Tangoe Takes 3 Analyst Downgrades After Earnings Miss

The company blamed its results, and its lower guidance for the year, on what it said was sales execution challenges. Management said that it believes it is taking the right steps to increase recurring revenue growth, with a new platform launch helping its total addressable market grow.

The analyst reaction was dismal, with three analysts seen cutting their targets.

Unfortunately, second-quarter revenue growth came to a crawl at $54.5 million (versus $52.7 million for the second quarter a year ago). The company’s recurring technology and services revenue was $49.9 million (versus $47.1 million a year ago) and revenue from consulting and software licenses was $4.5 million of total revenue for the second quarter of 2015.

Tangoe said that its operating income was $4.6 million in the second quarter, down from $7.8 million for the same period a year earlier. The company generated $6.7 million in net cash from operations for the second quarter of 2015.

For the third quarter, total revenue is expected to be in the range of $58.0 million to $59.5 million. For its fiscal year, total revenue is expected to be in the range of $227.0 million to $231.0 million. Expectations from Thomson Reuters were $65.5 million in the coming quarter and $245.3 million for this year.

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And as for those three analyst downgrades seen so far:

• Deutsche Bank cut its prior Buy rating to Hold and its $18 target was lowered to $10.
• Northland Securities downgraded Tangoe to Market Perform from Outperform, and it cut the price target in half — down to $9.00.
• Roth Capital maintained a Buy rating but slashed its $25 target price to $16.

Tangoe shares hit a new 2015 low of $6.57 Friday, and the price in mid-afternoon trading was down a sharp 32% to $6.95. The 1.1 million shares traded by 1:00 p.m. Eastern Time also compared to full normal day’s volume of about 160,000 shares.