Red-hot stock drops 10% on soft outlook

December 7, 2023 4:11 AM EST
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Price: $35.87 -2.98%

Rating Summary:
    5 Buy, 16 Hold, 3 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 8 | Down: 20 | New: 42
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(Updated - December 7, 2023 8:22 AM EST) -- reported mixed fiscal second-quarter results as revenue fell short of estimates, but the the AI software maker talked up the return of faster growth amid a transition to consumption-based pricing model. Inc (NYSE: AI) fell nearly 10% in pre-market trading following the report.

The AI software maker reported an adjusted loss of $0.13 per diluted share on revenue of $73.2 million, compared with estimates for an adjusted loss of $0.18 on revenue of $73.2M.

Looking ahead, the company forecast a Q3 adjusted loss from operations of $40M to $46M on revenue of $74M to $78M. That compared to Wall Street estimates for revenue of $77.69M.

For the full-year, the company now expects revenue of between $295M to $320M and an adjusted operating loss of $115M to $135M, with the latter up from a prior forecast for a loss of $70M to $100M.

"We are seeing a return to accelerating revenue growth as we continue our transition to a consumption-based pricing model," the company said.

DA Davidson analyst Gil Luria reiterated a Neutral rating and cut the price target by $2 to $28 per share.

"We believe shares still adequately reflect demand from Generative AI as accelerates revenue growth. However, given the deterioration of profitability, we reduce our price target."

Northland Capital Markets analyst Michael Latimore highlighted that the GenAI pipeline rose 60% sequentially.

Shares were up 160% YTD into the report.

Additional reporting by Senad Karaahmetovic

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D.A. Davidson, Gil Luria, Senad Karaahmetovic