SUMO
$8.14
Sumo Logic
$.05
.62%
Earnings Details
2nd Quarter July 2022
Thursday, August 25, 2022 4:02:00 PM
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Summary

Sumo Logic Raises Guidance

Sumo Logic (SUMO) reported a 2nd Quarter July 2022 loss of $0.27 per share on revenue of $74.1 million. The consensus estimate was a loss of $0.23 per share on revenue of $71.5 million. Revenue grew 25.9% on a year-over-year basis.

The company said it expects a third quarter non-GAAP loss of approximately $0.15 per share on revenue of $73.5 million to $74.5 million. The current consensus estimate is a loss of $0.16 per share on revenue of $73.00 million for the quarter ending October 31, 2022. The company also said it expects fiscal a 2023 non-GAAP loss of $0.56 to $0.54 per share on revenue of $289.0 million to $293.0 million. The company's previous guidance was a loss of $0.64 to $0.62 per share on revenue of $289.0 million to $292.0 million and the current consensus estimate is a loss of $0.60 per share on revenue of $290.97 million for the year ending January 31, 2023.

Sumo Logic Inc. is the pioneer in continuous intelligence, a new category of software, which enables organizations of all sizes to address the data challenges and opportunities presented by digital transformation, modern applications, and cloud computing.

Results
Reported Earnings
($0.27)
Earnings Whisper
-
Consensus Estimate
($0.23)
Reported Revenue
$74.1 Mil
Revenue Estimate
$71.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Sumo Logic Announces Second Quarter Fiscal 2023 Financial Results

Second quarter revenue grew 26% year over year to $74.1 million
Second quarter ARR grew 25% year over year to $286.2 million

REDWOOD CITY, Calif., Aug. 25, 2022 (GLOBE NEWSWIRE) -- Sumo Logic (NASDAQ: SUMO), the SaaS analytics platform to enable reliable and secure cloud-native applications, today announced financial results for the second quarter of its fiscal 2023 ended July 31, 2022.

“We continued to deliver improved revenue growth in the second quarter with year-over-year growth of 26% while also driving better operating efficiencies,” said Ramin Sayar, President and CEO of Sumo Logic. “We remain positive on the long term trends driving our business as companies continue to focus on delivering reliable and secure mission critical cloud applications for their customers.”

Second Quarter Fiscal 2023 Financial Highlights

  • Revenue was $74.1 million, an increase of 26% year over year
  • Annual Recurring Revenue ("ARR") was $286.2 million, an increase of 25% year over year
  • GAAP gross margin was 65%; non-GAAP gross margin was 70%
  • GAAP operating loss was $36.6 million; GAAP operating margin was (49)%
  • Non-GAAP operating loss was $12.7 million; non-GAAP operating margin was (17)%
  • GAAP net loss was $35.9 million, or $0.31 per share
  • Non-GAAP net loss was $12.0 million, or $0.10 per share
  • Net cash used in operating activities was $12.0 million; free cash flow was $(12.4) million
  • Cash and cash equivalents and marketable securities were $350.6 million as of July 31, 2022

Recent Highlights

  • Recognized as a Challenger in the 2022 Gartner Magic Quadrant for APM and Observability.
  • Achieved Threat Detection and Response distinction with Amazon Web Services Security Competency status for Sumo Logic Cloud SIEM and Cloud SOAR solutions.
  • Recognized by Cyber Defense Magazine as having the Best Solution for Cloud Security Monitoring and the Best Product for Security Orchestration Automation and Response.
  • Announced Threat Labs, a threat research and security detection unit to help customers modernize security operations and achieve greater cyber-resilience.
  • Announced a new process to deliver Kubernetes observability in just a few clicks; the simplified process streamlines the collection process and ensures faster time-to-value.

