Shares of Sumo Logic Inc., which sells an analytics-based platform for application performance management and observability, rose more than 11% in extended trading today after beating Wall Street’s expectations with its third-quarter results. and offering an upbeat forecast for the fourth quarter and full year.

The company reported a loss before certain costs such as stock compensation of four cents per share, ahead of the analyst’s consensus of an 11-cent loss. Revenue for the period came to $79 million, up 27% from a year earlier and ahead of Wall Street’s target of $74.2 million. All told, Sumo Logic delivered a net loss of $26.3 million, down from a $30.8 million loss one year earlier.

The results mean that Sumo Logic has now beaten Wall Street’s expectations for the sixth successive quarter. Investors were apparently not very confident of that, however, as Sumo Logic’s stock fell more than 7% during the regular trading session, only to rebound strongly in the hours after the report.

Sumo Logic is a provider of cloud-based data analytics software that enterprises use 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 will continue to emphasize efficient growth as it drives towards future cash flow break even and profitability. “Our unified cloud-native platform for reliability and security continues to resonate with our customers and industry analysts as more customers are seeking to provide best-in-class digital experiences to their end users,” he added.

Constellation Research Inc. analyst Holger Mueller said one of the chief factors driving Sumo Logic’s growth is that software is rapidly eating the enterprise, becoming the lifeblood of modern organizations. As such, they need a way to observe, manage and run their software reliably, he said.

“Sumo Logic is one such company that can provide these capabilities and so not surprisingly it is growing well,” Mueller said. “It managed to become more profitable in the last quarter on a year-over-year basis, which is good, but it’s worth noting that for the nine months of the year to date, Sumo Logic’s bottom line is almost identical to where it was last year. So that means Sumo Logic still faces a challenge, and the team around Ramin Sayar will either have to outgrow its cost base, cut costs somehow, or at least better manage the expectations of investors and pursue a longer-term path to profitability.”

Those challenges were reflected in Sumo Logic’s guidance for the next quarter and full year. The company said it’s expecting a loss of between eight and nine cents per share in the fourth quarter, with revenue in a range of $77 million to $78 million. The forecast came in ahead of Wall Street’s guidance for a 17-cent-per-share loss on sales of $75.4 million. For the full year, Sumo Logic is targeting a loss of 54 to 56 per share on revenue of $289 million to $293 million. Wall Street is looking for a full-year loss of 61 cents per share on revenue of $290.4 million.

“With its lower guidance for the fourth quarter, it looks like Sumo Logic is facing some short-term headwinds,” Mueller added. “But with any luck it may be able to break the $300 million in annual revenue barrier for the first time at the end of the full year.”

Photo: SiliconANGLE