Datalex revenue hit by continued Covid disruption to air travel in China

Irish software provider Datalex saw revenues fall by 17 per cent in the first half of the year as its bottom line was hit by continued Covid-19 disruption to air travel in China.

The group, which primarily provides digital retail technology to the airline market, published its results for the six months to June 30th on Friday.

Total revenue for the six-month period was $10.4 million (€10.4 million), down from $12.6 million during the same period last year.

“This year-on-year variance is primarily attributable to a reduction in transaction volumes in China, where air travel remains heavily impacted by Covid-19, and a decrease in services projects during the period,” the company said.

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Total operating costs before exceptional items increased by 13 per cent to $13.8 million (€13.76 million), while it recorded an adjusted earnings before interest, taxes, depreciation, and amortisation (ebitda) loss of $2.1 million, a decrease of $3.9 million versus the same period in 2021.

Sales and marketing spend increased, while the company said it had a “robust pipeline of opportunities to progress over the coming months”.

Datalex chief executive Sean Corkery said: “Despite the lower-than-expected activity levels in certain areas, I believe significant progress has been made in 2022 so far.

“Looking forward, I expect the positive momentum in sales activity experienced in the first eight months of 2022 will continue. However, as outlined in the guidance issued today, it will take time for this progress to be reflected in our financial performance.

“As I look beyond 2022, I am encouraged by the strong signs of industry recovery. We remain confident in the ability of our business to grow in the medium to long term.”

The company said the first half of 2022 saw strong increases in demand for travel across the world. “However, airports and airlines have faced challenges due to the unprecedented scaling up of operations, resulting in capacity constraints and intermittent flight cancellations,” it said.

“Datalex services activity levels were reduced as airlines focused on core operational priorities. Additionally, we have seen continued travel restrictions in some regions such as China, where they follow a zero-Covid policy, which affected Datalex transaction volumes.

“However, it is anticipated that there will be a continued recovery in the second half, and that the China market will experience a material recovery.”

The company said it expected to report revenue of $25 million-$27 million and adjusted ebitda of minus $3 million to minus $4.5 million for the 2022 full financial year. Currently the group has drawn down €2.5 million of the €10 million available under the existing debt facility.

The company also announced the signing of budget airline EasyJet as a new customer. Datalex will provide technology to “enhance their retailing and digital experience”. It follows the addition of Virgin Australia to its books over the past nine months.

Mr Corkery said he could not comment on the value of the EasyJet contract to the company, but said it would “materially impact our revenues for the duration of the contract when fully operational”.