With better cost management, Sumo Logic posts a new pace of earnings and its stock rises

Data analysis software provider Sumo Logic Inc. beat Wall Street expectations today, delivering first-quarter earnings and revenue that lifted its stock in after-hours trading.

The company reported a loss before certain costs such as stock compensation of 13 cents per share, resulting in an overall net loss of $34.8 million. Revenue for the period was $67.86 million, up 25% from the period a year ago. Analysts had modeled a wider loss of 17 cents per share on a revenue drop of $66.07 million, so it was another strong beat from the company.

Sumo Logic has now exceeded earnings and revenue expectations in four successive quarters, and investors have hailed its continued success. During the extended trading session, shares of the company rose more than 5%, having already gained just over 2% earlier in the day.

Sumo Logic is a provider of cloud-based data analytics software that enterprises rely on to gain insight into the status 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, as well as microservices and cloud security monitoring. The platform also lends itself to business-focused use cases, such as customer analytics, and can help mitigate cyberattacks.

Sumo Logic Chairman and CEO Ramin Sayar (pictured) said the company got off to a good start in the new fiscal year.

“Escalating security threats are generating a healthy demand environment, and we remain well positioned with a unified platform that delivers both observability and security,” he said. “The go-to-market changes we are making are underway, and customers continue to recognize the value of our differentiated SaaS analytics platform that ensures their applications are reliable and secure.”

The company also said its annual recurring revenue increased 27% from a year ago to $273.3 million.

Holger Mueller of Constellation Research Inc. said he was encouraged to see Sumo Logic’s strong growth, which is being driven by its ability to help enterprises leverage secure cloud operations. He cited improving the company’s cost management, which will be key to reducing its overall losses going forward.

Previously, Mueller raised concerns that Sumo Logic’s spending was outpacing its growth. However, its overall costs rose about 20% in the first quarter, lower than its revenue growth.

“It’s important to note that Sumo Logic grew its revenue faster than its costs grew, which is a new development for the company,” Mueller said. “This could be the turning point for Sumo Logic as it heads towards profitability, even though management still expects an overall loss for the rest of the year. In any case, good cost management makes sense, especially with economic headwinds looming on the horizon.

For the next quarter, Sumo Logic is targeting a loss of between 15 and 16 cents per share, which is in line with Wall Street’s estimate. In terms of revenue, Sumo Logic said it expects sales to be between $71 million and $72 million, just ahead of the consensus of $70.47 million.

Photo: SiliconANGLE

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