- Full year sales to fall short of estimates
- Break-up of three businesses following review
- Merger of marketing and content businesses
Shares in FD Technologies (FDP:AIM) sank by a third to 881p after the data analytics company warned full year revenue is expected to be below market forecasts.
The AIM-listed seller of software and consulting services, largely to the financial services industry, said tougher macroeconomic conditions and longer sales cycles have impacted the business.
The share price plunge marks a new 10-year low and means the shares sit roughly 80% below the peak reached in 2018.
Revenue for the year to 29 February 2024 is anticipated to be at least £247 million (consensus was looking for £254 million) while adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) is expected to be ‘not less than’ £22.5 million, in line with market expectations.
THREE-WAY SPLIT
Following a strategic review, the board has unanimously concluded that the separation of the firm’s three businesses (KX, First Derivative and MRP) is in the best interest of shareholders.
The first step towards this goal is the merger of the group’s marketing division MRP with US firm CONTENTgene, a provider of business-to-business technology buyer insights and lead generation.
The company will continue to own 49% of the combined entity which means it will be treated as an associate rather than consolidated into the group’s accounts.
The board said it will take a ‘measured’ approach to the separation of KX (software) and First Derivative (consulting) and will update shareholders as the process develops.
Ultimately the disposal of First Derivative will leave the company owning the KX software business which has become a strategic focus for FD Technologies in recent years.
WHAT DID THE COMPANY SAY?
Chair Donna Troy commented: ‘FD Technologies has an exciting collection of assets and at this stage in the evolution of these businesses and against the current market valuation, it is the right decision to take transformative action to separate them and realise value for shareholders.’
Pressure on corporate budgets has impacted both KX and First Derivative sales with lower conversion ratios and longer sales cycles.
Chief executive Seamus Keating said: ‘While the group’s revenue and adjusted EBITDA performance is broadly in line with our guidance, the KX ARR (annual recurring revenue) growth is disappointing.
‘We have moved quickly to strengthen our sales leadership and to ensure that the greatest focus is on repeatable use cases in financial services and aerospace and defence where we have a clear competitive advantage.’
