Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Why Ellie Mae Shares Popped

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 Ellie Mae (NYSE: ELLI  ) were up as much as 15% today after the mortgage-software provider posted strong third-quarter guidance in its earnings report.

So what: The software-maker said revenue increased 45% in the quarter, up to $34.3 million, in line with estimates, while adjusted earnings per share came in at $0.29, also matching expectations. CEO Sig Anderman noted the growth in "continued demand for SaaS solutions" as the company saw strong increases in the number Encompass360 customers, its end-to-end mortgage software. For the current quarter, management expects revenue of $34-$34.5 million, ahead of estimates of $33.75 million, and sees adjusted EPS of $0.29-$0.30, better than the $0.28 the experts forecast.

Now what: Despite the strong quarter and guidance, there are some concerns here. Revenue grew much faster than the bottom line as the cost of revenues and general and administrative expenses both grew by over 60% in the quarter. Shareholders should hope to see those cost increases in line with sales or lower in future quarters. Also, Ellie Mae pointed out that 50% of its revenue is sensitive to changes in mortgage volumes, and it expects a 13% decrease in new home loans this year. With interest rates on the rise, the housing market could cool even more. That could be bad news for Ellie Mae.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2576423, ~/Articles/ArticleHandler.aspx, 9/27/2016 1:54:20 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,224.71 129.88 0.72%
S&P 500 2,159.81 13.71 0.64%
NASD 5,300.74 43.25 0.82%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 1:39 PM
ELLI $101.75 Up +3.03 +3.07%
Ellie Mae CAPS Rating: ****