What: Shares of security and storage company Barracuda Networks (NYSE:CUDA) plummeted on Friday following a disappointing earnings report and a slew of analyst downgrades. At noon Friday, the stock was down about 33%.

So what: Barracuda reported third-quarter revenue of $80.1 million, up 14% year over year but just shy of the average analyst estimate. Non-GAAP EPS came in at $0.07, a penny short of analyst expectations. The number of total active subscribers rose by 15% to 269,000.

While the headline numbers didn't miss estimates by much, gross billings declined by 2.7% year over year to $89 million. Billings growth is often used as a proxy for future revenue growth, so a decline is about as disastrous as it gets for what's supposed to be a fast-growing company.

CEO BJ Jenkins pointed to a faster-than-expected shift to the cloud to explain the company's results. "We delivered third quarter revenue and earnings consistent with our guidance; however, billings came in below our expectations," Jenkins said. "While we see various dynamics impacting billings in each of our markets, the shift from traditional and solely on-premises IT solution deployments to hybrid, public cloud and managed service solutions is accelerating faster than we expected and is becoming pervasive across more of our markets."

In addition to reporting shrinking billings, Barracuda's guidance for the fourth quarter missed the mark. The company expects revenue between $80 million and $82 million, below the $84.7 million analysts were expecting.

Now what: Barracuda's weak quarter and guidance prompted Summit Research, JMP Securities, Pacific Crest, BTIG Research, Morgan Stanley, and William Blair to cut their respective ratings on the stock. With Barracuda unprofitable for most of its history, revenue growth has been the main driver of the stock price. With billings contracting, it should be no surprise that the stock has tumbled.

Jenkins is hopeful that the company will navigate the cloud transition successfully. "We have seen encouraging early results and believe we have a leadership and differentiated position in cloud security deployments in the product categories where we invested, such as our next generation firewall and web application firewall products, and have introduced a number of virtual appliances and subscription-only solutions with cloud delivered and pay-as-you-go deployment options." Jenkins said. "We are adjusting and accelerating our investments in our cloud-based solutions in order to focus more of our resources on products areas that we believe will provide stronger long-term growth."

Given the steep decline in the stock price on Friday, investors don't seem so sure.