Greenberg: RealPage Gets Ripped

(This originally ran in Herb Greenberg's Reality Check)

SAN DIEGO (TheStreet) -- This update to our Reality Check of two weeks ago on RealPage (RP):

Not only did the apartment-management software company miss fourth-quarter revenue and earnings, but it missed and guided down on perhaps the most important metric of all: Organic growth -- and not in a small way.

At RealPage, the target was 20% to 25%. As recently as a quarter ago, the company appeared to be exceedingly confident it would easily hit it.

Consider this exchange between analyst Jobin Mathew of Deutsche Bank and CFO Tim Barker:

Mathew:

"In the past, you've always talked about kind of your target growth model of operating between the 20% to 25% range. So looking out into 2014, without actually providing a guidance number, do you think you could step up closer to the high end of your target range?"

Barker:

"Yes, we like to provide consistent guidance one year out and stick with providing our guidance when we have the visibility for the year. We've executed 20% this year. Since we've gone public, the organic on-demand growth has been 22.5%. We've had periods in the 25% and periods in the 20%...we'll continue to execute on a consistent basis and drive towards our target model."

Compare that with what the company is saying now:

"On-demand revenue for the first three quarters of the year trended at 20% organic growth, and the full-year came in at 18%. Despite this, fourth quarter organic on-demand revenue growth slowed significantly to 12%. Some of the factors driving fourth-quarter performance will take time to turn around and we expect other factors to show improvement more quickly."

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