HawkEye 360 (NYSE: HAWK) stock, which held a successful IPO back in May, got its wings clipped this morning and is down 7.2% through 1:20 p.m. ET after reporting earnings last night. The surprising thing is that HawkEye didn't "miss earnings" at all; it beat them.
Analysts had forecast the satellite communications, navigation, and signals intelligence stock would lose $0.12 per share on only $45.5 million in sales for Q2. Instead, HawkEye reported losses of only $0.07 per share and sales of $49.8 million. This Rare Signal Is Flashing Again.
In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » HawkEye's sales surged 87% year over year in the quarter, with international sales making up more than 42% of the total.
Earnings flipped to negative -- when calculated under generally accepted accounting principles (GAAP) -- however, and that may be part of the reason why investors are reacting negatively to the news. On the other hand, HawkEye generated $5.4 million in positive free cash flow in the quarter, versus burning cash a year ago. Viewed in that context, the GAAP loss doesn't seem quite so bad.
What's more, business is continuing to improve. "We are seeing great momentum across the business heading into the back half of the year, with strong tailwinds from growing global demand for space-based RF intelligence," says CEO John Serafini. Management is forecasting full-year sales between $215 million and $220 million -- the entire range being above analyst forecasts for $213.4 million.
And for what it's worth, management also sees "non-GAAP Adjusted EBITDA" north of $30 million. None of the above would ordinarily prompt investors to sell the stock. Probably, if HawkEye stock cost less than its current valuation of 190 (!) times forward earnings, the stock would have been up today.
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