What happened
Shares of the cloud-based legal software company CS Disco (LAW 4.00%) plummeted today after the company (which also goes by the name DISCO) reported its second-quarter financial results. While DISCO beat analysts' consensus top- and bottom-line estimates, the company's management slashed its guidance for 2022.
The tech stock plunged 53.6% as of 3:53 p.m. ET.
So what
DISCO reported a non-GAAP loss per share of $0.23 in the quarter, which was worse than the company's loss of $0.16 in the year-ago quarter but ahead of Wall Street's average estimate of a loss of $0.27.
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The company's second-quarter sales increased by 14% to $33.7 million, which also beat analysts' consensus estimate of $33.4 million.
"This quarter marked another excellent period of accomplishments," DISCO co-founder and CEO Kiwi Camara said in a press release. Camara added that the company increased its customer count to 1,255, up 27% from the year-ago quarter.
But investors looked past the company's current growth and instead honed in on DISCO's full-year guidance.
The company had previously said 2022 revenue would be in the range between $149 million to $153 million, but management cut its forecast to the new range of between $132 million to $136 million.
DISCO also cut its earnings guidance, saying that adjusted EBITDA will be a loss of between $60 million to $56 million, which is worse than the company's previous range of a loss of between $51.5 million to $43.5 million.
Now what
Technology investors are being extra cautious right now as they try to assess whether a company will be able to handle a potential economic slowdown -- and they clearly don't have much faith in DISCO right now.
With the company cutting both its top- and bottom-line guidance for the full year, many DISCO shareholders don't think the company has what it takes to weather potential economic turbulence and sold their shares as a result.
