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Sumo Logic Reports Strong Revenue Growth, But Low Earnings Forecast Disappoints

Data analysis software company Sumo Logic Inc. beat expectations today for its fiscal fourth-quarter financial results, but its stock fell slightly in extended trading after 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 increased 24% from a year ago to $67 million.

The performance exceeded expectations. Wall Street analysts had expected the company to report a bigger loss of 17 cents per share on sales down $64.31 million.

Sumo Logic also released its results for fiscal 2022, indicating that its total revenue for the year increased 19% from fiscal 2021 to $242.1 million.

The company sells cloud-based data analytics software that is used by enterprises to gather information about the state of their IT infrastructure. It can also help businesses identify cybersecurity threats.

Specific services offered by the company include log management, Amazon Web Services monitoring, Microsoft Azure and Google Cloud management, Kubernetes and microservices management, and cloud security monitoring. The platform also lends itself to business-oriented use cases such as customer analytics.

Sumo Logic said its platform has done a lot more work in the past year than it ever has before. Throughout 2022, it ingested an average of 790 terabytes of data and analyzed 1.5 exabytes of data each day. It also analyzed about 3 quadrillion events per day, on average, in January 2022. The three figures are more than double what they were a year ago, the company said.

Sumo Logic President and CEO Ramin Sayar (pictured) said digital transformation and cloud migration remain high priorities for most of the company’s customers, helping to drive its growth. “Our highly differentiated SaaS analytics platform positions us well for continued revenue growth in the year ahead,” he promised.

Constellation Research Inc. analyst Holger Mueller said revenue growth of more than 20% is good for most tech companies. However, he said Sumo Logic needs to try to balance its books a bit better if it is to become profitable anytime soon.

“Sumo Logic cannot continue to grow its revenue by just 20% if its costs continue to outpace that growth, as they have for the past full year,” Mueller said, noting that while its revenue grew from $40 million in fiscal 2022, it added $43. million to its costs over the same period. “So Sumo Logic either needs to grow revenue by 30% or more next year or get its costs under control. The coming year will be a big year 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 announced a loss forecast of 17 cents per share 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. Analyst consensus is for a loss of 49 cents per share on revenue of $248.8 million.

With the lower forecast, Sumo Logic’s stock fell nearly 3% in after-hours trading, after holding steady in the regular session.

Photo: SiliconANGLE

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