had expected and so committing to that timeframe is hard. So at this point I think it's likely that you will not see the mid twentys.
You know until after 21, but you know that's obviously something that we will monitor as we see the impact of mix between those two businesses over the next coming quarters.
Got it I guess is that answer your question, yes. It does that mean the perpetual is the worst spark I mean, that's the biggest detractor to your cash flow and that is down to one so it should be more manageable I would imagine read between term and cloud.
I'm surprised that you don't have some kind of a range for cash flow next year granted that you are going to be mid twentys, that's going to be after 21, but.
I would implore that we give a little bit more thought to having some range, albeit as broad as good as it can be because you have more definitiveness today than you had say three months back that Thats, yes, I would say as we give full year guidance, which will happen in Q4 that will probably be ready to talk about it then got it alright. Thanks guys.
And cash as you saw.
With what what Jason and Ken included with the visuals, where we are trying to get much more aggressive at transparency and visibility said everyone styles.
So as we get a little bit closer to next year, and we really understand the effects of everything that we're putting in motion right now.
I feel pretty confident that no matter what the answer is you will have clarity on why the answer is the answer with less hoping this wonderful well see you guys had dot com.
Sounds good. Thank you thanks Kash.
Thank you. Our next question comes from Walter Pritchard with Citi. You May proceed with your question.
Hi, Thank you question for Jason on on the CRP, you gave an RPL bookings number I think of 19% and I don't think we have the information to be able to calculate.
The CR appeal bookings number is that something you could give us a feel like that's a little bit more of a standard duration constant in all that measure of growth.
So.
I'm, sorry, you're asking for current RPL.
Historically about the RPL bookings no.
Q1, or something to calculate the bookings because I don't think we could calculate that this quarter given we don't have Q1.
The website slides, we provided the links on the site actually shows current Rps going back five quarters.
Got it okay perfect perfect and then Doug I'm wondering on.
On the transition it seems like happened pretty quickly in the quarter to renewable was there something I know the pricing seems like it's been sort of unofficially rolled out so that probably didnt drive. It is there something you attribute the.
The with driving a significant shift in such a short amount of time with in terms of renewable.
Yes.
I don't think the price it had to do with it.
I think we for a year and a half now weve been leaning in on term and cloud we've put incentives in place starting a year and a half ago to make both more attractive in perpetual. So I think for the first time, a year and half ago, our reps were leading with term and cloud and yes.
Whether we like it or not sales teams tend to focus on their commission plan. So.
When per paid more they're a leader with FERC and out we made it more attractive for term and cloud and their leader, leading with which I think helped baked a bigger secular trend that we're all dealing with you guys report on a million times a day and is a continued shift to cloud.
And.
As people are.
Wrapping their heads around both their SaaS applications and other SaaS infrastructure and platform as a service capability. So much right to spend is going opex anyway that I think that except for a handful of companies and some limited industries everyone's I was actually asking for the opposite.
Which is can I need my budget I'd like to be simple no matter. How the heck you are giving me the stuff can you. Please just fit into the Opex category because my entire spend rate has shifted that way and so I think that there's a bigger trend that again, it's just carrying us long because it really was primarily customers, saying you know you guys, even having perpetual is making my job harder because now I'm going back to the CFO and renovating one versus the other just if you just took it away just make it easier and of course, we determine cloud we can offer a lot of different pricing constructs and other pieces that make it a little bit more friendly to business business with us.
Okay, Great and then Jason just on the CRP I think we just don't have the one Q of last year is the is the issue. So I don't know if that's something you can provide a demographic the five quarter stop at Twoq of last year.
Yes, well its fourth is 47% growth. This year than you can you can infer it and you've got to Q2.
Yes, with the growth rate from Q1, 20, you can get to Q.
Each element of RPL, Oh got it okay, okay, well back into okay. Thank you.
I can do it.
Got it thank you Walter.
Thank you. Our next question comes from Keith Bachman with BMO you May proceed with your question.
Hi, Thank you very much I wanted to ask two questions. The first one is back on cash flow for a second next year at a minimum.
If you're if your perpetual is gone from 10 to one just to make it ciro isn't that as a starting point.
A $200 million benefit to your cash flow for next year versus the headwinds that you're facing this year.
No because perpetual is booked a 100 is collected the cash collected 100% upfront and when you flip that determine cloud youre going to be booking one one third of it up if it all went yeah. So it's you have to assume that you're doing that much perpetual its just a onetime occurrence not to repeat occurrence or perpetual.
