Ken Tinsley - Corporate Treasurer and Director, IR Godfrey Sullivan - Chief Executive Officer Dave Conte - Chief Financial Officer

Brent Thill - UBS Siti Panigrahi - Credit Suisse Ed Maguire - CLSA Raimo Lenschow - Barclays Keith Weiss - Morgan Stanley Kirk Materne - Evercore ISI Greg Dunham - Goldman Sachs Brent Bracelin - Pacific Crest Jim Moore - FBR Capital Markets Derrick Wood - Susquehanna Aaron Schwartz - Macquarie

Good day, ladies and gentlemen. Thank you for standing by. And welcome to the Splunk Incorporated Third Quarter 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference to our host, Mr. Ken Tinsley, Splunk’s Corporate Treasurer and Director of Investor Relations. Sir, you may begin.

Thank you, Eric. Appreciate that, and good afternoon, everyone. With me on the call today are Splunk's CEO, Godfrey Sullivan; and CFO, Dave Conte. Our press release was issued after close of market today and is posted on our website. This conference call is being broadcast live via webcast and following the call, an audio replay will be available also on our website. On this call, we will be making forward-looking statements, including financial guidance and expectations for our fourth quarter and fiscal 2015 and 2016 years, transaction and product mix, uses of our software, planned product sales and facilities investments, increasing customer adoption in our products and apps, market and use case opportunities. These statements reflect our best judgment based on factors currently known to us, and actual events or results may differ materially. Please refer to documents we file with the SEC, including the Form 8-K with today's press release. Those documents contain risks and other factors that may cause our actual results to differ from those contained in our forward-looking statements. These forward-looking statements are being made as of today, and we disclaim any obligation to update or revise these statements. If this call is reviewed after today, the information presented during this call may not contain current or accurate information. We will also discuss non-GAAP financial measures, which are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of GAAP and non-GAAP results is included in the press release and is available on our website. With that, let me turn it over to Godfrey. :

