Description of the Business and Significant Accounting Policies	6 Months Ended
Jul. 31, 2023
Accounting Policies [Abstract]
Description of the Business and Significant Accounting Policies	Description of the Business and Significant Accounting Policies Business Splunk Inc. (“we,” “us,” “our”) helps customers build a safer and more resilient digital world. We deliver innovative solutions that enable organizations to harness the value of their data to help keep their digital systems secure, available, and performant. Our solutions for security and observability empower Security Operations, IT Operations, and Development Operations teams to maintain resilient systems by monitoring and securing them more quickly and efficiently. We also believe our offerings empower operational transformation, helping customers move from reactive, non-scalable and ineffective approaches to proactive, automated, and machine learning-assisted processes that drive better outcomes even as the scale and complexity of their technology continue to grow. Fiscal Year Our fiscal year ends on January 31. References to fiscal 2024, for example, refer to the fiscal year ending January 31, 2024. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Annual Report on Form 10-K for the fiscal year ended January 31, 2023, filed with the SEC on March 23, 2023. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all normal recurring adjustments necessary to state fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods but are not necessarily indicative of the results of operations to be anticipated for the full fiscal 2024. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, the reported amounts of revenues and expenses and the accompanying notes. For example, we make estimates with respect to the stand-alone selling price for each performance obligation included in customer contracts with multiple performance obligations, uncollectible accounts receivable, the assessment of the useful life and recoverability of long-lived assets (property and equipment, goodwill and identified intangibles), the period of benefit for deferred commissions, stock-based compensation expense, the fair value of assets acquired and liabilities assumed in business combinations, income taxes, the discount rate used for operating leases and contingencies. Our actual results could differ from those estimates. There have been no significant changes to our significant accounting policies and estimates described in our Annual Report on Form 10-K for the year ended January 31, 2023, filed with the SEC on March 23, 2023. Segments We operate our business as one operating segment: the development, marketing, and sale of cloud services and licensed software solutions that enable our customers to gain real-time business insights by harnessing the value of their data. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance and allocating resources. Principles of Consolidation The accompanying unaudited interim condensed consolidated financial statements include the accounts of Splunk Inc. and its direct and indirect wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. Foreign Currency The functional currency of our foreign subsidiaries is the U.S. Dollar. Foreign currency transaction gains and losses are included in “Other income (expense), net” on our condensed consolidated statements of operations and were not material during the three and six months ended July 31, 2023 and 2022. Revenue Recognition Our revenue consists of cloud service fees, license and related maintenance fees, and other service fees. Revenue is recognized when control of the promised subscriptions, products and services are transferred to customers, in an amount that reflects the consideration we expect to receive in exchange for those services and products. Cloud services are provided on a subscription basis and give our customers access to our cloud solutions and any related customer support. Licenses for on-premises software (“licenses”) are typically term licenses and provide the customer with a right to use the software. When a term license is purchased, maintenance is bundled with the license for the term of the license period. Other services include training and professional services that are not integral to the functionality of the cloud services or licenses. Our contracts with customers often contain multiple performance obligations, which may include a combination of cloud services, licenses, related maintenance and support services, professional services and training. The identification of performance obligations and the determination of whether they are distinct and should be accounted for separately may require significant judgment. For contracts with multiple performance obligations, the transaction price is allocated to each performance obligation using the relative stand-alone selling price (“SSP”), and revenue is recognized when the performance obligations are satisfied. We determine the SSP based on an observable standalone selling price when it is available as well as other factors, including the price charged to customers, our discounting practices, and our overall pricing objectives. In situations where pricing is highly variable, we estimate the SSP using the residual approach. For sales of our cloud services, we recognize revenue ratably over customers’ contract terms, beginning when access is provided to the customer, consistent with the pattern of transfer of benefits for those services. We recognize license revenue upon transfer of control of the licenses, which occurs at delivery of the license key to customers, or when the license term commences, if later. We recognize maintenance and support revenue ratably over the maintenance and support term, consistent with the pattern of benefit to the customer for those services. Professional services and training are either provided on a time and materials basis or over a contract term, and we recognize the associated revenue as those services are delivered. When our contracts include customer acceptance provisions, we recognize revenue no earlier than upon customer acceptance. Our policy is to record revenues net of any applicable sales, use, goods and services, value added, and excise taxes. Our multi-year cloud services and license contracts are typically invoiced annually. A current receivable for multi-year cloud services is generally recorded upon invoicing. A receivable for multi-year license contracts is recorded upon delivery, whether or not invoiced, to the extent we have an unconditional right to receive payment in the future related to those licenses. The non-current portion of these receivables, primarily consisting of unbilled receivables from multi-year license contracts, is included in “Accounts receivable, non-current” on our interim condensed consolidated balance sheets. Our standard payment terms generally require payment within 45 days. Actual payment terms and conditions vary. In instances where the timing of revenue recognition differs from the timing of payment, we have determined our contracts do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing. Deferred revenue is recorded when cash payments are received or due in advance of satisfying our performance obligations to customers. It is comprised of balances related to cloud services, maintenance, training and professional services, as well as licenses that were delivered prior to the license term commencing. Recently Adopted Accounting Standards We did not adopt any new accounting standards during the six months ended July 31, 2023. Recently Issued Accounting Pronouncements There have been no accounting pronouncements or changes in accounting pronouncements that are significant or potentially significant to the Company.

