Shares in Dianomi PLC (AIM:DNM) fell 9.5% to 47.5p after it reported a 17.6% decline in revenue in the first half and the amendment to a contract with one of its largest publisher clients.
After a big fall in traffic volumes across all media, the publisher's minimum traffic levels were not met in the first half, resulting in a US$1 million overpayment by Dianomi. Rather than recouping the overpayment, the publisher is instead providing an "enhanced revenue share" from 1 July in addition to its existing permanent ad units, with "additional premium ad inventory".
Dianomi recognised the one-off overpayment as an additional cost of sale in the first half, resulting in a lower gross margin and an increased underlying loss (EBITDA) of £1.0 million.
The amendment is expected to increase revenue and profitability in the second half of the year and beyond, with the company expecting to be profitable at an adjusted EBITDA level in the second half.
For the first half, revenue decreased to £14.8 million from £18.0 million last time as traffic volumes fell across its direct publisher inventory.
Dianomi swung to a statutory loss before tax of £2.05 million from a profit of £897,000 a year ago.
Cash stood at £7.1 million at the June half-year stage, down from December's £11.7 million.
Chief executive Rupert Hodson said the economic environment continues to be challenging and the group's operational cost base has been cut by £1 million, though in spite of the backdrop, he reported that Dianomi continues to attract new business and now counts all 10 of the top 10 US asset managers as clients.