Thanks, Ken. Greetings, everyone. Welcome to the call. Another fun quarter in Q3 and as always, big thanks to our customers and partners for their passion and their support. Revenues were $116 million, up 48% year-to-year, license revenues $71.8 million, up 41%, notable customers included, AT&T, SAP, Shazam in the U.K. and Weight Watchers, themes for this call, Cloud, Public Sector, Product Momentum and Markets. First, I want to thank many of you who joined us at this year’s User Conference. We welcomed more than 3,000 attendees and 80 presentations from passionate Splunk customers covering a wide range of very cool use cases. During the keynotes, execs from GE Capital, Coca-Cola North America, NASDAQ and Red Hat described how Splunk powers their future. Coke is using Splunk to push data-driven decision-making across their business and to break down data cartels. Splunk embedded in their Cloud architecture and even mining data from their freestyle machines. GE Capital’s CIO spoke about how Splunk is central to their continuous app delivery process. For GE, we enable rapid app development, help deliver competitive advantage to their BUs. The CIO of Red Hat described their migration of apps to the Cloud and how Splunk is their service assurance platform. And the CISO of NASDAQ talked about Splunk as part of their next-generation security intelligence platform. These are just some examples of the amazing customer stories that come out at conf. If you ever need a shot of adrenaline, just spend some time with our customers. Let’s go to Cloud, where the word of the day is velocity. Our largest transaction in Q3 was for Splunk Cloud, a seven figure order with a leading sporting goods company. They selected us as their next-generation security intelligence platform replacing a legacy SIM. This customer already uses Splunk on prem and wanted us to manage this new project as a service. Orrstown Bank, an east coast community bank is a new Splunk Cloud customer. Our champion there brought us in after having used Splunk for years at J.P. Morgan and we went from POC to production in one week. Intermedia, a one-stop shop for Cloud business applications selected Splunk Cloud for our rich feature set, high security and the ability to scale to match their growth. And from the education market, Chicago Public Schools selected Splunk Cloud for IT ops. Our online sandbox is doing great with thousands of free users and it’s a natural complement to our premium download model. Best news of all, I can tell you, former acting GM of our Cloud business, I am delighted to have replaced myself and welcome Marc Olesen to the team. Marc ran the Cloud businesses at McAfee and Mercury. He fits right into the Splunk culture and has hit the ground running. Just in time to as we had a big presence at the AWS show last week, where we announced Hunk on EMR and our new app for AWS integrated with CloudTrail. Customers are moving production apps to the Cloud and Splunk is a big part of moving to the Cloud with confidence. To summarize, a great quarter for Cloud, our largest customer order, doubling our customer base and strong market momentum with Amazon. Now on the Public sector where our team delivered another record quarter. You would expect strength given that its fiscal year end for federal, but our performance was broad-based federal, state and local. I'm happy to report that we signed an enterprise agreement with the Department of Energy, who have more than 75 sites using Splunk and we are now the standard for operational intelligence at the agency. We also signed an enterprise agreement with the U.S. Postal Service. We purchased a 10 terabyte license for security analytics. They also plan to analyze the data coming off their postal machines. Department of Homeland Security bought a multi-terabyte license to replace a legacy SIM, which is becoming a recurring theme in our security practice. Public sector is a market that is highly dependent on word-of-mouth and where inter-agency references matter. Our Public sector team is delivering customer success that is becoming highly visible in the Beltway. And Federal Computer Week just named us, a hot company to watch. On to the Product update, we shipped Splunk Enterprise 6.2, Hunk 6.2 and Splunk MINT Express. Enterprise 6.2 delivers easier data on boarding, pattern detection and lower TCO through improved hardware performance and easier data management. Hunk 6.2 is now integrated with the Amazon Elastic MapReduce console. It’s easy for customers to analyze data in EMR and S3, and priced by the hour like the rest of that stack. Hunk wins include Comcast, Vodafone Germany and the DoE. One of the ways that we are expanding our addressable market is by taking in more data from more