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$SPLK While the ticker is still hot, I reread the brilliant (hindsight is great) UBS sell call from late October. A couple of key quotes related to competitive positioning and pricing from their field checks:
Splunk Customer: "We have a 3-year deal with Splunk and they gave us a very good price point, such that it's cheaper to run Splunk than it is to run open source Elastic and to support it."
Splunk Partner: "More companies are asking about Splunk alternatives, but Elastic or Microsoft Sentinel are just not functionally equivalent."
Splunk Customer: "I don't understand why Microsoft and AWS haven’t replicated Datadog’s features, it’s not that complex of a tool. Splunk, on the other hand, would be tough to replicate. They have some magic under the covers, it’s a very sophisticated tool such that it wouldn’t
be easy for Elastic or Azure/AWS to copy it, the product works very well."
Splunk Partner: "Splunk is expensive given its data ingestion pricing model, customers want more predictable pricing and the company knows it needs to change its pricing structure, they did so last year
Splunk Partner: "Splunk is expensive given its data ingestion pricing model, customers want more predictable pricing and the company knows it needs to change its pricing structure, they did so last year
but no one understood the changes. I’ve looked at Splunk’s new workload-based pricing, and in my view it’s only relevant for perhaps 100-200 of the largest users, those ingesting at least 1-2 TB/day. I suspect Splunk is testing a bigger pricing change in the future, perhaps a
full move to price on the basis of compute power consumed, not the amount of data ingested."
Splunk Partner: "A few years ago Splunk made a big push to the cloud-hosted version and heavily discounted it, we saw 35%+ price discounts. Today, they aren’t giving customers the same
Splunk Partner: "A few years ago Splunk made a big push to the cloud-hosted version and heavily discounted it, we saw 35%+ price discounts. Today, they aren’t giving customers the same
discounts as before, I’m seeing more normal 17-23% discounts off list. As the prior discounted Cloud contracts come up for renewal and they now pay market/normal rates, Splunk could be seeing a revenue boost."
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UBS came to their sell rating because customers are paying 10-20% more for their Splunk YoY vs. the 40% ARR guidance given in late Oct.
On the competitive side: Multiple partners and customers still say Splunk's product suite is the best on the market.
On the competitive side: Multiple partners and customers still say Splunk's product suite is the best on the market.
On the pricing side: Price seems to be the main reason why customers are seeking $SPLK alternatives. This explains why COVID has really hurt them.
Some of the delayed Q3 deals could be due to Splunk no longer offering 35% discounts, resulting in extended price haggling.
Some of the delayed Q3 deals could be due to Splunk no longer offering 35% discounts, resulting in extended price haggling.
Seeing as ~5 of the top 10 deals are still being negotiated (rather than lost to competitors), this suggests the product suite is not the issue, which is good for Splunk's long-term prospects as once deals are made with a more standard 15-25% discount, renewals become easier.
All of the above could be reasons ARK bought $55M of $SPLK using $WORK proceeds
Less relevant for long term holders, but CNBC also pointed out traders are heavily betting on a very fast, strong reversal by holding calls with 160, 165, and even 170 strikes expiring tomorrow
Less relevant for long term holders, but CNBC also pointed out traders are heavily betting on a very fast, strong reversal by holding calls with 160, 165, and even 170 strikes expiring tomorrow
In total, staying long $SPLK (now 8%) and $DDOG (3%). Also putting $ESTC on close watch, as the idea of being equally long these three and just riding the industry CAGR (sorry $DT and $NEWR) is growing on me
