Delayed deals lead to profit warning from Gresham Technologies
Software and services company Gresham Technologies updated the market on its trading on Thursday, reporting that its legacy software businesses were performing as planned, and its Australian sub-contracting business had delivered a stronger performance in the second half, as expected.
The London-listed firm said its new cash management solutions business was performing “broadly” as planned, with an additional new ‘Clareti Multi Bank’ client win in recent weeks, bringing the total to three since Gresham’s acquisition of B2 Group in July.
It said it continued to see “strong demand” in the market for its flagship ‘Clareti Transaction Control’ offering and, as it noted in its interim results and its October trading update, the ability to convert the pipeline of new opportunities in the second half of 2018 had been “key”, with 80% of the planned revenues for the year now contracted.
Gresham said it also had “very good” visibility of a further 15% of planned revenues, based on a small number of high-value, incumbent vendor replacement software deals where the company had achieved preferred vendor status following successful competitive evaluations.
“Subject to these software deals being contracted and recognised by 31 December as anticipated, the group expects to close the year with continued strong Clareti growth and group revenues broadly in-line with expectations,” the board said in its statement.
“However, as a result of certain other high margin significant software licence deals now being delayed into 2019 and on-going investments in product innovation and business development, the company expects adjusted EBITDA for 2018 to be materially below current market expectations.”
In light of “complex data challenges” and increasing regulatory burden faced by institutions operating in Gresham's target markets, the board said it remained “fully confident” in the group's prospects and its Clareti-led strategy to deliver sustainable and profitable growth over the long-term.
It said it would continue to make the appropriate investments in support of that strategy.