$SUMO: Cloud-based Machine Data Analytics

SUMO Logic DD

SUMO Logic Inc: SUMO Logic went public in September for $22.00 a share. The stock dipped as low $16.71 on October 26th, 2020, before their first earnings report on December 7th (Posted in detail below), after which shares pumped to a high of $46.37 by February 8th 2021. SUMO’s analysts ratings are excellent, analyst coverage is largely solid, and despite offering softer than expected guidance amid their most recent earnings, little has changed as far as their prospects for high growth. Of course, I see many companies this earnings season claiming “uncertainty” as a result of underlying economic conditions. More often than not I assess they’re simply managing expectations so that they can continue overperforming analysts predictions.

SUMO guidance expects between $53.2M & $54.2M in revenue for the quarter ending this upcoming April, a return of 13-15% and an adjusted loss of 12 cents a share. Consensus analysts estimates called for $53.4M and a loss of 14 cents per share. Overall they expect to grow in revenue between $231-$235M by JAN2022, an increase of 14-16% YoY, while expecting an EPS loss of 40-50 cents a share (I believe this an extreme low ball assessment). Analysts expect $234.1M and a YoY adjusted loss of 51 cents per share by JAN2022. In all they’re beating their earnings and growing slightly faster than analysts expectations, although the street seems to expect much higher growth. And of course, so do I. In FY 2018 they had $68M in revenue. In FY 2019 they grew to $103M in revenue, and by FY 2020, $155.06M. In the year ending in JAN2021 they gained $202.6M.

I do not believe, given this company’s record and clientele, that they’re going to grow less than their expected rate. And while some critics believe that this space is overcrowded, I look through their growing list of customers and see some solid names. This is not likely to slow for SUMO any time soon and I am optimistic that their revenue may grow well beyond their YoY guidance. In short, little has changed to justify such a massive over-reaction (Remember they reported amid the market correction time frame) to their most recent earnings beat, and with COVID coming to an end, I expect revenue growth to be much higher than their lowball guidance. I see SUMO stock as oversold, I assess this three month low as a bullish set up for reversal (Yeah perhaps this is a bad observation given the circumstances), and I think it a great dip buying opportunity that only comes around once in a blue moon. This is why I am long SUMO, and as a result, I have set up a covered strangle to take advantage of recent volatility.

Of course, I could always be wrong. I welcome your comments and input below.

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• Current Value: $19.75

• P/E: -24.19

• EPS: -0.07

• PB: 6.44 (MRQ)

• Book Value Per Share (MRQ): $4.28

• Revenue Per Share (TTM): $4.15

• Total Cash: 404.14M

• Cash Per Share: $3.97

• Operating Cash Flow (TTM): -47.18M

• Levered Free Cash Flow (TTM): -28.09

• Debt to Asset Ratio 22.23%

• Quarterly Revenue Growth YoY: 22.2%

• Enterprise Value/Revenue: 9.23

• Float: 63.22M (Low-Moderate)

• Institutional Ownership: 60.16% (Solid)

• Insider Ownership: 6.49%

• Analyst Ratings: 30.00% Hold / 50.00% Buy / 20.00% Strong Buy out of 10 analysts (Webull)

• Analyst Price Targets: (LOW/$26.00) (Medium/$31.33) (High/$44.00)

Previous Earnings:

– Mar. 10, 2021 4:03 PM ET Sumo Logic (NASDAQ:SUMO): Q4 Non-GAAP EPS of -$0.07 beats by $0.05; GAAP EPS of -$0.20 beats by $0.04. Revenue of $54.15M (+22.2% Y/Y) beats by $2.02M.

– Dec. 07, 2020 12:07 PM ET Sumo Logic (NASDAQ:SUMO): Q3 Non-GAAP EPS of -$0.06 beats by $0.18; GAAP EPS of -$0.43 beats by $0.06. Revenue of $51.9M (+28.1% Y/Y) beats by $2.78M. Guidance: Q4 revenue between $51.8M – $52.3M, up 17% to 18% Y/Y. Non-GAAP EPS of -$0.13 to -$0.12 vs. -$0.15 consensus. FY21 Total revenue between $200.3M – $200.8M, up 29% to 30% Y/Y. Non-GAAP EPS of -$0.79 to -$0.78 vs. -$0.98 consensus.

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News

• 11MAR2021 Why Sumo Logic Stock Could Double From Here

• 10MAR2021 Sumo Logic Signs Definitive Agreement to Acquire SOAR Provider DFLabs

• 10MAR2021 Sumo Logic stock slips after soft sales forecasts offset upside Q4 results

• 09MAR2021Total Economic Impact™ Study Reveals 166% ROI Over Three Years for Organizations Using Sumo Logic’s Cloud SIEM

• 04MAR2021Sumo Logic Expands Observability with Deeper Insights for Performance and Reliability of Microservices

• 27FEB2021 Sumo Logic: How Gaming Has Benefited From the Evolution of Fintech in 2020

• 25FEB2021 iValue Partners with Sumo Logic for Advanced Analytics Platform

• 24FEB2021 How Sumo Logic Is Helping Users Improve Reliability and Performance

• 18FEB2021 Sumo Logic Helps Fintechs Modernize Banking With Continuous Intelligence

• 12FEB2021 For SOC teams, the analytics and automation hype is real

• 10FEB2021 Sauce Labs and Sumo Logic Team Up to Help Enterprises Drive Increased Engineering Efficiency

• 09FEB2021 Sauce Labs and Sumo Logic Team Up to Help Enterprises Drive Increased Engineering Efficiency

• 02FEB2021 Sumo Logic’s Continuous Intelligence Platform Achieves FedRAMP-Moderate Authorization; Doug Natal Quoted

• 29JAN2021 Sumo Logic Slowly Being Recognized

• 10DEC2020 Sumo Logic to Showcase Observability and Security Solutions at AWS re:Invent 2020

• 07DEC2020 Sumo Logic stock down despite earnings topper in its first public release

• 17NOV2020 Tiger Global Management adds Sumo Logic, moves out from Athene Holding

• 12OCT2020 Sumo Logic quiet period ends with bulls praising differentiation, 25% growth potential

• 14SEP2020 Sumo Logic’s IPO valuation implies discount to peers – MKM