Upcoming Events

  • Sumo Logic will host its 6th annual user conference, Illuminate, from September 13-14, 2022. Illuminate is a premier global education and community event that brings together our customers with thought leaders in IT operations, development and operations, and security in an interactive virtual experience.
  • Sumo Logic will host an Investor Day on September 20, 2022, at the Nasdaq Marketsite in New York City. Investors will get to hear from Sumo Logic’s executive team about its go-to-market strategy and longer-term financial roadmap.

Financial Outlook

For the third quarter of fiscal 2023, Sumo Logic expects:

  • Total revenue between $73.5 million and $74.5 million, representing 19% to 20% growth year-over-year
  • Non-GAAP operating margin of (24)% to (23)%
  • Non-GAAP net loss per share of $0.15 on approximately 119.0 million weighted average shares outstanding

For the full fiscal year 2023, Sumo Logic expects:

  • Total revenue between $289.0 million and $293.0 million, representing 19% to 21% growth year-over-year
  • Non-GAAP operating margin of (23)% to (22)%
  • Non-GAAP net loss per share of $0.56 to $0.54 on approximately 117.5 million weighted average shares outstanding

These statements are forward-looking and actual results may differ materially. Please refer to Forward-Looking Statements below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

Guidance for non-GAAP financial measures excludes stock-based compensation expense and related employer payroll taxes, amortization of acquired intangible assets, acquisition-related expenses, and expenses related to a cooperation agreement. We have not provided the most directly comparable GAAP measures because certain items are out of our control or cannot be reasonably predicted. Accordingly, a reconciliation for forward-looking non-GAAP operating loss and non-GAAP net loss per share is not available without unreasonable effort. Refer to Non-GAAP Financial Measures below.

Conference Call Details

The company will host a conference call and live webcast on Thursday, August 25, 2022, at 1:30 p.m. Pacific time (4:30 p.m. Eastern time). The news release with the financial results will be accessible on Sumo Logic’s investor relations website at investor.sumologic.com prior to the conference call. To access the conference call, dial (877) 407-0784 from the United States or (201) 689-8560 internationally and reference the company name and conference title. Following the completion of the call, a replay will be available for approximately two weeks. The replay can be accessed by dialing (844) 512-2921 from the United States or (412) 317-6671 internationally and using the recording passcode 13732122. A live webcast and replay of the conference call can also be accessed from the Sumo Logic Investor Relations website at investor.sumologic.com.

Supplemental Financial and Other Information

Supplemental financial and other information can be accessed through Sumo Logic’s investor relations website at investor.sumologic.com. Sumo Logic uses the investor relations section on its website as the means of complying with its disclosure obligations under Regulation FD. Accordingly, we recommend that investors should monitor Sumo Logic’s investor relations website in addition to following Sumo Logic’s press releases, SEC filings and social media.

Non-GAAP Financial Measures

In addition to our financial information presented in accordance with GAAP, we believe the following non-GAAP financial measures are useful in evaluating our operating performance. We use the following non-GAAP financial measures, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance. We believe that non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, may be helpful to investors because they provide consistency and comparability with past financial performance and meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. The non-GAAP financial measures are presented for supplemental informational purposes only, have limitations as analytical tools, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP and may be different from similarly-titled non-GAAP financial measures used by other companies. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business, which it includes in press releases announcing quarterly financial results, including this press release.

Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP loss from operations, non-GAAP operating margin, non-GAAP net loss, and non-GAAP net loss per share: We define these non-GAAP financial measures as their respective GAAP measures, excluding stock-based compensation expense and related employer payroll taxes, amortization of acquired intangible assets, acquisition-related expenses, and expenses related to a cooperation agreement. We use these non-GAAP financial measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance.

Free cash flow: We define free cash flow as cash used in operating activities less purchases of property and equipment and capitalized internal-use software costs. We believe free cash flow is a useful indicator of liquidity that provides our management, board of directors, and investors with information about our future ability to generate or use cash to enhance the strength of our balance sheet and further invest in our business and pursue potential strategic initiatives.

