What happened

Shares of software-as-a-service education and assessment platform company Instructure (NYSE:INST) took a big hit Tuesday, falling as much as 21.8% and down 16.3% at the time of this writing.

The stock's decline comes after the company's second-quarter earnings release on Monday. Though Instructure's revenue of $50.1 million and non-GAAP loss per share of $0.24 were better than expected, its lower-than-expected guidance for the third quarter could have worried some investors. In addition, a lowered rating from an analyst is likely weighing on shares.

A sketch on a chalkboard of a chart showing a stock price falling

Image source: Getty Images.

So what

Instructure's third-quarter financial results were slightly above consensus estimates for revenue and non-GAAP EPS of $49.5 million and a loss of $0.26, respectively. But Instructure's guidance for third-quarter revenue between $53.6 million and $54.2 million and a non-GAAP loss per share between a loss of $0.25 and $0.23 was below a consensus forecast for third-quarter revenue of $54.5 million and a non-GAAP loss per share of $0.22.

Another concern on Tuesday could be Oppenheimer analyst Brian Schwartz's decision to downgrade Instructure stock from outperform to perform, citing "a lack of near-term catalysts, and uncertainty on the medium-term growth and profits profile," said TheFly about the analyst's downgraded rating.

Pointing to the company's 30% year-over-year revenue growth during the quarter and its ability to surpass 4,000 customers, Instructure CEO Josh Coates said the quarter was "solid."

Now what

Notably, though Insructure's guidance for its third quarter was weaker than expected, management did raise its outlook for the full year. It now expects 2018 revenue between $205.1 million and $209.5 million and a non-GAAP loss per share between, $0.93 and $0.87. This compares to previous guidance for 2018 revenue between $204.5 million and $209.5 million and a non-GAAP loss per share between $0.94 and $0.88.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.