UPDATE: Deutsche Bank Downgrades ServiceSource to Hold on Weak Q4 Guidance

Deutsche Bank lowered its rating on ServiceSource

from Buy to Hold and reduced its price target from $15 to $7. Deutsche Bank noted, "4Q guide was reduced by $9m due to 3 key factors – reduced engagements at customers/customer losses ($5.5m), timing of ACV conversion getting pushed out ($1.5m), and higher back end weighting of new ACV ($2m). The company disclosed loss of a platform-based technology customer, which we believe had a $5m - $6m annual revenue run-rate. Meanwhile, other technology customers cut back on spend as they saw core business slow. Meanwhile the company reiterates pipeline is up 60% y/y, but lower expected ACV growth (15% - 17%) indicates tougher conversion rates. We believe Renew OnDemand is off to a good start (16 customer engagements, including Qualcomm), but anticipate longer time to maturity and do not see this improving margins in near-term." ServiceSource closed at $8.20 on Monday.