Yes, yes, sorry second yeah, I mean philosophically if you have a headwind this year in your move it next year right I mean, it's a 200 million.
Anyway, I agree with cash the previous comment I think it would be helpful to get some guidance and comments around cash flow for.
For next year, just again on the elimination of perpetual headwind it should be.
More beneficial.
Okay.
Transitioned to the ARPU bookings, so I am going to speak from the slide.
I just wanted to get a little bit help on what the narrative is so.
All the metrics look good your appeal bookings were down a little bit in terms of you're going from 48% growth in Q2 19 to Q2 20. It was 19% growth. So it is has slowed a bit is there anything that you want to comment as it relates to the RPL bookings in particular and why that might be slowing or is it just lumpy.
So while there is certainly some lumpiness to it but the first thing I'd say, so the 19% should really be if you take out the when we implemented a six or six there was an adjustment that related to prior year. If you normalize that it's 400 basis points the year on year growth absent that adjustment is 23%. So that's what you should think of it as really being 23% on a comparable basis now I would say.
That does and that's that's it's still not a sterling now lets just still not a sort of a number. So so if you then look at our other growth metrics. So you probably see billings is 29% RPL bookings adjusted is 23% revenue was 33% software revenue of 46% cloud easier. This popery of growth metrics and I've been here, roughly 90 days and I I've been looking at those trying to figure out like what really is the right growth metric to focus on and I know in the past we've talked about software revenue and as I looked at it I said well other than it's a it's a high number of 46% why is that the right number well when I look at it and cut them on packet I see that won the maintenance and services growth is slowing and the reason it slowing this for two reasons one as we move to cloud the mains and services are eliminated because those are embedded into cloud. So it's all recorded as.
As cloud revenue.
Second we're relying more and more on partners to provide those professional services for us it's not a high margin business, it's better for them to do so if you want to think about what is really the right growth rate to focus on to say, what's the core underlying growth. It is it is really software revenue.
So.
I think you will see the lumpiness in RPL bookings. There's a there are impacts I think you should look at software revenue and you will see move in RPL bookings, but I think it was probably a little bit low this quarter.
Again, the adjustment as a key driver but.
It will probably be a little bit lumpy because of the fact that we have large TCV numbers and timing of when a deal hits and all that kind of stuff can make that move around a bit.
Okay, Great I think the deal makes perfect sense, congratulations on that and thanks very much for the slide deck much appreciate it.
You bet.
Thank you. Our next question comes from Matt Hedberg with RBC capital markets. You May proceed with your question.
Thanks. This is actually Matt Swanson on for Matt following up from some comments, we did last quarter talking about the vertical solution field teams could you just give us an update on kind of how the implementations of those have gone I know, it's probably pretty early still.
Yes, great question Matt.
So the just for it to people remember what I talked about last quarter.
As we Susan say measure our president hired ahead of verticals.
That.
Verticals team now has seven to 12 people to paying the vertical that are focused on flushing out.
Specific use cases, the vertical and financial services retail manufacturing healthcare public sector telecommunications I'm, so a handful verticals.
They're really not sales teams are more.
Technical evangelists teams that can certainly help on the sales side.
But it's different in the security sales specialists Rnai tdev sales specialist.
Who is focused on making sure that.
We actually secure and independent deal within those accounts working with the account generalist account the RSM.
They have been doing some really good work.
I told everybody last quarter, we've gotten the book published by the financial services vertical that highlights I think 31.
Different use cases that those guys abound.
That are they are mostly non security and IP based price, 80% Oscar NFC based and you'll see more of those being published as the guidebooks and recipes and direction centers. When you move beyond security 90, ultimately what we're hoping for is that somebody us or a partner gets enough understanding of those use cases and sees the market potential that they actually craft application rounded.
I'm such way of trying to seed the market for non security non ITD non Deb based use cases.
That eventually turn into applications.
It's it's been it's been really helpful. I think for our customers in those verticals and for us to continue to visualize the multitude different use cases with Splunk that we tell every earnings call and people talk about Splunk light, but the kind of anecdotal and not written down on this attempt to make sure that there is a as a holdco cookbook recipe guidebook to make them less anecdote.
That's really helpful. And then it seems like if I get one more on Cignal effects, it's really well suited for containerized environments could you just talk about how pervasive that technology is through your installed base.
