September 29, 2026
Hi Everyone,
When a quarter ends below target, the easiest explanation is the one where nothing was your fault: the market slowed, a big deal moved, a customer changed plans.
Some of that may even be true. But it leaves your board, investors, or leadership team with nothing concrete to measure against next quarter, and that’s exactly what they'll want to do.
Today we’ll show you how to give them a useful explanation instead, plus a real example of what works and what doesn’t.
Put these four things in your explanation
You can't change the quarter. But you can give people a reason to trust your next forecast — and something concrete to check it against.
1. Name two or three causes, and put a number on each. If revenue was 800K below target, show what makes up the 800K: which deals, which customers, which products. You can check against those numbers next quarter. “The market was soft” tells you nothing.
2. Separate business problems from forecasting problems. A deal lost to a competitor is a business problem. A deal that was never going to close this quarter is a forecasting problem. The first is fixed by your sales team, the second by changing how you build the forecast, and mixing them up means you fix the wrong one.
3. Lower the forecast to a number you believe. Not the number you hope for, and not a number cut so far that it becomes meaningless. The new forecast is the first thing your board will check next quarter, so give them a number you expect to hit.
4. Propose two or three fixes, each with an owner, a date, and a number to report at the next meeting. If your list of fixes is longer than that, you're rewriting the strategy. One bad quarter is not a reason to rewrite the strategy.
Two companies, two explanations
In August 2023, Datadog cut its full-year revenue forecast, and CEO Olivier Pomel said that large customers were reducing their cloud spending. An external cause, but he specified which customers and when the shift began, so the board and investors had something concrete to check.
He called the new numbers deliberately conservative and changed nothing else about how the company ran. One quarter later, Datadog beat that forecast, and the stock rose 28% in a single day, the biggest one-day gain in its history.
UiPath handled it differently in May 2024. It cut its full-year forecast by about $150 million and announced the CEO's resignation on the same evening. The stock fell more than 30%, and the coverage that evening focused on the resignation rather than the forecast.
If you have bad news to deliver, change one thing and explain it fully. Announce two big changes at once, and it’s much harder to tell what’s driving what.
Go deeper
👉 Bessemer Venture Partners: How CFOs build a Goldilocks "just-right" budget — read this for a method that agrees the odds of the plan with your board upfront, so a miss never comes as a surprise.
👉 CNBC: Datadog stock surges 28% for its best day ever — read this to see what a conservative re-forecast did for Datadog one quarter later.
👉 SiliconANGLE: UiPath's stock plummets as CEO Rob Enslin abruptly resigns — read this before you ever bundle two pieces of bad news into one announcement.
👉 MxM: A CFO's first board meeting after a forecast miss — use this with your CFO to prepare the meeting itself; it covers what directors check first.
Coming up tomorrow
In 2013, Target entered Canada with a brand customers already loved, and left two years later with a $5.4 billion loss. Tomorrow we'll show you the six questions that would have changed their result.
P.S. If you're preparing for a board meeting, this issue will be useful, whatever the quarter looked like. It covers how to write a board pre-read, and it comes with our template — get your Board Pre-Read template here.