Datalex lowers earnings, revenue forecast for year as China recovery fails to materialise

Irish software provider Datalex has revised downwards its outlook for the full financial year, after an anticipated recovery in China failed to materialise.

The company, which provides digital retail technology to the airline market, said it expected to report revenue of $22.5 million to $23.5 million and adjusted earnings before interest, tax, depreciation and amortisation (EBIDTA) of minus $5 million to minus $6 million for the full financial year. That is down from the $25 million to $27 million in revenue and adjusted ebitda of minus $3 million to minus $4.5 million the company forecast in September.

The company blamed the ongoing impact of Covid restrictions on its Chinese customers and the timing of specific services projects which will move from 2022 to 2023. The group had previously anticipated that the Chinese market would recover in the second half of the year, but continued lockdowns in key cities in which its Chinese customers operate has hampered that. The company said the situation would negatively impact its earnings in the second half of 2022.

Datalex said it had continued to see strong engagement with customers elsewhere, with a push to accelerate digital retail roadmaps providing a number of opportunities. “However, partly as a consequence of planning for the delivery of such opportunities, it is now expected that services activity levels will be lower than expected in H2 2022 as certain projects move out to 2023,” Datalex said in a statement. “This will negatively impact 2022 revenues but will positively contribute to growth in 2023.”

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“While short term forecasting has continued to be difficult, we remain confident in the ability of our business to grow in the medium to long term. Airlines are focused on accelerating their digital offering and Datalex is very well placed to assist them,” said chief executive Sean Corkery.

“I am really encouraged by the strong engagement the team is having with current and prospective customers across the globe as we continue to execute on customer renewals and build on our robust pipeline of potential new customers. In addition, I am happy to report that the activation of our new customers, EasyJet and Virgin Australia is progressing well. All of which we expect to result in meaningful revenue growth in 2023 and beyond.”