I think there is there are very few customers that with.
That do not have active.
Development activities in the cloud and hazard up in the cloud there obviously using the native services through Microservices containers, kubernetes et cetera.
So I think it is incredibly.
It is an undeniable wave that's happening when you go back and look at the workloads that are being driven it's still a small percentage of the total workload.
A lot of the application still wind up.
Signaling are integrating with.
Core applications back on mainframe readiness boxes or windows.
Servers, there back in the data center, but we expect that we have to continue as does Amazon and Google and Microsoft and everybody else that's participating.
And I think providing that visibility around.
Those environment, coupled with the rest are landscape is there's some it that the team has been very clear on our customer team has been very clear on its been important.
Thanks.
Thanks, Matt.
Thank you. Our next question comes from Michael Turits with Raymond James You May proceed with your question.
Hey, guys, good evening, and really great deal really wonderful to see branch and broadening out this way so a couple of.
Couple of financial questions.
And this is his clarification just to confirm that Jason we are you at a 100%.
Annual annual invoicing around new billings is that now the rule all deals are annually invoice.
Uh huh.
Yes, we were very very close to 100%, which is I mean, we have a 33 and a half month average duration. So call. It basically a three year annual term.
And we are basically saying if you look at I think it's slide 13 of of the website slides I tried to help folks understand how this works and it basically shows that 33% invoicing, which is basically annual annual billings. So very few exceptions, but on average annual billing is correct. If someone wants to give us the money we will not ship. It back we don't want to pay them to give them a lot.
I mean look I am a CFO , who used to buy all the services from Splunk in every one of the SaaS providers I bought from all of them and now. It's just no one is going to write a big check upfront unless they get a massive discount and so that's why or it just slows that negotiation and takes a much longer. So this is this is what the market has been going and that's that's why this makes sense.
Okay, and then are you able to cut through the noise regarding an adjustment on our PEO for six of six.
Backing into the year ago, and just tell us what the current or future bookings.
Was the year over year basis, I think Walter was asking for this yeah. Let me. This is Ken let me clarify that so you can get the total ARPU growth rate from slide five in the deck, but he is right. The current is not broken down. So here. It is so we've already disclosed 765 million as our total ARPU in Q1 of 19.
Of that $238 million was current 520, sorry $230 million was long term $526 million was current 765 total to 38 long term 526 short term.
Okay, then the ARPU adjustment, Jason can answer that.
Right Okay.
Well going back and forth to many times and if you have it.
Yes, we're actually going to get the current bookings adjusted.
So if you got the right through it'd be great otherwise because we can do it offline.
Yes. So if you were to adjust RPL bookings. If you were to go same slide five you would basically see Q4 19 would go down by 400 basis points.
So call. It 37, instead of 41 and Q2 would go up to from 19 to 23.
Okay, alright, well to do more offline and I'm just going to if I can sneak one more and I'm just going to try to take another shot at the cash flow outlook and I know, we could get a range for next year and I think you said after calendar 21 is when you get back to target, but are we for fiscal 21.
At least cash flow from ops positive.
I'm, sorry, I'd say, yes fiscal 21, you're right.
After fiscal 21 now it's again, it's a it depends on the mix shift and so I just want to make sure it's very clear.
This is tricky so I think before I think it was keith or someone asked about headwind and how that wouldn't be ahead, when our perpetual again I want to make sure. It's very clear over the perpetual you're you're basically collecting three years of cash up front.
So when I switched that to term the following year I'm collecting one third of cash up front. So it is a headwind of two thirds when that happened. So so that's the headwind that you see just on lobbying perpetual and then on term we were collecting.
About 60% on average for the first half of this year, that's going to go to roughly a 33% for next year and then in the meantime, you have to if you want to look at yield it gets more confusing because then those are both both perpetual and term are recognizing.
Three years of revenue effectively upfront at least on the license portion when you get to cloud. It's one for one dollar revenue dollar of cash. So you have to look at all three dimensions to it all three independent variables not just.
One.
Understood. My question was just in terms of looking forward can we at least say that the fiscal 21, you guys will be cash from ops positive.
I am not ready to say that now because again it depends completely I mean, we will be we will be cash flow positive in some quarters, but to say what full year is going to be after 21 I'm. Just it's there I have to I have to forecast multiple variables I'm, just not ready to do that yet I'll do it by the end of this year.
But not ready to do yet.
