Splunk sheds 7% of workers amid Cisco's $28B embrace
Have another great quarter? Time to get rid of some staff, then
Enterprise analytics software specialist Splunk, which Cisco plans to purchase for $28 billion, has decided it needs to lay off 7 percent of the workforce.
The company revealed the plan in an SEC filing that said the job cuts would mostly affect staff in the US, and would cost around $42 million due to severance payouts, transition costs, and other expenses.
Splunk will chop approximately 560 heads based on an estimated [PDF] headcount of 8,000 per a January SEC filing, a number the company declined to confirm in an email to The Register, which consisted only of a link to the 8-K filing the company made with the SEC today.
"We are taking this proactive and strategic step that further aligns our workforce to better enable Splunkers to meet the needs of our customers and partners, while remaining sustainable and cost effective," Splunk president and CEO Gary Steele told employees in an email sent to staff and included in the SEC filing.
We're unsure how reducing headcount will help meet the needs of customers, unless of course those that remain on board are asked to run faster.
The move isn't a result of the pending Cisco acquisition, Steele claimed in the note. Rather, the layoffs "are the continuation of the important initiatives we've undertaken across Splunk for more than a year to align our resources and operating structure to deliver ongoing and incremental value for our customers."
In its Q2 2024 profit and loss accounts for the three months ended July 31, Splunk noted annual recurring revenue (ARR) was $3.858 billion, up 16 percent year-over-year, while cloud revenue grew 29 percent to $445 million. Operating expenses declined in the low-single digits, and its trailing 12-month operating cash flow was up a whopping 247 percent, with free cash flow up a similarly large 273 percent.
Yet all this was in vain, because the net loss for the period was $62.24 million, albeit far better than the $209.7 million net loss reported in the prior year's Q2.
"Splunk delivered another solid quarter, demonstrating the incredible value organizations worldwide gain from unified security and observability," Steele said in August.
Questions to Splunk, including why it's making the move in light of a $28 billion Cisco buyout expected to close late next year, went unanswered.
Cisco plans to use Splunk's analytics capabilities to create a new prediction-based cybersecurity product when it finishes the buyout of the company for $157 a share. Splunk's stock price shot up on the acquisition news in September, but has since leveled in the mid-$140 range.
… and the layoff machine keeps churning
If you thought the tech industry was done with mass layoffs for the year … sorry.
- Profits just keep rolling in at T-Mobile US. So only thing to do is axe 5,000 workers
- Epic cut: Fortnite games maker culls 16% of staff
- SEC boss warns it's 'nearly unavoidable' that AI will cause financial crash
- Microsoft's 10,000 job cuts didn't quite do the trick
We've covered a number of high-profile tech layoffs recently, including Microsoft's LinkedIn shedding 700 staff, Bandcamp slashing half its headcount after being acquired by Songtradr, and SiFive pruning one in five workers, among others.
The layoffs continued this week, with security firm Exabeam announcing a 20 percent layoff, and Sony's Bungie game development unit cutting an unspecified number of employees and blaming it on waning interest in the company's Destiny 2 RPG shooter.
Beyond layoffs, the tech industry has been contracting more generally, with VC spending reaching a six-year low in the third calendar quarter of 2023.
You wouldn't know that from listening to Splunk, though. It's been talking up one great quarter after another great quarter lately, continually adding customers with total ARR above $1 million a year, growing its cash flow and revenue, and reducing its expenses. Profit has yet to follow.
Not that any of this matters to the 500-odd folks who are now going to lose their jobs. ®