Sumo Logic reports strong revenue growth, but weak profit guidance disappoints
Data analytics software firm Sumo Logic Inc. beat expectations today for its fiscal fourth-quarter financial results, but its stock fell slightly in extended trading on warning of a lower-than-expected profit.
The company reported a net loss of $33.5 million for the quarter, or 13 cents per share. Revenue for the period rose 24% from a year ago, to $67 million.
The performance beat expectations. Wall Street analysts had forecast the company to report a wider loss of 17 cents per share on lower sales of $64.31 million.
Sumo Logic also posted its fiscal 2022 results, saying its total revenue for the year rose 19% from fiscal 2021, to $242.1 million.
The company sells cloud-based data analytics software that’s used by enterprises to gather insights about the state of their information technology infrastructure. It can also help companies identify cybersecurity threats.
Specific services offered by the company include log management, Amazon Web Services monitoring, Microsoft Azure and Google Cloud management, Kubernetes management and microservices and cloud security monitoring. The platform also lends itself to business-oriented use cases such as customer analytics.
Sumo Logic said its platform did a lot more work over the last year than it had ever done before. Throughout 2022 it ingested an average of 790 terabytes of data and scanned 1.5 exabytes of data each day. It also scanned around 3 quadrillion events per day, on average, in January 2022. All three numbers are more than double what they were a year ago, the company said.
Sumo Logic President and Chief Executive Ramin Sayar (pictured) said digital transformation and cloud migration remain big priorities for most of the company’s customer base, helping to drive its growth. “Our highly differentiated SaaS analytics platform positions us well for continued revenue growth in the upcoming year,” he promised.
Analyst Holger Mueller of Constellation Research Inc. said revenue growth of more than 20% was good for most any tech company. However, he said Sumo Logic needs to work on balancing its books a bit better if it’s to become profitable anytime soon.
“Sumo Logic cannot keep growing its revenue by just 20% if its costs continue to outpace that growth, like they did in the last full year,” Mueller said, noting that while its revenue increased by $40 million in fiscal 2022, it added $43 million to its costs over the same period. “So Sumo Logic must either its revenue growth to 30% or more in the next year, or else it has to get its costs under control. The coming year will be a big one for Sumo Logic.”
It remains to be seen if Sumo Logic can grow as fast as it needs to. For the first quarter, the company offered a forecast of a 17-cent-per-share loss on revenue of $65.5 million to $66.5 million. Wall Street was hoping for a lower loss of 12 cents per share on sales of $65.9 million.
For the full year, Sumo Logic sees a loss of between 66 and 68 cents and a share on sales of $288 million to $292 million. The analyst’s consensus is for a 49-cent-per-share loss on revenue of $248.8 million.
With the lower forecast, Sumo Logic’s stock dropped almost 3% in after-hours trading, having stayed flat during the regular session.
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