KRM22 PLC (LON:KRM) has said it still expects to be adjusted underlying earnings (EBITDA) positive at the end of 2020 despite the “uncertainties and unknowns” relating to the coronavirus pandemic.
In a trading update, the risk management software firm said it had “continued to see interest” for its products in the first quarter of the current year, and that a number of multi-year contracts were in “advanced stages of negotiation”.
KRM added that it has also implemented cost-cutting measures to reduce its cost base by over £1mln over 12 months, although these measures will not affect its ability to support existing customers or win new contracts.
Despite this, the company said it was seeing sales cycles for contracts extended due to high volatility as well as quarantine restrictions imposed by national governments as a result of the pandemic.
While the company is “encouraged” that its customers and prospective clients remain engaged in discussions, the outbreak meant it expects annual recurring revenues (ARR) to be “significantly lower than management expectations”.
The group also said it has lost £0.3mln in ARR from the acquisition of a customer by a third party, however, it believes the customer is in breach of termination clauses and facilitated an IP infringement, adding that it will pursue legal action if required.
Directorate changes
In a separate announcement, the company said its chief financial officer Kim Suter had been appointed to the board of directors with immediate effect, while non-executive director Karen Bach will be stepping down, also with immediate effect.
"I am very pleased to welcome Kim to the KRM22 board. Kim has been with us from the very early days in an executive capacity and built a solid and effective finance function and has shown an incredible work ethic, true professionalism and leadership”, said executive chairman Keith Todd.
“I, the board and the KRM22 team, wish to thank Karen for her important role in establishing KRM22 as a business and the successful IPO, as well as her contribution as COO to our acquisitions and business operations during our first two years”, he added.
The shares were steady at 49.5p in early trading on Thursday.