Jive Software cut its outlook for the third quarter and struggled with its sales execution as social business software expanded to a wider tech buying audience.
The big question following Jive's recent performance is whether the company can remain independent when social features are being built into most applications. Another theme to watch is whether social business applications are being scrutinized more by IT buyers.
On Tuesday, Jive reported a second quarter loss of $17.8 million, or 27 cents a share, on sales of $35.2 million, up 31 percent from a year ago. The non-GAAP loss for the second quarter was 14 cents a share. Wall Street was expecting a loss of 16 cents a share on revenue of $35.16 million.
Related: The major enterprise collaboration platforms and their mobile clients | Jive summer release taps Evernote, Chatter and Yammer connections | Jive's Q1 sales, outlook light | Jive CEO: 'Facebook for the enterprise' rap is dead
So far, so good? Not quite. The company said it expects third quarter revenue to be $36 million to $37 million and a non-GAAP loss of 14 cents a share to 16 cents a share. Wall Street had been expecting a loss of 14 cents a share on revenue of $38.1 million in the third quarter.
The big worry is that Jive's sales miscues and a different take from "the mainstream buyer" means the company is going to hit some potholes with social business software. Jive CEO Tony Zingale said:
The evolution of the market toward the mainstream buyer, combined with our go-to-market execution challenges, led to longer than expected sales cycles at the end of the quarter.
Shares were hammered on Wednesday.
On Jive's earnings conference call it was unclear whether those deals were closed in the third quarter. Usually, deals that slip and are later booked are mentioned by companies.
Zingale tried to allay concerns. He said:
I want to underscore that we believe the challenges are short term in nature, well within our power to address and that we remain positive on the long-term outlook for the social business market and Jive's position as the pure play leader. As we have discussed previously, we have seen many signs that the social business market is transitioning from early adopters to the mainstream. We continue to see companies from a growing number of industries evaluating and adopting social business platforms. Discussions are becoming increasingly strategic with a range of C-level executives and even boards of directors.
Since the quarter has been completed, we have done extensive reviews across our sales and marketing organization and the bottom line is we have to do a much better job from an execution perspective.
Here's the challenge: Rivals like Microsoft via Yammer, Salesforce and Tibco are much more seasoned about targeting mainstream enterprise accounts. Jive will have to get up to speed quickly as more CXOs are evaluating the company's wares.