14th Jul 2016 08:02
LONDON (Alliance News) - Digital Globe Services Ltd on Thursday said it expects to post full year revenue ahead of market expectations, though noted it will incur a one-off expense of around USD4.0 million and pointed to a gross margin compression in its second half.
The customer acquisition consulting company said it expects to post revenue of USD48.0 million for its year ended June 30, up from the USD40.3 million reported a year earlier and "marginally ahead of market expectations".
Digital Globe said this growth was driven by client wins in new verticals and increased volumes in its core business from its existing client base. Gross margins experienced compression in the second half, due to higher marketing spend, the company said, partly due to its entry into new industry verticals such as energy and utilities.
Digital Globe said its earnings before interest, tax, depreciation and amortisation is expected to be below market expectations at around USD3.1 million, due to a weaker gross margin and direct labour costs associated with its acquisition of an on-shore call centre to support new verticals that require on-shore fulfilment centres. The company said it expects gross margin to recover to historic levels as new business matures.
Digital Globe said it has written down "certain accrued revenue outstanding for over twelve months", and this will represent a one-off non-cash expense of around USD4.0 million in total, noting that it believes that a portion of this may be collectable but has written off the full amount.
"While we saw margin pressures on some of the core business and new trading, we expect to see margins improve during the first half of the new financial year. We have made additional investments in infrastructure and technology that enables us to remain a leading provider of customers for our brand partners," said Chief Executive Jeff Cox.
Shares in Digital Globe were down 24% at 58.25 pence on Thursday.
By Hannah Boland; [email protected]; @Hannaheboland
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