All right, thanks, very much and congrats on the acquisition.
Thank you. Thank you.
Thank you. Our next question comes from Brad Reback with Stifel. You May proceed with your question.
Great. Thanks, very much Doug.
Back on the pricing change are you fairly confident that upon renewal.
People will be paying you more on a like for like basis.
What do mean on like for like basis.
So you.
Ken can you be existing customer were new to this new pricing model or is that only sort of this idea of unlimited.
So they have to get bigger.
Uh huh.
So right now we only have a very few unlimited contracts so for people to move to unlimited from their current payment stream.
He will be an uplift for all but those unlimited customers and even with those of limited's or their current limited's. There's usually some type of framework that has CP VI and other adjustments that there is a moderate expansion, but the big expansion for existing Splunk enterprise unlimited and hopefully be adding more of those over time is we've got to grow the portfolio that we've got to add signal effects and Phantom and DSP in DFS and come back in and say awesome, you've got unlimited for Splunk enterprise, let's roll that forward and increase it because these new products.
When I look at our install base.
There is so much upward pressure from every single account I've ever met with in my entire career at Splunk.
Matt is saying like two years in which is the more you. The more you buy the more you want to buy.
And I just bet, yes that is part of why I think people are freshly with our pricing model is everyone knows data is exploding and you're going to hold me ransom.
And we've been working with a multitude of different formats, including the FDA structure that we I think just got much more aggressive on to say, we really really really will not hold you ran something that's not who we are we're not oracle.
We are a company that.
Focusing on making sure that we make you guys.
That productive and happy and we know there is a fair value exchange here between between what we are providing and what you want to give us so I'd expect upward pressure within our accounts as they expand.
And we've got to make sure that our portfolio expansion continues to be attractive to that as well.
Irrespective of but the expansion looks like within the Splunk Enterprise index.
Great and then Jason one quick follow up can you give us what the contract could put on build was where the impact I know last quarter was about 80.
Contract, but on Bill.
200, sorry.
200.
Great.
Thanks, very much centered on they'll come from it.
[laughter].
Thank you. Our next question comes from Gregg Moskowitz with Mizuho you May proceed with your question.
[noise].
Okay, Josh let's keep going please.
Hey, Hey, said, sorry, I was on mute.
So or good afternoon, guys, just want to commend or Jason along with a couple of the other is just on the additional disclosure. So first a clarification. If I may. So previously you had guided to 250 million in cash flow from ops. This year and now it's minus 320, so a $570 million swing and you talk about talked about the two dynamics that in total appear to represent a $700 million Delta. So does that mean that if we were to hold invoicing duration and the renewables mixed constant with what you had expected.
90 days ago that your fiscal 20 cash flow from ops would have been about 100 million or so higher than your prior guidance or is that not the case.
Okay first let me clean up some of the statements. So we guided to minus $300 million not threetwenty.
So thats a reduction of 550 from the from the 250 guidance that we had previously.
I'd also said that the.
If you look at slide 13, and the attached website slides. It shows that we went from collecting 58% adjusted mix adjusted upfront to now collecting 33 cents, a 25% reduction 25% times the second half TCV, which is roughly about 2 billion. That's the that's the 500 ish million headwind.
There's a little more because of the signal effects acquisition couple little things. So that's how you get to the 550.
Now Im sorry did you ask me again, what the second part of your question once would we have been higher if we hadn't.
Seen perpetual move and if we hadn't looked shorten the duration, yes. So slide 13 shows what the impact from perpetual as a win from a mix adjusted tend to one so you could say 9% times at 200, and then you can do the same thing for the other two.
Buckets of term and club.
Okay, correct and at least again based on my math. It does appear that apples to apples. It would have gone up if not for again invoicing duration and higher renewables.
Yeah, absolutely yeah definitely for sure.
Okay, just wanted to confirm that and then secondly, so a follow up on pricing. So the correlation guys. Obviously is not plus one but historically you've spoken about how increases in data volumes also drive a clear increases in revenue each and every year and I wanted to ask if that was still hold true onto the predictive pricing as well.
Yes, it should I mean, the Briton pricing doesn't grant every existing customer and unlimited license [laughter]. It provides a path where they where they can see that well I'm sitting at Acs and theirs and bands and those bands are much more coarse grained now before I get to unlimited so that at least appeal a high visibility and much more control do you currently have and what the price point will be for for data that they will.
