Why LifeLock Shares Shot Up

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of identity-theft protection system LifeLock were tightening their hold on the market today, climbing as much as 13% after beating estimates in its quarterly earnings report.

So what: The fraud-protection specialist said revenue jumped 32% in the quarter, to $89.5 million, while adjusted earnings per share of $0.04 was better than expectations of just $0.01. CEO Todd Davis credited the company's strong brand and superior service for the solid quarter, and the company increased its guidance for the full year. Management is now calling for revenue of $360-$365 million, and adjusted earnings per share of $0.33-$0.36. The updated revenue figure is ahead of estimates, while the EPS range meets the consensus of $0.34.

Now what: Despite the warm welcome from Wall Street, LifeLock actually saw profits drop in the quarter, and reported an operating loss as the increase in revenue was chewed by a near 40% increase in sales and marketing, and a 50% increase in general and administrative costs. The company is in a growth phase now, and needs to be investing in support and marketing, but I'd like to see a stronger bottom line before committing to a relatively unproved field like this one.

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The article Why LifeLock Shares Shot Up originally appeared on Fool.com.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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