Cybersecurity company Intercede Group plc (LON:IGP) said today full year revenue could be hit by delays on orders with government contractors amid uncertainty on President Donald Trump’s military spending plans.
Trump has pledged to increase the defence budget by $84bn over the next two years but is yet to map out the specific details on where the spending will be allocated, including how much will go to cybersecurity.
Intercede believes this raises “considerable and unexpected uncertainty” for the short term budget allocations across the company's target customer base in the US.
The group warned that orders that were due to close in the fiscal year to 31 March 2017 will be delayed into the next financial year, which would hit revenue and result in losses for the year higher than management expectations.
The orders, with US government and defence contractor customers, are worth £2.0mln.
Unless it receives further orders that can be recognised as revenue in the current year, the company said its full year revenue will fall to £8.0mln from £8.8mln the previous year.
However, Interserve thinks the impact of the US government’s budget is short term and a presidential executive order on cybersecurity is expected shortly.
“Intercede is developing products and services which directly address the emerging need for higher levels of cybersecurity,” said chairman Richard Parris.
“In the next 12 months, European and US regulation will require a range of agencies and organisations to put this in place.”
Intercede will use the £4.5mln in funds it raised in January to invest in new applications for software and to expand into new markets. The group is expected to end the financial year with a gross cash balance of £6.0mln.
Shares tanked 16.15% to 43.60p in late morning trading.