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Splunk stock plunges as CEO Doug Merritt steps down

Splunk’s CEO Doug Merritt

Scott Mlyn | CNBC

Software maker Data Analytics shares SplunkAfter the acquisition of the company, they fell as high as 19% saidDoug Merritt, CEO, had decided to step down. Graham Smith, the board chair of Splunk, would take over as interim CEO. He will be effective immediately. Splunk is searching for a permanent chief.

Splunk’s worst stock market move since December was expected to happen again.

Uncertainty is a bigger problem for companies trying to transform themselves from a traditional seller of on-premises software into a cloud-focused company.

After stints as an intern at Splunk, Merritt was appointed senior vice president of Splunk in 2014. CiscoPeopleSoft SAPHe succeeded Godfrey Sullivan in 2015 as Splunk’s CEO. Godfrey Sullivan had previously taken Splunk public in 2012. Smith was a Salesforce former chief financial officers and joined Splunk’s board of directors in 2011.

KeyBanc analysts Michael Turits and KeyBanc clients were able to write that the transition of the CEO is an “additional concern”.

Splunk’s transition to cloud-based software has had an impact on revenue and margins during Merritt’s tenure. Similar changes have occurred at other software firms like Adobe, Autodesk or Microsoft. Splunk reported $605.7 million in quarterly revenue in AugustThe yearly increase in ad revenue by 23% was compared to a year ago. Cloud revenue at $217.4million increased 73%.

Splunk stock has risen about 120% since Merritt became CEO, compared with 125% growth in the S&P 500 index over the same period.

Splunk and enterprise software vendors such as IBM. Customers were reluctant to sign larger contracts and were reluctant to collect receivables.

September OktaSusan St. Leger was hired as Splunk’s President of Worldwide Field Operations.

WATCH: Splunk CEO discusses the data analytics firm’s new initiative focused on government cybersecurity

Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.