Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why ServiceSource International Is Imploding Today

By Brian Feroldi - Oct 19, 2018 at 10:24AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares tumble after management slashes guidance. Here's what investors need to know.

What happened

Shares of ServiceSource ( SREV -2.75% ), a provider of outsourced inside sales and customer service solutions, are being obliterated today. The stock is down 46% as of 11:07 a.m. EDT on Friday after the company shared preliminary third-quarter results and revised its full-year guidance.

So what

Here's an overview of the updated guidance:

  • Third-quarter revenue is expected to be about $57 million. That's below its prior outlook for revenue of $60 million to $61 million. It's also below Wall Street's projection of $60.5 million.
  • Full-year revenue is expected to land between $238 million and $240 million. For context, market watchers were expecting $248 million in revenue.
Man with head against wall in conference room.

Image source: Getty Images.

Here's the explanation that CEO Christopher Carrington shared with investors on the disappointing numbers:

While our forecasts for new logo ramps and install base growth were generally in line across our portfolio, as we closed the quarter we experienced unexpected churn and softer end-user demand at several clients. The impact of these factors offsets the positive progression we experienced across the remainder of our business and alters our view for the balance of the year.

In a separate release, ServiceSource also stated that it has hired Richard Walker, a member of the company's board, to take over the role of CFO starting in November.

Traders are responding to the weakness by taking the share price to the woodshed.

Now what

CEO Carrington did his best to tell the markets that the company is taking action to address its weaknesses:

We are implementing specific actions in response to these challenges and other catalysts give us reason for sustained optimism. In recent months we have attracted three new executive leaders to further advance the Company, we have signed 12 new logos year-to-date, client net promoter scores continue to improve, and we have a strong balance sheet and liquidity profile.

Management also stated that the company will provide additional details on its turnaround plan during its earnings call on Nov. 7. Bulls and bears alike will want to tune in to learn what's next for this beaten-down business.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

ServiceSource International, Inc. Stock Quote
ServiceSource International, Inc.
SREV
$1.06 (-2.75%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
656%
 
S&P 500 Returns
144%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/02/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.