sources than ever before, including mobile, wire, mainframe and sensor. MINT Express gives mobile application developers real-time analytics on app quality, usage and performance. Our App for Stream makes it easy to capture and analyze wire data. Our partner Syncsort released their Iron Stream App for customers who want to analyze their mainframe data. And our partner Kepware launched the Industrial Data Forwarder to send SCADA, sensor and control system data in the Splunk. Use cases include operational improvements, preventive maintenance and security, very strong customer interest at conf for all of these products. Let’s go to market segments, earlier this year, we told you about our move from a purely functional order structural to one that includes market segment teams. Security was our first segment for this structure and Haiyan Song is doing a brilliant job leading this group. It’s prime time for Splunk in security. No one wants to be the next breach headline and Splunk is a critical part of the equation, evidenced by our enterprise security app which had a record quarter with more than 200 orders. Con Edison is a new Splunk customer and selected us to replace the legacy SIM. Beth Israel Medical Center, a teaching hospital for Harvard Medical School is another new security customer. UniCredit in Italy is also a new customer and we are helping them comply with local banking regulations, security, auditing and compliance reporting. Now on to the ITOA market, as we did with security, we are now extending the same market group org structure to our application and IT ops market. I'm delighted to tell you that Rick Fitz has joined Splunk as the exec to lead this market group. Rick is well known in this marketplace having been SVP of Product Management for CAs Service Assurance products, as well as similar experience at Network General and BMC. Customer selecting and expanding their use of Splunk for operational use cases included ADP, Abacus International and Zulily. One of our new customers in Q3 for IT ops is Oscar Health, where the support teams now have real-time dashboards on metric such as resolve issues by agent, top issues resulting in tickets and unresolved ticket status. One more fun customer story, this one in business analytics. I hope you got a chance to see a Niners game in the new Levi’s Stadium. As a season ticket holder, I can tell you that one of the really cool things is the Levi’s Stadium mobile app. Splunk is helping bring to life the business benefits of this app which was created by the VenueNext team. And their goal is to elevate every aspect of a fan’s experience on game day. Splunk is powering the real-time data and analytics dashboards on game day. So thanks to the data feeds, the venue operator knows what food and drinks are being ordered, parking lot availability, wait lines at concession stands, network performance and even how fans are -- how many fans are entering the stadium using mobile tickets. Customer like this are what makes Splunk so much fun. There are common threads across our business analytics customers. Most common use cases are customer experience, product analytics, digital marketing and business process analysis. They use Splunk to mash up, unstructured machine data with structured business data. For example, matching customer IDs in the logs with the customer profile in their CRM system and as a result, they get real-time analytical trending without the need for ETL or the latency issues involved in data warehouse reporting. Let’s switch gears and go for a moment to higher Ed. You may recall in Q1, we announced a partnership with Internet2. This agreement enables member universities to buy Splunk with a pre-negotiated contract and subscription pricing. In Q3, we signed our largest I2 order today of 1 terabyte order from the University of Illinois. Even as a Baylor bear, I’m glad to welcome the Fighting Illini to Splunk. At the academic level, more than hundred universities have now made Splunk part of their instruction or their research programs. Most recently, Georgetown, Northwestern and the University of Oxford. I’m very excited to see the progress we're making in education. Before closing, I want to take this opportunity to welcome Mark Carges to the Splunk Board of Directors. Mark formerly served as the CTO of eBay and also former GM of products at Weblogic. And I’m thrilled to have Mark joining our Board. Thanks again to our customers and partners for another really fun quarter. Our success is merely a reflection of their success and their enthusiastic support. And I also want to thank many of our investors who are taking the item to attend our events, meet our customers and learn more about our business. Thanks again, over to Dave.

