Data analytics software vendor Sumo Logic Inc. sailed past Wall Street’s expectations today, delivering a first-quarter earnings and revenue beat that sent its stock higher in after-hours trading.
The company reported a loss before certain costs such as stock compensation of 13 cents per share, which translated to a $34.8 million net loss overall. Revenue for the period came to $67.86 million, up 25% from the year ago period. Analysts had been modeling a wider loss of 17 cents per share on lower revenue of $66.07 million, so it was another solid beat from the company.
Sumo Logic has now surpassed expectations on earnings and revenue in four successive quarters, and investors nodded their appreciation at its ongoing success. In the extended trading session, the company’s stock rose more than 5%, having already gained just over 2% earlier in the day.
Sumo Logic is a provider of cloud-based data analytics software that enterprises rely on to gain insights into the state of their information technology systems. Its software encompasses areas such as log management, Amazon Web Services monitoring, Microsoft Azure and Google Cloud management, Kubernetes management, plus microservices and cloud security monitoring. The platform also lends itself to business-oriented use cases such as customer analytics, and can aid in mitigating cyberattacks.
Sumo Logic President and Chief Executive Ramin Sayar (pictured) said the company had delivered a strong start to the new fiscal year.
“Escalating security threats are driving a healthy demand environment, and we remain well positioned with a unified platform that delivers both observability and security,” he said. “The go-to-market changes we are making are underway and customers are continuing to recognize the value of our differentiated SaaS analytics platform that ensures their applications are reliable and secure.”
The company also reported that its annual recurring revenue grew 27% from a year ago to $273.3 million.
Holger Mueller of Constellation Research Inc. said he was encouraged to see Sumo Logic’s strong growth, which is driven by its ability to help enterprises operate secure cloud operations. He cited the company’s improved cost management, which will be key in narrowing its overall losses as it goes forward.
Previously, Mueller had raised concerns that Sumo Logic’s expenses were outpacing its growth. However, its overall costs rose by about 20% in the first quarter, lower than that of its revenue growth.
“Importantly, Sumo Logic grew its revenue faster than its costs went up, which is a new development for the company,” Mueller said. “This could be the turning point for Sumo Logic as it moves toward profitability, though the management is still forecasting an overall loss for the rest of the full year. In any case, good cost management is wise, especially with the economic headwinds that are coming up on the horizon.”
For the next quarter, Sumo Logic is targeting a loss of between 15 and 16 cents per share, which is in line with Wall Street’s estimate. In terms of revenue, Sumo Logic said it sees sales of between $71 million and $72 million, just ahead of the $70.47 million consensus.