K3 Business Tech plummets as it warns on earnings

(ShareCast News) - Shares in K3 Business Technology plummeted as the software provider warned that earnings for the year will be less than expected due to a "softening in market conditions".Earnings before interest, tax, depreciation and amortisation (EBITDA) for the year will be £3.5m less than initially anticipated.The company said that trading in December, a key selling period, was not as strong as expected due to a "softening in market conditions" as the industry shifts to cloud-based consumption and lengthening sales cycles around large deals.K3 reorganised the business, which is largely complete, to established a more unified and streamlined operating structure, which the company hopes will "enhance sales opportunities and deliver cost efficiencies".The costs associated with restructure are expected to amount to about £3m, with the future benefit likely to exceed £3m per year.The company said it views its "prospects positively, supported by the pipeline of opportunities and the benefits expected to flow from the reorganisation" and the adoption of cloud-based consumption and the ongoing own intellectual property strategy, with recurring revenues remaining high.It also expects cash conversion to increase through due to improvements in the management of working capital.Shares in K3 Business Technology were down 22.06% to 238.50p at 0957 GMT.