- Splunk Inc's SPLK 4% global workforce reorganization reinforced Citi analyst Fatima Boolani's positive catalyst watch view on the upside OPM and FCF guidance surprise.
- It also bolstered the budding bull case for expanding profitability and corresponding valuation re-expansion scope.
- In the analyst's OPM sensitivity analysis, Boolani anticipated a ~5% reduction would bring ~150bps of OPM upside vs. consensus. This swift undertaking now appears more credible with a new CFO formally appointed.
- Actions appear to be a mix of both headcount reduction and relocation.
- Though the analyst sought clarity on the impact on functional areas, current management posture and trends would suggest this likely involves further streamlining of the GTM org ("single-seller model") and technical and non-customer facing headcount reshuffling to lower-cost jurisdictions.
- While hard to dismiss this as intimating a more brutal selling environment (affecting forward ARR growth), net-net, the stock should react positively.
- Needham analyst Mike Cikos maintained a Buy and raised the price target from $100 to $115.
- Price Action: SPLK shares traded higher by 4.81% at $104.60 on the last check Thursday.
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