Telematics and big data provider Trakm8 Holdings PLC (LON:TRAK) lost almost a third of its value today after it revealed that a delay in the timing of new orders has led it to substantially reduce expectations for the current year.
In a trading update, the AIM-listed firm said its “revenues are now expected to be only modestly ahead of FY2016 with adjusted operating profit significantly below FY2016.”
TrakM8 said its board has “taken steps to reduce annualised overheads by c.£1.5m and will ensure that any increases are held in line with revenues.”
The group pointed out that it was affected by new revenues being booked later in the current financial year than expected or delayed into 2018.
However, it added that new orders booked for current and future financial years were valued in total at £24.2mln in the 10 months to January 31, up 24% on the year.
John Watkins, Trakm8’s executive chairman, said: "We continue to be frustrated by the timing of new order wins and it is very disappointing that we have to substantially reduce expectations for this financial year despite having a very strong pipeline.”
But he added: “The future remains very positive and we believe that this year, whilst very disappointing, should prove to have been a hiatus in our continuing long term growth."
Shares plunge ...
In early morning trading, TrakM8 shares dropped by almost 31%, or 34p to 76p.
In a note to clients, ‘house’ broker FinnCap, said: “The hoped-for solutions contracts have slipped and the software business is rapidly shifting to a SaaS model rather than licence fees.
“Also, there is the deliberate reduction of the low-margin contract manufacturing.”
The broker added: “Cash flow will also be affected with net debt likely to rise to £6m by September. Although there should be no problem supporting this debt, we expect dividends to be suspended.”