Please see the reconciliation tables at the end of this release for the reconciliation of GAAP and non-GAAP results.

Forward-Looking Statements

This press release contains express and implied forward-looking statements including but not limited to, statements regarding our GAAP and non-GAAP guidance for the second fiscal quarter and full fiscal year 2023, expectations regarding the benefits of our offerings, our growth strategy and investments, our market opportunity, the potential impact of the macro environment, and our ability to achieve success. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to our ability to realize the anticipated benefits from our acquisitions, our ability to achieve and maintain future profitability, our ability to attract new customers and retain and sell additional functionality and services to our existing customers, our ability to sustain and manage our growth, our ability to successfully add new features and functionality to our platform, our ability to compete effectively in an increasingly competitive market, and general market, political, economic, and business conditions, including the impact of COVID-19, and other risks detailed in our Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2022, filed with the Securities and Exchange Commission (SEC) on May 27, 2022, and other filings and reports that we may file from time to time with the SEC. Additional information will be made available in our Quarterly Report on Form 10-Q for the quarter ended July 31, 2022 that will be filed with the SEC, which should be read in conjunction with this press release and the financial results included herein.

Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent our views as of the date of this press release. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release. We anticipate that subsequent events and developments could cause our views to change. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

About Sumo Logic

Sumo Logic, Inc. (NASDAQ: SUMO), empowers the people who power modern, digital business. Through its SaaS analytics platform, Sumo Logic enables customers to deliver reliable and secure cloud-native applications. The Sumo Logic Continuous Intelligence Platform™ helps practitioners and developers ensure application reliability, secure and protect against modern security threats, and gain insights into their cloud infrastructures. Customers around the world rely on Sumo Logic to get powerful real-time analytics and insights across observability and security solutions for their cloud-native applications. For more information, visit www.sumologic.com.

For more information, please contact:

Investor Relations Contact
Bryan Liberator
IR@sumologic.com

Media Contact
Carmen Harris
charris@sumologic.com

 
Sumo Logic, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 
  Three Months Ended July 31, Six Months Ended July 31,
   2022   2021   2022   2021 
Revenue $74,108  $58,841  $141,963  $113,060 
Cost of revenue  25,963   19,778   50,108   35,173 
Gross profit  48,145   39,063   91,855   77,887 
Operating expenses:        
Research and development  27,636   23,861   53,889   44,304 
Sales and marketing  39,536   31,457   74,826   61,735 
General and administrative  17,552   16,670   34,548   31,243 
Total operating expenses  84,724   71,988   163,263   137,282 
Loss from operations  (36,579)  (32,925)  (71,408)  (59,395)
Interest and other income (expense), net  1,149   69   1,780   53 
Interest expense  (6)  (3)  (35)  (89)
Loss before provision for income taxes  (35,436)  (32,859)  (69,663)  (59,431)
Provision (benefit) for income taxes  444   (810)  967   (468)
Net loss $(35,880) $(32,049) $(70,630) $(58,963)
         
Net loss per share, basic and diluted $(0.31) $(0.30) $(0.61) $(0.56)
         
Weighted-average shares used to compute net loss per share, basic and diluted  116,610   107,884   115,486   105,990 


