Sumo Logic’s share price rose more than 11 percent after the company’s third-quarter results exceeded Wall Street’s expectations. The numbers feed a positive outlook for the fourth quarter.
Sumo Logic offers a cloud-based platform for observability and app performance management. The firm recently reported quarterly revenue of $79 million, up 27 percent from last year. The result beat Wall Street’s expectation of $74.2 million. Net loss totalled $26.3 million, down from $30.8 million in the same period last year.
Sumo Logic has exceeded Wall Street’s expectations for six consecutive quarters. Investors initially weren’t so sure of that, as Sumo Logic’s shares declined by more than 7 percent during regular trading hours — before making a dramatic comeback in the hours following the news.
Businesses use Sumo Logic’s cloud-based software to gain insight into the performance of systems. Its products cover cloud security and infrastructure monitoring, providing insights into microservices, Amazon Web Services, Kubernetes, Microsoft Azure and Google Cloud.
“Sumo Logic 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”, Constellation Research analyst Holger Mueller commented.
“That means Sumo Logic still faces a challenge, and the team 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.”
The difficulties were reflected in Sumo Logic’s forecast for the next quarter. The business expects a fourth-quarter loss of eight to nine cents per share and sales between $77 million and $78 million. The prediction is more optimistic than Wall Street’s expectation of a 17-cent loss per share and sales of $75.4 million.