Splunk CEO Doug Merritt. Photo by Bloomberg. Illustration by Mike Sullivan
Q&A
Enterprise Amazon

Splunk CEO Merritt Says Cloud Will Soon Be 50% of Its Business, Double From Start of Pandemic

Photo: Splunk CEO Doug Merritt. Photo by Bloomberg. Illustration by Mike Sullivan

Splunk CEO Doug Merritt tries not to show it but he’s clearly a little frustrated with Wall Street. The 18-year-old enterprise software company’s stock has dropped 30% since last fall, wiping out all its gains earlier in 2020, even as Splunk’s cloud-based software sales soared thanks to the impact of remote work on corporate software buys. Merritt says cloud software will soon account for half of the company’s revenue, compared to a quarter when the pandemic was beginning.

Splunk, which makes software that analyzes server and application data to identify performance issues, is in the middle of a transition away from its traditional business of selling software that runs in companies’ private data centers. It’s a shift that other big enterprise software firms like Microsoft and Oracle have gone through over the past few years. And it’s a painful transition. Revenue appears to shrink because sales of old-fashioned software sales go on the record all at once while sales of cloud software hit a company’s books over time. Splunk’s reported revenues last year fell 5%, although growth has rebounded this year.

Merritt thinks investors, who he says “control a degree of the narrative,” are distracted by that accounting issue. He would prefer an investor focus on Splunk’s cloud revenue growth, which has exceeded 70% for ten consecutive quarters, including 73% in the three months to July 31.

Get access to exclusive coverage
Read deeply reported stories from the largest newsroom in tech.
Latest Articles
 
Reality Check AR/VR
Unity Buys Ziva in Photoreal 3D Race; Game Makers Balk at Metaverse
A 3D face rendered and animated in real-time with Ziva's ZRT Face Trainer tech. Credit: Ziva Dynamics.
Game engine maker Unity is acquiring Ziva Dynamics, a company that uses machine learning to make more lifelike and efficient models of human characters. Its tech opens the door to creating hyper-detailed characters (and not just photorealistic ones) for games and AR/VR apps while also more easily letting those characters interact with users in believable ways.This acquisition slots into the...
Latest Briefs
 
Indian Food Delivery Startup Swiggy Raises $700 Million
Indian’s Ola Electric Raises $200 Million at $5 Billion Valuation
Activist Investor Seeks to Push Peloton CEO Out
Stay in the know
Receive a summary of the day's top tech news—distilled into one email.
Access on the go
View stories on our mobile app and tune into our weekly podcast.
Join live video Q&A’s
Deep-dive into topics like startups and autonomous vehicles with our top reporters and other executives.
Enjoy a clutter-free experience
Read without any banner ads.
Nick Tran. Photo by Hulu. Art by Mike Sullivan
Exclusive
TikTok’s Global Marketing Chief Abruptly Departs
TikTok’s leaders have pushed out Nick Tran, the company’s head of global marketing, two people familiar with the situation told The Information.
Images by Microsoft; Activision. Art by Mike Sullivan
News Analysis
Eight Takeaways From the Microsoft-Activision Deal
Microsoft’s $68.7 billion acquisition of Activision Blizzard may have caught the market by surprise, but the deal makes sense on a number of levels.
Microsoft's Chetan Nyak. Photo by Microsoft. Art by Mike Sullivan
The Big Interview Venture Capital Startups
Microsoft Quantum Computing Executive Sees Progress After Lagging Rivals
For more than 15 years, researchers at Microsoft have been chasing the idea of building a better quantum computer, an ultrapowerful machine that promises to accelerate everything from drug discovery to the development of electric batteries.
Art by Mike Sullivan
Exclusive Media/Telecom Entertainment
Inside the Battle for Streaming’s Home Screens: Hollywood Egos Collide With Algorithms
Last summer, executives at Eurosport—a London-based live sports TV network owned by U.S. media company Discovery—couldn’t believe their eyes.
Art by Haejin Park. Photo courtesy Caroline Spiegel.
The Big Read Startups Culture
Caroline Spiegel’s Porn Revolution
Birds chirp and wind rustles through leaves—the sounds of early fall. “Man, it’s beautiful out here,” remarks a deep, crackly male voice.
Image: Gopuff
Exclusive Startups E-commerce
Inside Gopuff’s Ambitious and Costly Bid to Dominate European Instant Delivery
Executives at Gopuff, a U.S. instant-delivery company that has planned to go public this year, recently told investors that its foray into Europe, which began last year, has topped expectations: The business is on pace to generate $100 million in annual revenue there, or about 5% of its overall revenue currently, and is growing three times faster than it had projected, according to two people with direct knowledge of the discussions.