1st Mar 2024 11:37
(Alliance News) - FD Technologies PLC on Friday said it agreed for one of its unit to merge with a provider of technology buyer insights, and said it expects revenue to be slightly below guidance.
The County Down, Northern Ireland-based group of data-driven businesses, including technology and digital solutions providers KX, First Derivative, and MRP, said it had concluded its structure review.
FD Technologies shares dived 30% to 927.65 pence each on Friday morning in London.
The company said its MRP business will merge with CONTENTgine, a provider of business-to-business technology buyer insights and lead generation.
It said: "The changes announced today represent a major transformation of FD Technologies and reflect the determination of the management and board to realise value for all stakeholders from a unique portfolio of businesses with different capital needs and future opportunities.
"As we progress this plan, we will review the appropriate board composition and update the market in due course."
FD Technologies will own 49% of the combined entity, which will be reflected as an associated investment instead of being consolidated in group financial statements. The net asset value of MRP is stated at GBP19 million.
"CONTENTgine tracks content engagement across 650 B2B software and technology categories, identifying which organisations have the highest propensity to buy. The combination with MRP's enterprise demand generation products and services will create an end-to-end provider covering the entire B2B technology sales and marketing process.
"The combined customer base includes some of the largest brands in enterprise technology and the merged business will be led by MRP CEO Christopher Rack, assisted by the three founders of CONTENTgine," FD Technologies said.
Furthermore, it said it will take a measured approach to the separation of KX and First Derivative, in particular with regard to the timing of any transaction.
FD Technologies also gave a trading update for the financial year that ended on Thursday.
The company expects revenue to be at least GBP247 million, slightly below consensus, with adjusted earnings before interest, tax, depreciation and amortisation to be in line with consensus and not less than GBP22.5 million.
It said the consensus excluding MRP for revenue is GBP254 million.
"The revenue performance for the group was impacted by the prevailing macro-economic conditions and some short-term challenges in KX, which we are proactively addressing as detailed in the overview below," the company said.
KX is expected to report annual contract value added of about GBP7 million in the second half of the financial year, bringing the total for financial 2024 to about GBP14 million.
Annual recurring revenue for financial 2024 will be lower than the expected consensus of GBP83 million, FD Technologies cautioned.
The company said that there have been lower conversion ratio and longer sales cycles, in particular in the joint cloud service provider pipeline. Further, there has been delayed decision making on a small number of larger contracts which were expected to be signed in the second half of financial 2024, that have been delayed into financial 2025.
FD Technologies noted key drivers of sustainable growth in financial 2025 and beyond, such as repeatable use cases with improved time to value in capital markets using standard configurations and closed infrastructure, supporting quantitative research, and attracting new audiences and providing value through its native Python integration PyKX.
The company added that for its First Derivative unit, customer spending caution continued to be evident in the second half of financial 2024. It expects financial 2024 revenue of about GBP170 million for the unit, about 7% lower than a year prior.
More positively, it said: "Looking ahead, there are encouraging signs of improved customer sentiment although it remains too early to forecast the timing of a return to revenue growth."
Chief Executive Officer Seamus Keating said: "While the group's revenue and adjusted Ebitda performance is broadly in line with our guidance, the KX annual recurring revenue growth is disappointing. The slower growth reflects the weaker macro environment and some areas where we need to improve. We have moved quickly to strengthen our sales leadership and to ensure that the greatest focus is on repeatable use cases in financial services and aerospace and defence where we have a clear competitive advantage."
FD Technologies will release its financial 2024 results on May 21.
By Tom Budszus, Alliance News slot editor
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