What happened 

Shares of software company Model N (NYSE:MODN) tumbled Wednesday after it reported its fiscal fourth-quarter results. Though it beat Wall Street's consensus estimates for both earnings and revenue, investors appeared unhappy with management's guidance for its first quarter and fiscal year 2021.

The tech company's shares fell by as much as 18.3% in intraday trading and were down by 11.5% as of 1:53 p.m. EST.

So what 

For the period, which ended Sept. 30, Model N's non-GAAP diluted earnings per share of $0.14 easily beat analysts' consensus estimate of $0.09, and were an improvement from earnings of $0.12 in the year-ago quarter.

A red line graph going down.

Image source: Getty Images.

Similarly, the company's fiscal Q4 revenue of $41.5 million beat Wall Street's expectation of $40.4 million, and was an improvement of 13% from the year-ago quarter.

However, looking ahead, management gave guidance ranges for its fiscal first-quarter that did not impress: At the midpoints, the forecasts are for revenues of $40.4 million, and non-GAAP earnings of $0.07 per share. Analysts' consensus estimates were for $41.1 million in sales and earnings of $0.10 per share. 

Additionally, Model N's management forecast that for fiscal 2021, revenue will be $171 million at the midpoint with earnings of 0.31 per share, compared to Wall Street's estimates of $174.1 million in revenues and earnings of $0.43 per share.

Now what

Th share price of this software company, which specializes in revenue management solutions, has been volatile in 2020, and Wednesday's share price drop puts the company's stock down by about 10.4% year to date. Even after better-than-expected quarterly results, the market is pessimistic about Model N's prospects, so investors should expect more volatility from the stock.

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.