PETALUMA -- Cyan, Inc. (NYSE: CYNI), developer of software for managing optical data networks, on Monday reported preliminary figures on fourth-quarter sales that would be more than one-third below previous estimates, attributing it to an 88 percent quarterly drop in revenue from its largest customer.
The company expects revenue for the fourth quarter, ended Dec. 31, to be $20 million to $21 million. That's below a previous company estimate of $30 million to $33 million.
"We are very disappointed with our preliminary fourth-quarter 2013 revenue results, which were significantly impacted by a sharp decline in orders from our largest customer," said Mark Floyd, chief executive officer. The largest customer, Windstream, cut orders from $19 million in the third quarter to $2 million in the fourth quarter, according to Cyan.
"Although we expect revenue from this customer to represent a meaningful portion of our revenue in future periods, we expect that it will continue to fluctuate from quarter to quarter," he said. "As we previously noted, our business in the near term is substantially dependent on this customer while we ramp revenue from new accounts and expand our customer base."
Excluding sales to Windstream, revenue is expected to be $70 million to $71 million for the year, up 32 percent to 34 percent from 2012. Full year revenue is expected to be $116 million to $117 million.
This shows increased momentum from other customers, according to the company.
"Additionally, we continued to make progress with our Tier-1 opportunities as lab trials and proof-of-concept activities continue," Mr. Floyd said. "Our BluePlanet software is a key differentiator for Cyan and we remain confident in our long-term prospects and opportunity to capitalize on the widespread and fundamental shift to software-defined WAN networks."
Cyan plans to report final fourth-quarter and year-end results in early February.
The price of company declined sharply on the announcement, released just after the stock market closed. The share price fell by $1.17 a share, or nearly 23 percent, to $4 in after-hours trading. The price had declined 2.27 percent during normal trading Monday.
Cyan's stock price continued to slip Tuesday, opening at $3.98 and falling by nearly 30 percent to close at $3.63. However, the price was up 3 cents a share in early after-hours trading.
Cyan identified dependence on one customer as a key risk at the time of its initial public offering May 9. The price after the first day of trading was $11 a share. Windstream represented 47 percent of revenues in the first quarter, but Cyan added 50 clients in 2012 and had 130 by the time of the public offering, according to the stock prospectus.