Splunk Names New CEO

Mr. Steele is the founding CEO of Proofpoint Inc., an information-security company based in Sunnyvale, Calif., that helps companies mitigate risks in emails, the cloud, social media and the web. Proofpoint was acquired by software investment firm Thoma Bravo last year.

Last month, The Wall Street Journal reported

Cisco Systems Inc.

CSCO 2.80%

made a takeover offer worth more than $20 billion for Splunk.

The hiring of a new CEO could suggest the company doesn’t see an imminent deal in its future.

Splunk Chairman and interim CEO

Graham Smith

said Mr. Steele has a deep understanding of the industry and expertise in driving innovation that will help the company scale its business.

In announcing his plans to step down, then-CEO

Doug Merritt

said the board was focused on finding a leader with a proven record of scaling operations.

Mr. Smith will return to his role as board chair.

Splunk shares rose sharply early in the pandemic as did those of a number of other technology companies with strong growth potential, but have almost fallen in half since then. Splunk’s shares rose 2.2% after-hours on Wednesday.

Splunk also reported a strong fourth-quarter earnings report. Revenue rose 21% from the year earlier to $901.1 million, ahead of analysts’ consensus estimate of $774.6 million, according to FactSet.

Annual recurring revenue, a closely watched metric for companies with subscription revenue, rose 32% to $3.12 billion.

The number of customers with total annual-recurring revenue more than $1 million a year rose to 675, a 32% increase from the year earlier. Meanwhile, the number of customers with cloud annual-recurring revenue greater than $1 million was 317, up 70% year over year.

Splunk said in June that technology-focused private-equity firm Silver Lake was making a $1 billion investment in the company to help support the transformation of the business. Splunk has been shifting from a traditional software-licensing arrangement to a cloud-based subscription model.

Software has been a hot corner for deal making lately, with a number of companies being snapped up by private-equity firms or other industry players. In one of the latest examples,

Citrix Systems Inc.

agreed to be taken private by a pair of private-equity firms in an acquisition valued at $16.5 billion, including debt.

Write to Kimberly Chin at [email protected]