Why ServiceSource Shares Soared

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 (NASDAQ: SREV  ) have soared by as much as 24% today after the company reported first-quarter earnings.

So what: Revenue in the first quarter totaled $61.1 million, higher than the $60.4 million consensus estimate. The non-GAAP net loss of $1.5 million, or $0.02 per share, was also better than the $0.04-per-share loss that investors were expecting. The company inked four new Renew OnDemand subscription deals during the quarter.

Now what: CEO Mike Smerklo said the new deals give the company strong momentum to start the year. Revenue guidance for the second quarter calls for sales of $64 million to $66 million, which would be an increase of 9% at the midpoint. Adjusted gross margin should be 41% to 43% and get better as ServiceSource progresses through the year. Not everyone was impressed, though, as Northland Securities downgraded the stock from outperform to market perform.

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

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