Potentially have in the future.
There there so we'd still expect much like our cohort showed the past that very few people are going to come jump in right an unlimited, they're going to start with 100 gigs or a terabyte or five terabyte and that prove out that value to the platform and eventually realize holy cow I want as much as I can consume when we get to that upper band.
And then you couple that with the many products that have come out of this past year and a half including products that we've added organically like Phantom enough solar some big drops that complement that whole cohort discussion.
On the core Splunk enterprise piece. So it is the two levers we've been pushing.
Make sure that we're clear on what Splunk enterprise does well and to complement Splunk enterprise craft, New technology is the side or on top of it.
That that bring even more to life and then make it easier for people to consume Splunk enterprise.
Okay. That's great. Thank you.
Thanks, Greg.
Thank you. Our next question comes from Andrew Malinski with Piper Jaffray. You May proceed with your question.
Okay. Good afternoon, I would like to start with a clarification on the impacts from the end of the perpetual licenses. So I understand the cash will impact, but are you factoring in any potential customer churn or any revenue impact from that decision that we should consider.
Yeah, and our in our overall forecast that we just drove we raised guidance to two three.
A chunk of that forecast was the pipeline that we're working with a chunk that is really understanding from the early indicators from the pricing what is going to happen on both the puts and takes there there will be some people that decide you know if you're not going to be perpetual I don't want to just don't want to do business anymore.
I don't have not done that yet we have not had any of those occurrences yet, but it's not as broadly known and were not retiring new sales perpetual until November onest. So we've sent out an internal memo to our salesforce and the partners and it made its way.
Through some investor traction that partner channel World over to you guys. So there still is not immediate thing, but it will be happening starting in Q4.
We think we feel confident in the guidance that were that were driving.
And believe that in general it's a very positive element both for us and for the customers that gives them what they want and enables us to serve them. The way that we want to which is more data driven insights more data driven actions more data driven outcomes that they've been asking for from Splunk enterprise.
And with that anyway, and then I will.
I was just wondering if you could comment on the competitive landscape.
Specifically against elastic and perhaps how your new pricing models have impacted your win rates. Thank you.
Yes, I think we have been pretty consistent and reporting what irwin.
Win rate look like against elastic and they remain very high it's.
I've said over and over that one of the things that makes me excited but also gives me pause for concern is when your average win rates against competitors are north of 80% that means you're just not being exposed to all the opportunities that are out there.
I did have one of the things that's been holding us back as people really afraid about the price. This block is not so much the price or worried about this data driven metric.
Yes, again I have yet to me with the customer says I am not getting a fair exchange of value for the dollars am shipping euros or whatever the heck. The quantity is they're saying I don't like the fact that I feel out of control because we all know data volumes are going to go up so I would anticipate and hope that this will continue to substantiate or accelerate those win rates the win rates that I see a super consistent it had been playing around with a bunch of different things and I realize how important. This is add data is absolutely critical to my future or my next Gen infrastructure is critical to my future for the cyber resilience you might corporation is critical my future I need something with enterprise scale with high resiliency with the right features and functions to allow me to deal with a very large population internally and externally and gosh darn it I need Splunk.
Yes, the more that we can make that Splunk journey from the very first try all the way through the enterprise license the better.
But ultimately our bread and butter is and has been for so many years.
We really understand these very complex landscape and were able to quote companies are doing 510, 15 terabyte petabytes of data per day.
Which is our debt those few that really understand the power of data.
Great. Thank you.
Thank you.
Thank you I would now like to turn the call back over to Doug for any further remarks.
I really appreciate the great questions. Nicole we are as I said very proud of our Q2 and I just want to reach out to the signal FX team that may or may not be listening to the call a bit certainly could see unrecorded basis.
We are incredibly excited to have you join the overall Splunk team I think the combination of the two of us.
It will be extremely powerful for our customers.
I appreciate so much the customer Centricity that you guys have that we live every single day.
And your joining a really motivated group of folks.
People that natively went up and Splunk and other organizations like you that that found their way through an acquisition.
And to all of our customers out there. Thank you for the constant support and we're excited to see everybody a comp 19 coming up at the end of October is going to be a fantastic show a lot of new use cases and customer stories to share. So please find a way to get there.
Have a have a great day. Thank you.
Thank you ladies and gentlemen, thank you for participating in today's conference. This does conclude todays program and you may all disconnect everyone have a wonderful day.