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Why MuleSoft Stock Gained 25.6% in February

Keith Noonan, The Motley Fool

What happened

MuleSoft (NYSE: MULE) stock climbed 25.6% in February, according to data provided by S&P Global Market Intelligence. Shares popped after the company announced fourth-quarter results that came in substantially above analysts' expectations alongside promising guidance.

MULE Chart

MULE data by YCharts.

So what

Sales for MuleSoft's quarter ending in December climbed 60% year over year to reach $88.7 million, handily topping the $83.1 million in sales that Wall Street expected. The company delivered an earnings beat as well, a with loss of $0.12 per share for the quarter looking much nicer than the $0.19-per-share loss consensus estimate. 

A cloud with small lights inside of it, concentrating as a large ball of light in the center of the cloud.

Image source: Getty Images.

Management paired the earnings beat with guidance for the current fiscal year and beyond that bolstered shareholder optimism. MuleSoft expects sales for 2018 to come in between $405 million and $415 million, representing roughly 38.5% growth at the midpoint over 2017's $296 million in sales. It also expects the business to reach over $1 billion in annual sales in 2021.

Now what

MuleSoft is successfully growing its customer base, having increased its number of large-contract customers from 30 at the end of 2016 to 45 at the end of 2017, and looks poised to see increasing demand for its software. The company's software for organizing and utilizing data across different cloud platforms is a leading solution in its category and could allow the business to shift into regular profitability as its customer base scales. Shares have climbed another 9% in March so far and trade at roughly 11 times forward sales.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends MuleSoft. The Motley Fool has a disclosure policy.