Shares of Edgio (NASDAQ: EGIO) took a dive today after the content delivery network that resulted from the merger of Limelight Networks and Yahoo's Edgecast missed estimates on the bottom line and offered weak guidance for the fourth quarter.
The stock closed down 35.7% on the news.
Driven by the addition of Edgecast, Edgio's revenue jumped 119% to $121.2 million, which was just slightly below estimates at $121.7 million.
Management touted momentum across the business, saying that its sales pipeline was up 75% from the beginning of the year, that it nabbed an eight-figure total contract value deal, and that it replaced a major competitor at a top fintech company.
On the bottom line, it reported an adjusted EBITDA loss of $3.2 million, which was slightly worse than the second-quarter result. Its GAAP loss per share widened from $0.11 to $0.19, which was below estimates at $0.05.
Looking ahead, CFO Stephen Cumming said: "We remain bullish on Edgio's transformation and in our ability to drive long-term value creation for our shareholders. The current macro environment has made us more cautious in the near term and we anticipate companies will delay or defer capital spending in the fourth quarter."
The company called for a sequential decline in revenue in the fourth quarter to $109 million to $114 million, which set off alarm bells on Wall Street, as analysts had expected revenue of $130.7 million. Edgio also sees its adjusted EBITDA loss widening to $6 million to $8 million.
Analysts seemed to think the company was more recession-resistant than it is. As a new company, that disappointment weighed hard on the tech stock today.
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