Shares inIntercede Group (AIM:IGP) dropped 18% to 79.7p on Tuesday after the cybersecurity software company warned that full-year revenue would come in 8-9% below market expectations, blaming procurement delays and customer caution linked to geopolitical uncertainty, including the Middle East conflict.
The shortfall feeds directly into profitability. Underlying earnings are expected to land 15-18% below forecasts, a meaningful miss for a company in the middle of a strategic shift from one-off licence sales to recurring subscription revenue.
The company was more upbeat on cash, with year-end balances expected 3-5% ahead of expectations, and it reaffirmed its financial year 2027 revenue target of £21 million, arguing the shortfall reflects timing rather than lost business.
CEO Klaas van der Leest emphasised that pipeline engagement remains active and that order intake improved in the second half of the financial year, which he said validates underlying demand for the company's digital identity products.
The company carries no debt. A fuller trading update, including revenue figures and cash balances for the year ending 31 March, is expected on 9 April.
Cavendish trimmed its target price to 180p from 225p, valuing the company at 15 times its 2028 earnings before interest and tax and just under 20 times forecast earnings per share excluding cash.
Both multiples represent a premium to the broker's broader technology peer group, which the broker justified on the grounds that Intercede's digital identity products address a large global market.
The reduction reflects sustained pressure on software sector valuations rather than a change in the broker's view on the underlying business.