Thanks Godfrey. Good afternoon everyone. Thanks for joining the call. As you can tell by the press release, Q3 was a solid quarter, led by strong delivery from our field organization and our public sector team in particular. Third quarter revenues were $116 million,a 48% increase over Q3 of last year. License revenues grew 41% over Q3 last year, totaling $71.8 million. Once again in Q3, more than 70% of our license bookings came from existing customers in the form of upgrades and expansions. We continued to see about two thirds of our upsells coming from horizontal expansions into new use cases within the enterprise. We added over 500 new customers, recorded 290 orders greater than $100,000 and again, closed with more transactions than in any other prior quarter. Just to clarify, the users trying Splunk in our Cloud Sandbox environment are not included in our total customer count and have not contributed to revenue. Just as we’ve anticipated, the mix of ratable transactions continues to vary substantially quarter-to-quarter, generally following seasonal trends and driven by customer buying behavior, adoption transactions and the consumption of products that are recognized ratably such as Hunk and Cloud. The mix in Q3 was approximately 40%, including the contribution from these types of transactions. Of course, this was significantly impacted by the seven-figure Cloud transaction that Godfrey described earlier. Excluding that order, the Q3 mix would have been 34% ratable. Given that Q4 is traditionally our highest volume and highest velocity bookings quarter, we expect the full-year mix will likely be closer to the high-end of our 25% to 35% range. As we continue to gather more data points on drivers affecting mix, we’ll share them with you and revise our expectation for mix in future periods accordingly. In particular, the early indicators of success from our Cloud offering, which is of course traditional SaaS and therefore ratable suggest that long-term mix could go even higher. It's possible that the contribution from our Cloud business could represent 25% of the total in the medium term. Obviously this will be a significant driving force behind the construct of our revenue and cost model going forward. In Q3, international operations represented approximately 21% of total revenues in line on a year-over-year basis. We’ll continue to make investments in our international business and look forward to continued growth and expansion of Splunk globally. Related to this expansion, we ended the quarter with 280 quota carriers and we’re on track to end the year in the range of 300 to 310 in total. Recall at our analyst meeting last month, I mentioned the evolution of our go-to market strategy and aligning our field organization with continued focus around market groups, industry verticals and global expansion with partners. This evolution will impact how we structure and scale the field organization in the future. We’ll continue to update you as this evolution progresses and what are the appropriate metrics around go-to market investments. Regarding services, education and pro serve represented 8% of revenues in Q3, in the range of prior and expected levels of between 5% and 10%. Remember since we generally recognize revenue on services when they are delivered and billed, services bookings typically do not flow through the balance sheet as deferred revenue. Turning to margins, which are all non-GAAP. Q3 overall gross margin was 89% in line with prior quarters. Operating income was about $3 million, representing a positive margin of approximately 2%, better than our expectations due to higher than forecasted revenues. In addition to your excellent field execution, it’s also important to note the velocity coming from our products group. As Godfrey mentioned, we announced several important product enhancements at .conf and I’m please with our continued investment in this area is translating into more customer success. Q3 non-GAAP income was $2.4 million and EPS was a positive $0.02 per share based on a fully diluted share count of the 126.9 million shares. Cash flow from operations was one $24 million and free cash flow was $20 million positive. And we ended the period with about $960 million in total cash and investments with zero debt. Now looking forward to the rest of the year, we expect total revenues of between $135 and $137 million in Q4. Consistent with prior years, we expect Q4 will be our most profitable quarter of the year with positive non-GAAP operating margin of between 4% and 5%. With our year-to-date performance and our Q4 outlook, we now expect total revenue for the year to range between $438 million and $440 million, up from our prior guidance of $423 million and $428 million in total. We now expect to generate positive non-GAAP operating margin of between 1% and 2% for the full year as we continue our investment in our market groups, product teams and Splunk Cloud offerings. Remember, because we expect to be profitable on a non-GAAP basis in Q4 and the full year, you should use a fully diluted share count for your EPS calculations for these periods. We will continue to run the business cash flow positive and with our overachievement year-to-date, it now looks like operating cash flow will be closer to 21% to 22% of total revenue for the full year. Looking forward a bit further, I thought it would be helpful to give you some insight on how we're thinking about next year, which is fiscal 2016. With current inputs and visibility, we expect total revenues of approximately $575 million next year, the seasonality trend following fiscal 2014 and 2015 patterns. At this level of overall growth, we expect to remain in investment mode as we continue to expand the product portfolio and our field reach globally and we’ll continue to run the business with these investments in mind. As a result, we expect full-year non-GAAP operating margin will be comparable with this year’s performance. In closing, our team continues to execute on our mission to deliver exceptional value to our customers. Q3 was solid and I’m enthusiastic about our outlook for Q4 and fiscal ‘16. Thanks much for your time and interest. With that, let’s open it up for questions.

[Operator Instructions] And our first question comes from Raimo Lenschow from Barclays.

Our next question comes from Brent Thill from UBS. Please go ahead.

Our next question comes from Phil Winslow from Credit Suisse. Please go ahead.

Our next question comes from Ed Maguire of CLSA. Please go ahead.

Our next question comes from Raimo Lenschow from Barclays. Please go ahead.

Our next question comes from Keith Weiss from Morgan Stanley. Please go ahead.

Our next question comes from Kirk Materne from Evercore ISI. Please go ahead.

Our next question comes from Greg Dunham of Goldman Sachs. Please go ahead.

Our next question comes from Brent Bracelin from Pacific Crest. Please go ahead.

Our next question comes from Daniel Ives of FBR Capital Markets. Please go ahead.

Our next question comes from Derrick Wood of Susquehanna. Please go ahead.

We have time for one final question from Aaron Schwartz of Macquarie. Please go ahead.

That concludes our Q&A session. I’d like to turn it back to Ken Tinsley for closing remarks.

Great thanks, Eric. Appreciate your help today, and thank every body for joining us. Hope you have a great night, and a good thanks giving.

Ladies and gentlemen, this does conclude today's conference. Thank you for your attendance, you may now disconnect. Everyone have a great day.