(Alliance News) - Smartspace Software PLC issued a profit warning on Thursday due to an issue with a key supplier and said its annual revenue will likely be flat on the year before.
Shares in Smartspace were down 33% at 30.00 pence in London on Thursday morning.
The company provides software solutions for business covering, among other things, desk and meeting room management, car parking, and ticketing.
It had expected to complete its "pipeline of near-term enterprise opportunities" before year-end on Friday next week, the majority of which are with existing clients. However, this is no longer the case.
"While the company has made good progress and is in advanced stage contract negotiations, the division has been informed that one of its key hardware suppliers will not be able to fulfil its contractual obligation in respect of timely delivery of product," Smartspace explained.
This supplier, who has not been named, "is seeking to fulfil the order as soon as possible" but delivery will not occur before Smartspace's year-end.
Because of the delay, Smartspace could not conclude negotiations or recognise revenue "on a number of material enterprise prospects" expected in financial 2020 and so revenue levels are likely to be similar to financial 2019, when the firm's revenue was GBP6.3 million.
This revenue result will hurt earnings before interest, tax, depreciation, and amortisation as well. In financial 2019, Smartspace's adjusted Ebitda loss was GBP2.7 million. This adjusted figure is for continuing operations and excludes impairment charges and share based payment charge.
More positively Smartspace's SwipedOn business is performing well and the integration of the company's Space Connect acquisition, made in October 2019, is making good progress. As at December 31, Smartspace had cash of GBP3.2 million.
"While the unforeseen delays in supply chain and the subsequent impact on the phasing of these enterprise contracts is disappointing, demand for products and services remains strong," Smartspace said.
"The board is confident that negotiations with the enterprise prospects, in addition to others in the company's pipeline, will reach a successful conclusion, underpinning expectations for [financial 2021]. Furthermore, the FY20 outturn supports the previously announced strategic shift to focus on diversification into the self-serve and mid-range markets which can deliver fast growing pure [software-as-a-service] revenue at higher margins," the company added.
By Anna Farley; annafarley@alliancenews.com
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