Brisbane software and tech services company TechnologyOne’s share price has plunged 13.2% after the company downgraded its full year profit growth forecast on Tuesday.
The company announced to the ASX that the 2017 financial year results would see profit rise 7% to 9% from the previous year, which was down from the previous guidance of 10% to 15%.
The share price dipped 13.2% to hit $4.40, down from yesterday’s closing price of $5.07.
TechnologyOne chief executive Edward Chung blamed the downgrade on a “slower than anticipated return to profitability” for its consulting arm, saying the underlying profit growth excluding significant events would be about 20%.
In the first half, the consulting business recorded a loss of $314,000 with a forecast that its fortunes would pick up to reap a profit of $8.2 million for the full year. Now that profit is expected to be just $5.4 million – a $2.8 million hit to its bottom line, which last year saw a $41.3 million net profit off $249 million of revenue.
“Given the strength of our sales pipeline, and our closure rate, we had expected that we could substantially overcome [the consulting] shortfall, but unfortunately a number of significant deals for which we are preferred and for which contracts have been negotiated, have not been able to be closed by year end,” said Chung.
The 2017 calendar year also saw the company fight a public battle with Brisbane City Council over a cancelled software system. That case is now being fought in the courts. This year also saw Adrian DiMarco, who founded TechnologyOne in 1987, stepped down as chief to make way for Chung in May.
The ASX-listed company’s final 2017 financial results will be released on November 21.