Sumo Logic, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
  July 31,
2022
 January 31,
2022
Assets    
Current assets:    
Cash and cash equivalents $82,211  $79,986 
Marketable securities, current  235,349   210,645 
Accounts receivable, net  50,738   49,451 
Prepaid expenses  8,233   9,792 
Deferred sales commissions, current  17,946   17,110 
Other current assets  2,835   2,865 
Total current assets  397,312   369,849 
Marketable securities, noncurrent  32,992   65,866 
Property and equipment, net  4,898   4,960 
Operating lease right-of-use assets  3,275   6,110 
Goodwill  92,910   94,967 
Acquired intangible assets, net  17,950   26,221 
Deferred sales commissions, noncurrent  31,537   32,689 
Other assets  2,167   1,469 
Total assets $583,041  $602,131 
Liabilities and stockholders’ equity    
Current liabilities:    
Accounts payable $12,427  $7,755 
Accrued expenses and other current liabilities  21,835   25,425 
Operating lease liabilities, current  3,421   4,619 
Deferred revenue, current  143,217   131,329 
Total current liabilities  180,900   169,128 
Operating lease liabilities, noncurrent  362   2,346 
Deferred revenue, noncurrent  7,707   5,944 
Other liabilities  5,568   5,744 
Total liabilities  194,537   183,162 
Stockholders’ equity:    
Common stock  12   11 
Additional paid-in-capital  989,459   944,447 
Accumulated other comprehensive loss  (9,181)  (4,333)
Accumulated deficit  (591,786)  (521,156)
Total stockholders’ equity  388,504   418,969 
Total liabilities and stockholders’ equity $583,041  $602,131 


Sumo Logic, Inc.
Condensed Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
 
  Three Months Ended July 31, Six Months Ended July 31,
   2022   2021   2022   2021 
Cash flows from operating activities        
Net loss $(35,880) $(32,049) $(70,630) $(58,963)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization  4,236   3,563   8,519   5,607 
Amortization of deferred sales commissions  5,087   3,764   9,718   7,165 
Amortization (accretion) of marketable securities purchased at a premium (discount)  577   801   1,367   1,367 
Stock-based compensation, net of amounts capitalized  18,939   14,057   32,216   26,190 
Non-cash operating lease cost  998   1,032   2,053   2,094 
Other  46   (1,069)  (116)  (1,046)
Changes in operating assets and liabilities        
Accounts receivable  (2,210)  13,880   (1,453)  14,717 
Prepaid expenses  1,586   2,953   1,549   3,545 
Other assets  (1,179)  242   (999)  1,386 
Deferred sales commissions  (5,468)  (3,832)  (9,402)  (9,490)
Accounts payable  2,514   170   4,695   1,553 
Accrued expenses and other current liabilities  (2,516)  (2,773)  (2,680)  (4,068)
Deferred revenue  2,200   (4,291)  13,651   4,886 
Operating lease liabilities  (1,117)  (1,113)  (2,273)  (2,247)
Other liabilities  180   127   346   47 
Net cash used in operating activities  (12,007)  (4,538)  (13,439)  (7,257)
Cash flows from investing activities        
Purchases of marketable securities  (66,794)  (24,122)  (118,477)  (291,670)
Maturities of marketable securities  62,309   13,650   103,331   15,208 
Sales of marketable securities  14,600      20,520    
Purchases of property and equipment  (15)  (1,054)  (386)  (1,301)
Capitalized internal-use software costs  (418)     (605)   
Cash paid for acquisitions, net of cash and restricted cash acquired     (40,297)     (40,297)
Net cash provided by (used in) investing activities  9,682   (51,823)  4,383   (318,060)
Cash flows from financing activities        
Payments of deferred offering costs           (93)
Proceeds from employee stock purchase plan  2,831   4,725   2,831   4,725 
Proceeds from exercise of common stock options  2,793   5,308   9,747   13,327 
Cash paid for holdback consideration in connection with acquisitions  (456)     (456)   
Net cash provided by financing activities  5,168   10,033   12,122   17,959 
Effect of exchange rate changes on cash and cash equivalents  (369)  (140)  (841)  (149)
Change in cash and cash equivalents and restricted cash  2,474   (46,468)  2,225   (307,507)
Cash and cash equivalents and restricted cash:        
Beginning of period  80,037   143,401   80,286   404,440 
End of period $82,511  $96,933  $82,511  $96,933 


Sumo Logic, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share data and percentages)
(unaudited)
 
