Splunk Patent Case Vs An Ex-Employee's Growing Firm Has Merit, Analyst Says

Raymond James analyst Adam Tindle assigned Splunk Inc SPLK a Moderately Aggressive Risk/Wealth Accumulation (MA/ACC) rating given its fast-growing market.
Splunk filed a lawsuit against Cribl, alleging infringement of numerous Splunk patents and unlawfully misappropriating Splunk's source code and other confidential materials.
Cribl founder and CEO was previously a Splunk employee. Splunk states he founded Cribl on code stolen from Splunk.
The analyst sees the nature of events as favorable to Splunk.
Considering Splunk does not have a track record of taking legal action and has previously attempted to resolve allegations privately, he thinks the company must feel confident in its chances.
Cribl's momentum may be a catalyst for the timing of this lawsuit, given ARR growth at 300% Y/Y in February and tripling its customer base, including 10 of the Fortune 50 (Splunk's core market).
Splunk urged Cribl to stop using Splunk's IP and for fair compensation.
The timing of a decision is unknown, with filing being the first step. With the size difference between the firms and Splunk's case indicating a positive outcome, he also cites an out-of-court settlement.
UBS analyst Karl Keirstead downgraded Splunk to Neutral from Buy with a price target of $86, down from $125.
The analyst's latest round of industry checks clarified the root cause of the company's recent $250 million annual recurring revenue guidance cut for 2023.
Also Read: British Chip Designer Arm Ropes In Splunk's Jason Child As Finance Chief
Price Action: SPLK shares traded lower by 5.23% at $78.95 on the last check Thursday.

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