Envivio shares tumbled 55 percent Tuesday after it slashed its second-quarter revenue expectations.
The company, which enables network providers to deliver video across multiple devices, said it now expects its revenue for the quarter to total between $10 million and $11 million, down from its previous range of $17 million to $18 million.
Analysts were already discounting the company's predictions and had expected revenue of $10.7 million.
"Our preliminary revenue results reflect a general slowdown in spending by our service provider customers, in particular in North America and Western Europe, which have been two key growth areas of the company in the last two years," said President and CEO Julien Signes.
The company experienced a slowdown of major project start-ups and a lengthening of sales cycles stemming from the current global economic environment.
Envivio plans to release its full quarterly results on Sept. 6.
Shares of Envivio, based in San Francisco, Calif., dropped $3.10 to $2.60 in heavy morning trading after hitting a three-year low of $2.56.
Since going public in April, the company's shares have traded between $5.44 and $9.88. As of Monday's market close, they had fallen about 37 percent from their IPO price of $9.
The company says customers in the U.S. and Europe are pulling back on spending due to the economy.