NEW YORK (AP) -- Velti PLC's stock slid more than 27 percent on Wednesday as investors seemed to look past the mobile marketing company's solid first-quarter results, instead concentrating on its dwindling available cash.
THE SPARK: Late Tuesday Velti reported that its quarterly loss narrowed to $8.8 million, or 14 cents per share, from a loss of $15.9 million, or 34 cents per share. Its adjusted loss was 2 cents per share. Revenue rose 75 percent to $51.8 million. Analysts polled by FactSet expected a loss of 2 cents per share on revenue of $45.7 million.
Velti also said its cash and cash equivalents declined to approximately $41 million at March 31 from $75.8 million as of Dec. 31.
THE ANALYSIS: Richard Fetyko of Janney Capital Markets said in a client note that Velti's cash balance may fall to a range of $20 million to $30 million, with the company hitting free cash flow profitability in the fourth quarter.
The analyst was pleased with Velti's earnings and revenue results. Fetyko maintained a "Buy" rating but lowered the company's price target to $16 from $18 party because of a higher share count.
Jefferies & Co.'s Peter Misek said that Velti has been having some difficulty collecting payments from its customers, with the number of days outstanding rising to 259 days in the quarter, up from 226 days in the fourth quarter. But Velti expects this to get better, as a bigger portion of its business shifts to the U.S. and U.K. and it cycles in new customers with more favorable collection terms.
Misek said investors may be concerned about the days outstanding, but believes their worries will lessen when the Dublin-based company turns cash flow positive later in the year. Velti had maintained its outlook to be operating cash flow breakeven by the third quarter and free cash flow positive by the fourth quarter.
"We think Velti continues to benefit from the secular growth of mobile marketing and we believe operating cash flow breakeven could come sooner than expected," Misek wrote.
The analyst reaffirmed a "Buy" rating and $23 price target.
SHARE ACTION: Shares of Velti fell $2.39, or 27.8 percent, to $6.21 in afternoon trading. Earlier the stock reached an annual low of $6.