Shares in Aconex dived Monday after the cloud-based construction software provider slashed its guidance for full-year revenue and earnings, which triggered heavy selling amid investor concerns that new policies in the US and Brexit in the UK may delay a pick -up in orders.
Aconex shares extended their decline in closing trading, falling 45 per cent to $3.10 trading near the days low of $3.04.5c and trading at their lowest level since mid-2015. The all-time high was $8.48 touched in mid-2016.
![Aconex's operating performance remained solid, Aconex CEO Leigh Jasper said.](/web/20170201182255im_/http://www.theage.com.au/content/dam/images/g/q/z/8/f/6/image.related.articleLeadwide.620x349.gu1eew.png/1485752986485.jpg)
Aconex blamed lower than expected sales in the UK and the Americas during the December half for cuts its forecasts. Uncertainty around Brexit was partly to blame for the softer sales in the UK, and the US presidential election had impacted sales in the US.
Also, a higher proportion of long-term contracts had resulted in lower additional short-term revenue, and currency movements in the British pound and the euro had been unfavourable.
Aconex provides cloud-based and mobile collaboration software for the construction industry, which connects owners, contractors and their project teams.
"First-half sales performance in the UK and the Americas was lower than expected due to longer contract lengths and, as highlighted at our AGM, the continued impact of market uncertainty on our UK business," Aconex chief executive Leigh Jasper said on Monday.
"This has been compounded by delayed decision making in the lead-up to the presidential transition (in the US)."
Nonetheless, Aconex's operating performance remained solid, Mr Jasper said.
"We will continue to invest in product and sales and marketing to capitalise on the large global market opportunity ahead of us," he said.
Aconex now expects earnings before interest, tax, depreciation and amortisation (EBITDA) for the full year of $15 million to $18 million - down from $22 million to $25 million previously forecast.
The company expects to generate full-year revenue of $160 million to $165 million compared to the prior forecast of $172 million to $180 million.
Despite the downgrade, both Citi and Morgan Stanley like Aconex shares.
Ahead of the downgrade, Morgan Stanley told clients Aconex was their key pick in their 'structural growth' theme - which is basically high growth with low correlation to wider economic conditions while telling clients it expected a pick up in December half earnings.
Following the downgrade, Citi said Aconex shares were still a 'buy', with a 12-month price target of $8.69, although it did admit the near term outlook is "incrementally concerning" following the downgrade.
While the long term thesis for good growth in the construction collaboration software market remains robust, the short term outlook is incrementally concerning," it told clients, citing concerns about 'new customer wins'.
"Greater insight into Acronex's order book (won work not yet billed) and its pipeline (work that could be won) would increase confidence in Acronex's ability to return to stronger growth rates after this 'pause' in growth.
"With ambiguity regarding US policy, especially over the last week, and the proposed implementation for the UK's Brexit still undefined, we are concerned that buying decisions could remain subdued longer than expected."
- staff writers with AAP