‘Macro’ Volatility Caused Splunk to Miss Its Q3 'Bookings Target'; Stock Plunges

of $145 million was 80% higher than in the year-earlier quarter, total revenue declined 11% to $559 million. As Splunk reached the end of October, “we saw a much lower than normal close rate among our largest deals, which caused us to fall short of our bookings target,” said Merritt. “Our third quarter did not meet our expectations.” Despite Q3 results, “I continue to believe that our opportunity is massive and our fundamentals remain strong,” he said. The stock plummeted 23.3% Thursday, closing at $158.03. Since exiting the quarter, Splunk “scrutinized the transaction pipeline and factors impacting our close rates,” said Chief Financial Officer Jason Child. “All indicators point to continued strong demand overall, and we are confident in the eventual closing of delayed transactions in the pipeline, but when they will actually close remains uncertain. As a result, we remain cautious on near-term market dynamics, but confident in our long-term growth trajectory.” Fiscal Q3 featured “the most unusual selling environment we’ve ever seen,” he said. “We believe this is a temporary market condition and the underlying demand remains strong, particularly for cloud.” Bookings that the Splunk sales team thought were in the bag “got stopped” by the customers' CEO, CFO or the board “in the final hours or days of routing for approval,” said Merritt. Looking back quarter over quarter, of “the top 10 deals that we went into a quarter with, we tend to close seven, eight or nine,” he said. “This quarter, we wound up closing three.” Customer personnel who previously had the authority to approve deals “had that authority pulled at the very end” of the quarter, he said. “There were some material, large-term transactions that got pushed.”