What happened
Shares of Avaya Holdings (AVYA), a cloud communications company, were tumbling this morning after the company reported worse-than-expected second-quarter results.
The tech stock had fallen by 15.7% as of 11:16 a.m. ET.
So what
Avaya reported second-quarter non-GAAP (adjusted) earnings of $0.53 per share, which was down from $0.74 in the year-ago quarter and also below Wall Street's consensus estimate of $0.61 per share.
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The company's revenue of $716 million in the quarter was down about 3% from the year-ago quarter and was far below analysts' average estimate of $737.9 million.
Avaya CEO Jim Chirico tried to highlight some of the good news for the company, including that it's on track to hit annual recurring revenue of $1 billion by the end of 2022 for its OneCloud product.
"We are successfully repositioning the company from our historic one-time revenue model to a recurring one, in fact 75% of our new bookings were Avaya OneCloud," Chirico said.
Now what
But investors weren't happy with management's guidance either. The company expected non-GAAP earnings for the full year to be between $2.09 to $2.25, but that was below Wall Street's expectation of $2.80 for the full year. And Avaya's full-year revenue outlook of between $2.81 billion and $2.85 billion was below analysts' average estimate of $3 billion.
Investors have grown increasingly concerned that high-growth technology stocks are riskier investments right now, as inflation hits a 40-year high. And as the Federal Reserve raises rates to try to get it under control, it's likely that investor fears of a potential economic slowdown could cause more share price dips in the near term.
