SUMO - Sumo Logic surges after beat-and-raise quarter flags macroeconomic uncertainty ahead

Sumo Logic ( NASDAQ: SUMO ) stock rose as much as 18.4% in Tuesday morning trading after it reported better-than-expected third quarter results and provided an improved forecast for the current year.

SUMO on Monday after the bell posted Q3 Non-GAAP EPS of -$0.04, beating by 11 cents, and revenue of $78.95 million was ahead of consensus by at least $4.75 million.

For the fiscal 2023, Sumo Logic expects total revenue between $298 million and $299 million, representing 23% growth year-over-year, up from previous range of $289 million to $293 million.

Sumo also narrowed full-year non-GAAP net loss per share range and now expects it between -$0.36 to -$0.35, compared with previous forecast of -$0.56 and -$0.54.

"The macroeconomic environment continues to create a higher degree of uncertainty. While we did not experience a material impact to our business in Q3, we are seeing increased scrutiny over budgets and buying decisions." - CFO Stewart Grierson said during an earnings call

Grierson, during the call, said the company expects to modestly increase its operating expenses in Q4 to add capacity and sales, while also remaining cognizant of "the greater uncertainty" caused by the macro environment.

The company said it would cut about $27 million in expenses and sees free cash flow margin of about negative 10% by the end of the year.

In the long run, SUMO expects gross margins in the mid-70% plus range from operational efficiencies in its cloud infrastructure and business.

Stock is down 41.8% year-to-date as of last close.

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