Shares in lifestyle and travel platform Ten Lifestyle (TENG:AIM) plunged 7.8% to 76.5p after it warned coronavirus will hit its net revenue for the year.
In a half-year trading update the company, which offers perks for the world’s wealthy and mass affluent, said adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) is expected to be breakeven.
This would represent a significant improvement on the adjusted EBITDA loss of £2.5m made in the first half of last year.
Ten Lifestyle also said that year-on-year net revenue increased from both existing contracts and new launches, though at a lower growth rate than expected because of slower ability to turn leads into sales and launch activation.
What investors were more concerned about however was the impact of coronavirus on the business.
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Ten Lifestyle said it experienced ‘some disruption’ in its Asia Pacific region in January and February, and that the virus ‘may impact near-term general marketing spend and initiatives’, as well as the timing of client launches.
As a result, it expects a reduction in full year net revenue growth compared to expectations, but added it is making ‘continuing operational efficiencies’ to mitigate the impact on adjusted EBITDA and net cash for the year.
But the firm also reminded investors that its revenue largely derives from ‘service delivery’, rather than the conversion of bookings such as a travel or event ticketing stand-alone business.
Despite the share price fall, Numis sounded a more upbeat note on the company. The broker said, ‘The formula of a ‘digital platform + a request-based model + not earning its margin from the end users’ shines through today.
‘Breakeven EBITDA at H120 is better than expected, thanks to stronger operating leverage, despite maintaining its investment in its platform, which helped win its recent deal flow.’
