Netcall downgrades guidance on purchasing delays

British based customer engagement software company Netcall plc (LON:NET) has announced that it was forced to downgrade its annual earnings guidance after delays in purchasing had an adverse effect on sales.

Good start gone wrong

The company’s first set of interim results were not only positive but in line with its expectations, so in regard to the figures published in March 2019, Company CEO Henrik Bang was understandably optimistic.

“We are now approaching a clear inflexion point in our transition from a traditional software business to a high growth digital cloud operation, with our Cloud service bookings exceeding product sales.”

“The increase in our total ACV and Low-code ACV provides a clear demonstration of the growing forward visibility of our revenue streams.”

“Trading is in line with our expectations for the year so far. We expect revenues for the year to be more weighted toward the second half given the move to a recurring revenue model and the timing of product sales. Our strong sales momentum has continued into the second half with order inflow significantly ahead compared with the same period last year.”

What has gone wrong?

For the financial year through June, the company’s product sales had been weighed down by purchasing delays within the NHS, which was compounded by customers ordering the firm’s new low-code cloud offerings. Cloud bookings to-date maintained strong performance, bouncing 160% to £6.5 million. In the meantime, expected adjusted Ebitda has been dropped to £3.4 million.

“The board remains very optimistic about the prospects for Netcall, as evidenced by the strong growth in cloud bookings and ACV,” the company said in its statement.

“The group continues its transition from a traditional software business to a digital cloud operation and the board looks forward to giving a further update at the time of its final results to be published in September 2019.”

Investor update on Netcall

The company’s shares have dipped during trading on Wednesday, down 10.13% or or 5.75p to 51p per share 29/05/19 12:14 GMT. Analysts from finnCap have ‘Reiterated’ their ‘Corporate’ assessment of Netcall stock.

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Jamie Gordon
Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.