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Why ServiceSource International Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of ServiceSource International (Nasdaq: SREV  ) plunged today by as much as 39% after the company reported  earnings and weak guidance rattled investors.

So what: Third-quarter sales were $59.1 million, an 18% increase over last year. Non-GAAP net income was $1.9 million, or $0.02 per share. That bottom-line result was mildly worse than investors had hoped . CFO David Oppenheimer said the company had near-term challenges in converting ACV to revenue.

Now what: The fourth-quarter outlook was particularly weak, with revenue expected to be between $62 million and $64 million. That's far short of the $72 million in revenue that the Street thought was coming. The results triggered a handful of analyst downgrades, including from Morgan Stanley, CLSA, and Deutsche Bank. ServiceSource's near-term execution looks challenging.

Interested in more info on ServiceSource International? Add it to your watchlist by clicking here.


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