Secure payments specialist Eckoh PLC (LON:ECK) is suffering the growing pains that come with international expansion.
It warned that profits for the year would be flat and therefore miss market expectations, citing changes taking place in the US for the temporary glitch.
Stateside it is moving clients to software as a service (SaaS) pricing and away from upfront client payments.
This transition will require some upfront investment, which in turn will hit profit margins this year.
But some short term pain should be rewarded in a longer term gain, the company told investors.
“The newly introduced SaaS model offers Eckoh greater revenue visibility, longer-term client relationships (typically of three to five year fixed terms) and higher overall gross margins,” the firm told investors.
“Eckoh's US customers have proved extremely receptive to this approach and the transition is taking place much more quickly than expected, with over 80% of the company's US sales pipeline already using this pricing structure.”
At the same time a division of the US business it acquired last year has incurred cost overruns of £600,000 for a complex fixed-price project that it is carrying out. The figure is set to rise to £700,000, Eckoh said.
“As a consequence, the decision has been taken to accelerate the closure of the division and focus the company's US workforce on its continuing core operations,” the firm said.
Eckoh said the medium and longer-term outlook remained “positive” following the action taken in the US and the move to the SaaS model there.