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Barracuda Networks CUDA, a security and storage company, saw its stock plunging over 34% in afternoon trading Friday after disappointing Q3 earnings were reported.
The company reported revenue of $80.1 million, a figure that is up 14% on a year-over-year basis but fell short of average analyst estimates. Non-GAAP earnings per share (EPS) of $0.07 was reported, a number that again missed estimates; analysts were expecting $0.08 per share.
While these numbers were just shy of estimates, the real disappointment comes in gross billings numbers. Year-over-year, gross billings decreased by 2.7% to $89 million. Since billings growth is seen as a way to measure future revenue growth, a decline is a huge setback for a the company.
“We delivered third quarter revenue and earnings consistent with our guidance; however, billings came in below our expectations,” CEO BJ Jenkins said. “While we see various dynamics impacting billings in each of our markets, the shift from traditional and solely on-premises IT solution deployments to hybrid, public cloud and managed service solutions is accelerating faster than we expected and is becoming pervasive across more of our markets.”
As a result, Summit Research issued a report downgrading Barracuda Networks. The firm rates CUDA at a “Hold” and also lowered the price target form $32 to $15.
Summit analyst Srini Nandury wrote that “While Barracuda’s execution issues were likely fixed (the two tier model is now working, new leadership in EMEA & APAC, etc.), for us now the bigger concern is customers moving to the public cloud. We believe this is the greatest threat to Barracuda given that there are many applications that are natively provided by public cloud providers […] Barracuda will need to prove to the investor community that it can execute and deliver solid growth.”
On a brighter note, Barracuda saw their total number of active subscribers rise by 15% to 269,000.
As of 3:36 PM EST, CUDA stock sits at $10.76 per share. It currently sits at a Zacks Rank #2 (Buy), but that could possibly change following the events that happened today.
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BARRACUDA NTWRK (CUDA): Free Stock Analysis Report
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