Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Equity Bottom-Up

<ul>
<li>Splunk shares outperformed in 2023 and rose ~69% as total ARR exceeded $4B, operating loss narrowed, and FCF margin improved. The company executed well to drive long-term durable growth.</li>
<li>Over the past 2 years, Splunk transformed itself into a cloud company. In 2022, WSJ reported that Cisco made a $20B+ takeover offer. However, no deal was on the table. </li>
<li>Following M&amp;A rumors, the company’s cloud transition, and strong fundamentals, Cisco offered a $157 per share to acquire Splunk in a $28B mega all-cash deal on September 21, 2023. </li>
</ul>


Splunk shares outperformed in 2023 and rose ~69% as total ARR exceeded $4B, operating loss narrowed, and FCF margin improved. The company executed well to drive long-term durable growth.
Over the past 2 years, Splunk transformed itself into a cloud company. In 2022, WSJ reported that Cisco made a $20B+ takeover offer. However, no deal was on the table. 
Following M&amp;A rumors, the company’s cloud transition, and strong fundamentals, Cisco offered a $157 per share to acquire Splunk in a $28B mega all-cash deal on September 21, 2023. 


Splunk and $28B Mega Deal: Will Cisco Overpay For San Francisco-Based Software Company?

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

<ul><li>Splunk Inc. delivered a decent result and managed an all-around beat in the last quarter, marked by solid execution, operational discipline, and favorable customer engagement.</li><li>Total revenue experienced a healthy year-over-year increase, demonstrating Splunk's ability to achieve this growth while managing costs underscores its strategic approach.</li><li>Additionally, Splunk continued to innovate by leveraging AI in security and observability, introducing the concept of Splunk AI to empower organizations to detect, investigate, and respond more efficiently.</li></ul>

Splunk Inc. delivered a decent result and managed an all-around beat in the last quarter, marked by solid execution, operational discipline, and favorable customer engagement.Total revenue experienced a healthy year-over-year increase, demonstrating Splunk's ability to achieve this growth while managing costs underscores its strategic approach.Additionally, Splunk continued to innovate by leveraging AI in security and observability, introducing the concept of Splunk AI to empower organizations to detect, investigate, and respond more efficiently.

Splunk Inc.: Strategic Partnership with Microsoft & Other Major Drivers

Equity Capital Markets

<ul><li>Splunk managed to surpass the revenue expectations as well as the earnings expectations of Wall Street.</li><li>In cybersecurity, Splunk expanded its footprint within a worldwide IT services and consulting firm, including the addition of Splunk Enterprise Security.</li><li>They closed a large transaction in Europe for Splunk Cloud and Splunk IT Service Intelligence with a global semiconductor manufacturing company in Q1.</li></ul>

Splunk managed to surpass the revenue expectations as well as the earnings expectations of Wall Street.In cybersecurity, Splunk expanded its footprint within a worldwide IT services and consulting firm, including the addition of Splunk Enterprise Security.They closed a large transaction in Europe for Splunk Cloud and Splunk IT Service Intelligence with a global semiconductor manufacturing company in Q1.

Splunk Inc.: Penetrating The Retailer Market Through The Immersive Commerce Experience – Key Drivers

<ul>
<li>
<a href="https://www.smartkarma.com/entities/elastic-nv" target="_blank" data-smartkarma-citation="entities:27526:1" rel="noopener">Elastic NV (ESTC US)</a> reported a solid 4QFY23, reflecting a stronger-than-expected non-GAAP operating margin of ~9% and GAAP subscription gross margin of ~79%. </li>
<li>Elastic cloud revenue grew 28% y/y, representing 40% of total revenue. Elastic cloud is scaling well, and margins improved faster-than-anticipated. </li>
<li>We are concerned about slowing H1 FY24 y/y growth in total revenue and failure to achieve the $2B revenue mark in FY25. Price target to $112.</li>
</ul>



Elastic NV (ESTC US) reported a solid 4QFY23, reflecting a stronger-than-expected non-GAAP operating margin of ~9% and GAAP subscription gross margin of ~79%. 
Elastic cloud revenue grew 28% y/y, representing 40% of total revenue. Elastic cloud is scaling well, and margins improved faster-than-anticipated. 
We are concerned about slowing H1 FY24 y/y growth in total revenue and failure to achieve the $2B revenue mark in FY25. Price target to $112.


Focus On Profitability Expansion And Durable Growth: PT Reduced To $112 From $133

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

<ul>
<li>Elastic just dramatically raised its revenue guidance for FY2025...implying a massive acceleration in revenue growth that the 18% move in the stock underplayed.</li>
<li>Dynatrace is a wildly profitable software company trading at a significant discount to its Rule of 40 metrics.</li>
<li>The overall observability space is red hot, unimpacted by macro factors and being overlooked by software investors.</li>
</ul>


Elastic just dramatically raised its revenue guidance for FY2025...implying a massive acceleration in revenue growth that the 18% move in the stock underplayed.
Dynatrace is a wildly profitable software company trading at a significant discount to its Rule of 40 metrics.
The overall observability space is red hot, unimpacted by macro factors and being overlooked by software investors.


Observability Is Not Just Datadog: Why Elastic and Dynatrace Are Great Longs

United States

Splunk Inc. develops web based application software. The Company provides software that collects and analyzes machine data generated by websites, applications, servers, networks, and mobile devices. Splunk serves customers worldwide.

Splunk Inc (SPLK US)

Splunk and $28B Mega Deal: Will Cisco Overpay For San Francisco-Based Software Company?

Despite a transaction price of $157 per share offered by Cisco to acquire Splunk in a $28B mega deal, investors should take profits now.

Andrei Zakharov

Splunk Inc.: Strategic Partnership with Microsoft & Other Major Drivers

Splunk Inc. delivered a decent result and managed an all-around beat in the last quarter, marked by solid execution, operational discipline, and...

Baptista Research

Splunk Inc.: Penetrating The Retailer Market Through The Immersive Commerce Experience – Key Drivers

Splunk managed to surpass the revenue expectations as well as the earnings expectations of Wall Street. In cybersecurity, Splunk expanded its...

Baptista Research

Focus On Profitability Expansion And Durable Growth: PT Reduced To $112 From $133

Elastic remains my top pick in the observability and search space, and I see the potential for revenue growth re-acceleration in 2024.

Andrei Zakharov

Observability Is Not Just Datadog: Why Elastic and Dynatrace Are Great Longs

Observability software stocks are being overlooked in the recent valuation downdraft. Elastic is our top pick...it had a massive revenue guidance...

Aaron Gabin