Why Marketo Shares Jumped

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 Marketo (NASDAQ: MKTO  ) rose by as much as 14% during intraday trading, then pulled back to close up around 3% Friday after the marketing software specialist announced better-than-expected quarterly earnings, and mixed forward guidance.

So what: Quarterly revenue rose 65% year over year to $25.5 million, which translated to an adjusted net loss of $0.21 per share. For reference, analysts were looking for a larger adjusted net loss of $0.25 per share on just $23.44 million in sales.

In addition, Marketo provided fourth-quarter guidance for revenue in the range of $26.2 million to $26.7 million, and a non-GAAP net loss per share in the range of $0.25 to $0.27. While the net loss was larger than the $0.23 for which analysts had hoped, revenue was well ahead of expectations for sales of $24.64 million.

Now what: This quarter was particularly strong considering Q3 has historically remained Marketo's softest quarter. However, investors obviously want to see Marketo translating that growth in sales to higher earnings going forward. Until Marketo can prove it has what it takes to keep marching toward sustained profitability, it's hard to blame investors for remaining on the sidelines.

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