Shearwater Group PLC (AIM:SWG), a cybersecurity company, is bracing for reduced profits in its full financial year after a weak fourth quarter.
Shares in the company opened 38% lower on Friday compared to Thursday’s close.
Full-year revenue is set to come in at £27mln, lower than the £35.9mln in sales in 2022 and a current consensus of £37.7mln, the company said.
Shearwater will now just breakeven in the 2023 financial year. compared to £4.4mln in underlying earnings last year.
The markets had expected profits to stay flat year-on-year.
The UK-based firm claimed a slowdown in its services and software business as well as key customers switching to one-year deals were the reason for the drop in earnings.
Shearwater added that £800,000 had also been lost due to the US$ and £ exchange rates fluctuating, but said hedging was now in place to stop this from happening again.
Available funds have improved, however, with the current net cash of £3.4mln - up £2.5mln from the half year.
“Looking forward the group retains a strong pipeline on which to deliver sustainable revenue, with profits moving forward as we deliver deals to our loyal customer base,” the firm stated in the trading update.
Shearwater said it expects its full-year results will be published in July 2023.
Shares opened on Friday at 52p.