Xeros Technology Group shares hit a fresh all-time mid-price low on Monday as investors continued to exit the stock after the company pushed out its timeline for profitability.
In a sobering trading update released last week, Xeros Technology Group plc has announced significant setbacks to its revenue and earnings outlook for the near future.
The company, known for its technologies aimed at reducing the environmental impact of clothing, faces delays in key markets and regulatory uncertainties that have forced a downward revision of its financial projections.
The update paints a grim picture of the company’s short-term prospects. Xeros has dramatically reduced its revenue expectations for FY24 and FY25 to £0.5m and £3.8m, respectively. A substantial decrease from previous forecasts.
Moreover, the adjusted EBITDA loss is now anticipated to be £4.2m for FY24 and £1.0m for FY25, indicating investors are in for a long wait for profitability.
Two major factors contribute to this negative outlook. Firstly, Xeros’s Indian domestic laundry licensee, IFB Industries Limited, has postponed the mass market launch of a 9kg washing machine incorporating Xeros technology from 2024 to 2025. This delay, coupled with a leadership change in IFB’s Home Appliances Division, has pushed back the timeline for Xeros to realise its first royalty revenues in the Indian market.
Secondly, the company has been impacted by regulatory uncertainties in France. While legislation for microfibre filtration in washing machines is in place, the standards and efficacies remain unclarified. This lack of clarity has stalled the anticipated demand for Xeros’s XF3 technology in the short term, further dampening revenue prospects.
The company projects cash balances of £2.9m at 31 December 2024, with current cash standing at £4.0m as of 30 August 2024. While the board expects this to be sufficient to finance operations until achieving month-on-month cash flow break-even in late 2025, the margin for error appears slim.