Ellie Mae Inc. ($ELLI) the “leading provider of on-demand automation solutions for the mortgage industry,” reported earnings after the bell on Oct. 31, and they were a severe disappointment. The company missed on revenue and profit, and significantly lowered projections for the fourth quarter. The company’s shares fell in direct response.
In a conference call with investors, founder and CEO Sig Alderman said the earnings were below expectations for three reasons. One, mortgage applications steeply declined. Two, it was taking longer to implement orders from larger customers who signed on earlier in the year. Three, the company was negatively impacted by “two re-fi focused customers going out of business during the quarter.”
But the mortgage software company’s earnings miss is not expected to be a one-time thing. The company also lowered internal estimates for fourth quarter net gain to $0.17 to $0.18 a share, down from the $0.24 expected by analysts.
Ellie Mae has reportedly been looking for a white knight since August, interviewing banks to possibly organize a sale of the company.
For their third quarter 2013 earnings report, Ellie Mae reported a net gain of $3.36 million, or $0.12 per share, versus the net gain of $6.83 million, or $0.25 per share, from the same period a year ago. Revenue for the quarter was $33 million, as compared to $27.5 million from the previous year. Analysts were expecting a net gain of $0.30 per share on revenues of $34.4 million.
On the earnings miss and lowered forecast Ellie Mae’s shares fell precipitously, losing 17.51 percent in midday trading to hit $23.81 a share.
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