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Tuesday 14 November 2017

Escher full year set to disappoint again

Escher logoShares in AIM-listed Escher Group are trading some 27% lower this morning (at 127.5p as we write) after the SME announced that the postponement of major contracts would result in materially lower license revenues for the year to end December.

The provider of outsourced point of sale software to the worldwide postal, retail and financial industries, will not close the additional license sales it had expected in H2 2017 and revenues will end the year at c$18m as a result, compared to $22.4m the prior year (see Escher profits jump on improved recurring revenues). Crucially the higher margin license revenues will be ‘materially lower’ than expectations. Adjusted EBITDA (excluding exceptional items) is now expected to be c$2.7m with a neutral net debt/cash position. Escher continues to manage its fixed cost base to remain profitable and we can expect restructuring costs of c£0.3m again this year.

This is not the first time that Escher has disappointed the markets with its second half performance. Our UKHotViews archive tells the story of its ‘uneven and difficult’ license revenue history (see here). As CEO Liam Church explains: “The volatility in revenues and earnings caused by the timing of these license sales remains a characteristic of our core Postal activity.” That may well be the case, but it’s not difficult to see why shareholders are losing patience with Escher, which has repeatedly failed to meet full year expectations.

Posted by Tola Sargeant at '10:53' - Tagged: trading   software   postal  

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