What happened

Shares of government IT contractor The KeyW Holding Corporation (NASDAQ:KEYW) are plummeting today, down 15.4% as of 12:50 p.m. EDT after the government intelligence, cyber, and counterterrorism specialist reported second-quarter earnings (actually, losses) that may have fallen short of expectations.

KeyW reported a $0.23 per-share loss for Q2 versus consensus estimates of a $0.22 loss. On the other hand, KeyW says its "adjusted" loss was only $0.05 per share. Sales, on the other hand, more clearly exceeded expectations, with KeyW reporting revenues of $128.1 million versus a Street estimate of $125.5 million.

Hooded figure in front of a laptop

Image source: Getty Images.

So what

Sales may have beaten estimates, but up barely 3% over last year's Q2, KeyW isn't exactly setting records for sales growth rates. Similarly ho-hum was the earnings result -- better than last year's $0.37 GAAP net loss to be sure, but still a loss.

The company also remains firmly in the red from a free-cash-flow perspective, with FCF actually worsening year over year. At the halfway mark, KeyW has now burnt through roughly $15.5 million over the past six months.

Now what

As for the rest of this year, KeyW says its guidance has not changed. Revenues are still expected to come in between $495 million and $515 million, management is still forecasting an 8.9% to 9.3% "adjusted EBITDA margin," and KeyW still isn't confident enough to give its shareholders any assurance that it can earn a GAAP profit this year.

No wonder investors are selling.

Rich Smith 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.