What happened
Shares of Tufin Software Technologies (TUFN +0.00%) fell sharply on Thursday, declining about 24% as of 11:20 a.m. EST.
The stock's decline follows the network security automation company's preliminary fourth-quarter and 2019 results. Worse-than-expected fourth-quarter revenue and a non-GAAP (adjusted) operating loss (when management was guiding for an adjusted operating profit) are likely the main reasons for the market’s negative response to the update.
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So what
Tufin said it now expects fourth-quarter revenue between $29.5 million and $30.1 million, significantly lower than management's previous forecast for revenue between $34 million and $38 million. The company also revised its forecast for non-GAAP operating profit lower, from an expected range between breakeven and $3 million to a loss of $1.1 million to $2.6 million.
Management said it was "disappointed" with the performance.
"The primary reason for our revenue shortfall was our inability to close a number of transactions, primarily in North America, that we anticipated would close but did not close by the end of the quarter," said CEO Ruvi Kitov in the tech company's fourth-quarter update.
Now what
It's important to note that Tufin believes that most of the deals it failed to close during the quarter "were not lost to competitors and have moved into our pipeline for 2020," said Kitov. The company is currently working to close these deals, he added.
Furthermore, Kitov said the company's pipeline going into the year "is very healthy relative to this time in 2019."
