Newly-listed Gentrack issues profit warning
Gentrack chairman John Clifford and chief executive James Docking have been unavailable for comment today after issuing a shock profit warning.
Shares in the business software firm opened 19 per cent lower at $2.10 on the NZX this morning after the Auckland software firm downgraded its profit forecast and revealed it was in dispute with a customer.
Spokesman Aaron Baker said Docking, and he understood Clifford, had been locked in discussions with adviser UBS for much of the day and had not been available to the media.
Gentrack said it expected its profit for the year to September 30 would be $2.5 million to $2.8m, which is $900,000 to $1.2m lower than forecast in its May 26 prospectus.
Revenues would likely be between $38.1m and $38.5m, which would be between 5.2 per cent and 6.2 per cent lower than it originally forecast.
The downgrade prompted strong criticism.
Trade Me founder Sam Morgan tweeted it was "baffling how directors can sign a prospectus and take a company public only to miss forecasts two months later".
Brian Gaynor, executive director of Milford Asset Management, said the downgrade was "not good and very disappointing" and could have fallout for other technology stocks.
Gentrack's downgrade came just five weeks after the company listed on the NZX on June 25.
The company said trading to date had been in line with expectations, but a dispute had arisen between the company and an unnamed customer over the delayed completion of a project. Baker declined to name the customer.
There was also a delay signing a substantial contract with an existing customer, which it still expected to sign by the end of this financial year, it said.
Gentrack said it foresaw no change to its forecast $2.6m annual dividend, which it expected to pay in December or its forecast for the 2014-15 financial year.
Clifford said in June that the biggest potential risk investors faced was that the company might botch an implementation for a major client and suffer reputational damage.
"Some projects are more difficult than others but we haven't had any implementation failures," he said then.
Gentrack shares had recovered slightly to $2.35 at noon, but then resumed a downward slide and were trading down 13 per cent at $2.24 in midafternoon trading, 16c down on their original $2.40 listing price.