Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of IntraLinks Holdings (NYSE:IL), a software-as-a-service provider, slumped on Thursday after the company came up short of analyst expectations when it reported its fourth-quarter earnings. As of 3:30 p.m., the stock was down around 17%.
So what: IntraLinks reported revenue of $67.4 million, up 7.6% year-over-year and slightly higher than what analysts were expecting. The company's earnings came up short, however, with non-GAAP EPS of $0.02 a penny below analyst estimates.
IntraLinks was unprofitable on a GAAP basis, reporting a net loss of $0.20 per share, compared to a net loss of $0.07 per share during the fourth quarter of 2013. For the full year, IntraLinks reported $255.8 million in revenue, a GAAP net loss of $0.47 per share, and $0.06 in non-GAAP EPS.
The company guided for revenue growth between 4% and 6% in 2015, with both GAAP and non-GAAP net income expected to be roughly flat year-over-year.
Now what: IntraLinks' growth is slowing and its earnings are stagnating. It currently trades at about 175 times the midpoint of its guidance for 2015 non-GAAP earnings, and 2.3 times sales. With this lofty valuation, single-digit revenue growth, and persistent GAAP losses, it's not surprising that the market punished the stock.
Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.