What happened
Space-based data and analytics company Spire Global (SPIR +31.66%) reported preliminary fourth-quarter earnings last night, sparking an immediate reaction among after-market traders. In after-hours trading, Spire stock jumped as much as 22% in response to news that the company will exceed analyst expectations for $12.9 million in revenue in Q4 -- and keep on beating estimates all year long.
But by 10:30 a.m. ET today, almost all of Spire's gains had evaporated, leaving the stock up only 2%. Why?
Image source: Getty Images.
So what
In last night's preannouncement, Spire reported "top end of guidance range" revenue -- $15.3 million for the quarter, or 111% more than Spire produced in Q4 2020. Full-year revenue is expected to be up 53% year over year at $43.7 million.
Furthermore, Spire added enough customers in 2021 that it says its annual recurring revenue is now at more than $70 million.
Now what
Spire predicts that between this recurring revenue and other, nonrecurring revenue, it is now in a position to generate sales between $85 million and $90 million in fiscal 2022 -- and to end this year with annual recurring revenue coming in at a rate of $100 million to $105 million annually. This implies that 2023 revenue growth will be at least 17% -- or more.
That being said, Spire's going to have a whole lot more nonrecurring revenue in 2023 if it hopes to match the 93% revenue growth it's predicting for this year, or even the 53% growth enjoyed in 2021. Management hasn't clearly explained yet how (or if) it expects to keep growth going next year, at the pace it's set last year and at the pace it hopes to maintain this year.
It's this uncertainty about revenue growth in 2023 (and of course, the total lack of any mention of profits) that is causing investors to rethink their support for Spire stock this morning.
