The consensus of analysts polled by First Call expected Engage, an online advertising and marketing services provider, to lose 23 cents a share.
That estimate was obviously too optimistic considering the Andover, Mass.-based company warned earlier in the quarter that it would post a loss of 25 cents a share.
Company executives said it missed its own loss estimate primarily because some of its customers were unable to pay their bills this quarter. The company's sales, down 38 percent from the fourth quarter, came in right in the middle of the $40 million to $42 million it projected earlier this quarter.
Ahead of the earnings report, Engage shares closed the regular trading session up 28 cents to $1.97, down from a 52-week high of $94.50.
"Clearly, we are very disappointed in the results for the first quarter," chief executive Tony Nuzzo said in a statement. "In order to improve the financial health of Engage in this tough market, significant changes will be made in the short term."
Nuzzo, who replaced Paul Schaut earlier this quarter, will have his work cut out for him considering the amount of cash Engage continues to burn quarter after quarter.
"It's already a disaster," said Chris Hansen, an analyst at Banc of America Securities.
Engage said the dismal results and shaky outlook were tied to deteriorating online advertising sales not only by fledgling dot-coms but also by so-called "old-economy" companies.
In its fourth quarter, Engage tried to stem the tide of red ink when it consolidated five of its business divisions and shed 175 employees, roughly 13 percent of its work force.
Last quarter, Engage posted a loss of $23.9 million, or 14 cents a share, on sales of $66.7 million.
Seven of the 10 analysts tracking the stock have rated it a "hold."