Splunk Inc. (“we,” “us,” “our”) helps customers build a safer and more resilient digital world. We deliver innovative solutions that enable organizations to harness the value of their data to help keep their digital systems secure, available, and performant. Our solutions for security and observability empower Security Operations, IT Operations, and Development Operations teams to maintain resilient systems by monitoring and securing them more quickly and efficiently. We also believe our offerings empower operational transformation, helping customers move from reactive, non-scalable and ineffective approaches to proactive, automated, and machine learning-assisted processes that drive better outcomes even as the scale and complexity of their technology continue to grow.

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Annual Report on Form 10-K for the fiscal year ended January 31, 2023, filed with the SEC on March 23, 2023.

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all normal recurring adjustments necessary to state fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods but are not necessarily indicative of the results of operations to be anticipated for the full fiscal 2024.

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, the reported amounts of revenues and expenses and the accompanying notes. For example, we make estimates with respect to the stand-alone selling price for each performance obligation included in customer contracts with multiple performance obligations, uncollectible accounts receivable, the assessment of the useful life and recoverability of long-lived assets (property and equipment, goodwill and identified intangibles), the period of benefit for deferred commissions, stock-based compensation expense, the fair value of assets acquired and liabilities assumed in business combinations, income taxes, the discount rate used for operating leases and contingencies. Our actual results could differ from those estimates.

There have been no significant changes to our significant accounting policies and estimates described in our Annual Report on Form 10-K for the year ended January 31, 2023, filed with the SEC on March 23, 2023.

We operate our business as one operating segment: the development, marketing, and sale of cloud services and licensed software solutions that enable our customers to gain real-time business insights by harnessing the value of their data. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance and allocating resources.

The accompanying unaudited interim condensed consolidated financial statements include the accounts of Splunk Inc. and its direct and indirect wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

The functional currency of our foreign subsidiaries is the U.S. Dollar. Foreign currency transaction gains and losses are included in “Other income (expense), net” on our condensed consolidated statements of operations and were not material during the three and six months ended July 31, 2023 and 2022.

Our revenue consists of cloud service fees, license and related maintenance fees, and other service fees. Revenue is recognized when control of the promised subscriptions, products and services are transferred to customers, in an amount that reflects the consideration we expect to receive in exchange for those services and products.

Cloud services are provided on a subscription basis and give our customers access to our cloud solutions and any related customer support. Licenses for on-premises software (“licenses”) are typically term licenses and provide the customer with a right to use the software. When a term license is purchased, maintenance is bundled with the license for the term of the license period. Other services include training and professional services that are not integral to the functionality of the cloud services or licenses.

Our contracts with customers often contain multiple performance obligations, which may include a combination of cloud services, licenses, related maintenance and support services, professional services and training.

The identification of performance obligations and the determination of whether they are distinct and should be accounted for separately may require significant judgment. For contracts with multiple performance obligations, the transaction price is allocated to each performance obligation using the relative stand-alone selling price (“SSP”), and revenue is recognized when the performance obligations are satisfied. We determine the SSP based on an observable standalone selling price when it is available as well as other factors, including the price charged to customers, our discounting practices, and our overall pricing objectives. In situations where pricing is highly variable, we estimate the SSP using the residual approach.

For sales of our cloud services, we recognize revenue ratably over customers’ contract terms, beginning when access is provided to the customer, consistent with the pattern of transfer of benefits for those services. We recognize license revenue upon transfer of control of the licenses, which occurs at delivery of the license key to customers, or when the license term commences, if later. We recognize maintenance and support revenue ratably over the maintenance and support term, consistent with the pattern of benefit to the customer for those services. Professional services and training are either provided on a time and materials basis or over a contract term, and we recognize the associated revenue as those services are delivered. When our contracts include customer acceptance provisions, we recognize revenue no earlier than upon customer acceptance. Our policy is to record revenues net of any applicable sales, use, goods and services, value added, and excise taxes.

Our multi-year cloud services and license contracts are typically invoiced annually. A current receivable for multi-year cloud services is generally recorded upon invoicing. A receivable for multi-year license contracts is recorded upon delivery, whether or not invoiced, to the extent we have an unconditional right to receive payment in the future related to those licenses. The non-current portion of these receivables, primarily consisting of unbilled receivables from multi-year license contracts, is included in “Accounts receivable, non-current” on our interim condensed consolidated balance sheets.

Our standard payment terms generally require payment within 45 days. Actual payment terms and conditions vary. In instances where the timing of revenue recognition differs from the timing of payment, we have determined our contracts do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing.

Deferred revenue is recorded when cash payments are received or due in advance of satisfying our performance obligations to customers. It is comprised of balances related to cloud services, maintenance, training and professional services, as well as licenses that were delivered prior to the license term commencing.