Shares in financial services software maker GBST Holdings plummeted by 20 per cent in the first few hours of ASX trading on Wednesday after it said it had lost contracts in the UK, its largest international market.
On the same morning that OFX Group issued a profit downgrade, sending its shares down 20 per cent, GBST chief Robert De Dominicis said the company had "experienced project delays and deferred spending related to major projects in the UK" during the first half. Revenue was also hit by the lower pound against the Australian dollar.
"Based on reactions from other companies that have provided soft guidance we would expect GBT's share price to face material pressure as a result of this announcement," said RBC Capital Markets analyst Paul Mason.
GBT's shares slid 20 per cent to $3.07 by 11.30am AEDT and were 37 per cent below their level before the UK Brexit vote last June. Shares traded as high as $5.38 before the Brexit vote.
The stockmarket has been spooked by other companies downgrading profits ahead of the interim results season, including construction software group Aconex. Its shares dived after the company slashed its full-year profit forecast citing the impact of Brexit.
Pallet maker and global logistics company Brambles lost 16 per cent in a single day last week on the back of an earnings downgrade.
Brisbane-based GBST, which makes administration and transaction processing software for wealth managers and investment banks, on Wednesday said that EBITDA for the full year would now be in the region of $12 million for the full year, compared to $17.2 million in the prior corresponding period. Consensus forecasts were for EBITDA of more than $20 million this year.
Services revenue was hit by "a project that will not materialise and client deferral of other projects".
GSBT, due to report its half-year results on February 14, has cash of $12 million and no debt and said the board "intends to continue to pay dividends".
The company's shares surged in early 2015 by 70 per cent, but disappointed investors last year when it posted a 5 per cent drop in revenue to $108.1 million and a 39 per cent fall in net profit to $9.3 million for the full year, missing analyst expectations.
This was on the back of negative currency conversions caused by the Brexit vote and a challenging first half. The business had a 16 per cent jump in revenue in 2015 but that year, its long-time chief executive Stephen Lake retired.
With its market capitalisation falling to around $220 million after the Wednesday rout, GBST could become a takeover target given the number of global firms working on similar systems. Mr Mason said last year GBST could be targeted by one of its larger global competitors, such Broadridge, Genpact or Cap Gemini. Broadridge has previously tried to establish an Australian presence.
GBST said on Wednesday said it would continue to invest in Syn~, which automates middle and back offices for stockbrokers, and Composer, software which streamlines wealth management administration. After falling heavily at the time of Bravura's initial public offering in November, its shares have recovered to be trading at $1.38, below the issue price of $1.45.
Despite its UK troubles, GBST said its recurring licensing fee revenue in the UK had increased, while Syn~ "has exciting prospects in Asia and North America". It also said its Australian retail wealth product, called Catalyst, "is on schedule".