  Three Months Ended July 31, Six Months Ended July 31,
   2022   2021   2022   2021 
Reconciliation of gross profit and gross margin        
GAAP gross profit $48,145  $39,063  $91,855  $77,887 
Add: Stock-based compensation and related employer payroll taxes  370   193   686   366 
Add: Amortization of acquired intangible assets  3,501   3,006   7,060   4,543 
Add: Acquisition-related expenses  71   54   152   54 
Non-GAAP gross profit $52,087  $42,316  $99,753  $82,850 
GAAP gross margin  65%  66%  65%  69%
Non-GAAP gross margin  70%  72%  70%  73%
         
Reconciliation of operating expenses        
GAAP research and development $27,636  $23,861  $53,889  $44,304 
Less: Stock-based compensation and related employer payroll taxes  (7,752)  (6,103)  (14,306)  (10,961)
Less: Acquisition-related expenses  (257)  (238)  (549)  (238)
Non-GAAP research and development $19,627  $17,520  $39,034  $33,105 
         
GAAP sales and marketing $39,536  $31,457  $74,826  $61,735 
Less: Stock-based compensation and related employer payroll taxes  (5,890)  (4,291)  (8,807)  (8,013)
Less: Amortization of acquired intangible assets  (150)  (83)  (300)  (83)
Less: Acquisition-related expenses  (85)  (86)  (186)  (86)
Non-GAAP sales and marketing $33,411  $26,997  $65,533  $53,553 
         
GAAP general and administrative $17,552  $16,670  $34,548  $31,243 
Less: Stock-based compensation and related employer payroll taxes  (5,176)  (3,906)  (8,935)  (8,094)
Less: Acquisition-related expenses     (2,540)     (3,756)
Less: Expenses related to a cooperation agreement  (634)     (2,354)   
Non-GAAP general and administrative $11,742  $10,224  $23,259  $19,393 
         
Reconciliation of operating loss and operating margin        
GAAP loss from operation $(36,579) $(32,925) $(71,408) $(59,395)
Add: Stock-based compensation and related employer payroll taxes  19,188   14,493   32,734   27,434 
Add: Amortization of acquired intangible assets  3,651   3,089   7,360   4,626 
Add: Acquisition-related expenses  413   2,918   887   4,134 
Add: Expenses related to a cooperation agreement  634      2,354    
Non-GAAP operating loss $(12,693) $(12,425) $(28,073) $(23,201)
GAAP operating margin  (49)%  (56)%  (50)%  (53)%
Non-GAAP operating margin  (17)%  (21)%  (20) %  (21)%
         
Reconciliation of net loss        
GAAP net loss $(35,880) $(32,049) $(70,630) $(58,963)
Add: Stock-based compensation and related employer payroll taxes  19,188   14,493   32,734   27,434 
Add: Amortization of acquired intangible assets  3,651   3,089   7,360   4,626 
Add: Acquisition-related expenses  413   2,918   887   4,134 
Add: Expenses related to a cooperation agreement  634      2,354    
Non-GAAP net loss $(11,994) $(11,549) $(27,295) $(22,769)
GAAP net loss per share $(0.31) $(0.30) $(0.61) $(0.56)
Non-GAAP net loss per share $(0.10) $(0.11) $(0.24) $(0.21)
Weighted average shares outstanding, basic and diluted  116,610   107,884   115,486   105,990 


Sumo Logic, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures (Continued)
(in thousands)
(unaudited)
 
  Three Months Ended July 31, Six Months Ended July 31,
   2022   2021   2022   2021 
Reconciliation of cash used in operating activities to free cash flow        
GAAP cash used in operating activities $(12,007) $(4,538) $(13,439) $(7,257)
Less: Purchases of property and equipment  (15)  (1,054)  (386)  (1,301)
Less: Capitalized internal-use software costs  (418)     (605)   
Free cash flow $(12,440) $(5,592) $(14,430) $(8,558)

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Source: Sumo Logic, Inc.