What happened
Shares of Zuora (ZUO +0.00%), an online monetization platform company, were falling hard this morning after the company reported its results for the third quarter of its fiscal 2023, ended Oct. 31.
While the company beat analysts' top- and bottom-line consensus estimate in the quarter, it issued weaker-than-expected fourth-quarter guidance and said that it was laying off 11% of its staff.
As a result, the software-as-a-service stock plunged by 14.2% as of 10:41 a.m. ET.
So what
Zuora reported a non-GAAP (adjusted) loss per share of $0.02 in the quarter, which was flat on a year-over-year basis but was better than Wall Street's average estimate of a loss of $0.06 per share.
NYSE: ZUO
Key Data Points
Additionally, the company's sales increased 13% in the quarter to $101.1 million and beat analysts' consensus estimate of $100.2 million for the quarter.
"We delivered third quarter results at the high end of guidance as companies across industries continue to lean into recurring revenue models," Zuora's founder and CEO Tien Tzuo said in a press release.
He also added that the company is making adjustments to its business to deliver "meaningful profitability" improvement in fiscal 2024.
But investors ignored the company's third-quarter results and instead focused on Zuora's fourth-quarter guidance. Management expects an adjusted loss of between $0.07 and $0.06 on revenue of $100.5 million, at the midpoint of guidance.
That disappointed investors, likely because the average analysts' estimate is for a loss of just $0.03 on revenue of $103.1 million.
Making matters worse for the company was the fact that Zuora's CFO Todd McElhatton said in the press release that the "macroeconomic dynamic" is causing the company to cut 11% of its workforce.
Now what
Tech investors are especially focused on a company's bottom line right now so it's not surprising to see investors reacting negatively to fourth-quarter earnings guidance that falls below Wall Street's expectations.
With a fourth-quarter outlook that was worse than expected and job cuts because of macroeconomic headwinds, Zuora investors may want to anticipate more share price instability in the near term.
