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Why Cloopen Group Stock Just Popped

By Rich Smith – Aug 11, 2021 at 1:15PM

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Cloopen lost money in Q2, but its sales are still growing briskly.

What happened

Shares of Cloopen Group Holding Limited (RAAS -3.55%), the Beijing-based provider of cloud-based communications, jumped 14.5% through 12:15 p.m. EDT after reporting a "sales beat" but an earnings miss early this morning.

Analysts had forecast that Cloopen would lose $0.02 per share on sales of about $40 million in Q2 2021. In fact, Cloopen's loss came to $0.05 per share, but its sales exceeded $42 million.  

Stock up glowing green arrow climbs on a stock screen

Image source: Getty Images.

So what

Those sales were up 48% year over year, by the way, and "cloud-based contact center solutions" sales more than doubled. And while the company lost money in Q2 -- and more money than Wall Street had bargained for to boot -- the good news is that losses contracted by about 62% in comparison to last year.  

Now what

Looking ahead, Cloopen forecast roughly 44% to 45% year-over-year revenue growth in Q3 2021 -- only slightly less brisk than what the company enjoyed in Q2, and a fact that investors presumably found encouraging today.

Meanwhile, on the political front, Cloopen highlighted its "unwavering devotion to data security through private and hybrid cloud via local deployment [that] helps meet customers' increasingly strict security requirements." Perhaps even more important than the customers, Chinese government regulators have focused on data security as they cracked down on their own tech sector these past several weeks.

Cloopen's expressed devotion to the party line may go a ways toward insulating the company from the consequences of the ongoing government crackdown, and I have to imagine that investors liked hearing that, too.

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.

Stocks Mentioned

Cloopen Group Holding Limited Stock Quote
Cloopen Group Holding Limited
RAAS
$0.77 (-3.55%) $0.03

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