Aconex shares slammed after profit outlook downgraded

Aconex shares have entered a tailspin after it blamed Brexit and the US election for a hefty revision to its outlook.

Aconex co-founder and CEO Leigh Jasper (Source: Supplied)

Construction software company Aconex’s share have taken a tumble after the company slashed its full year outlook, citing Brexit and the US elections as factors hurting sales in the UK and US markets.

Aconex (ACX), which provides process and project management solutions to the construction industry, has downgraded its fiscal 2017 revenue forecast from a range of $172-180 million to $160-$165m. Meanwhile, full year EBITDA has been slashed from $22m-$25m to a range of $15m-$18m.

The news has sent the market darling’s shares into a tailspin, tumbling 45.13 per cent from $5.65 to a more than six-month low of $3.10 by the close of trade. The warning has been just as big a shock to market analysts as it’s for investors, given the positive sentiment attached with Aconex.

Aconex’s revised forecast was up to 35 per cent below Bloomberg’s $23.1m consensus estimate and a far cry from the upbeat outlook expected by Morgan Stanley analysts. In a client note on Aconex, Morgan Stanley analysts advised investors to load up on the company’s shares ahead of a robust earnings update.

“We believe the share price will rise in absolute terms over the next 30 days,” analysts James Bales, John Stavliotis and Wayne Ma said.

“We expect 1H17 result to show strong sales momentum and for ACX to provide more detail on its cash flow profile.”

Instead, Aconex said that lower than expected first half FY17 sales performance in the UK and Americas market, currency fluctuations and market uncertainty in the wake of Brexit and the US presidential election had all taken a toll on numbers.

The company’s performance in the ANZ, Asia, Europe (excluding UK) and Middle East regions remains in line with expectations.

“We estimate that there is about an 80 per cent+ (or ‘highly likely’) probability for the scenario.”

It’s a major blip for Aconex which until now has been seen as a success story in the Australian technology sector. The company ticked over the $1 billion valuation mark as it joined the ASX 200 last year and with consistent revenue growth and strong investor support Aconex’s shares were trading as high as $8.75 a share in late July. The Melbourne-based company recorded a 50 per cent jump in revenue to $123.4m for the year to June 30, largely buoyed by its purchase of Germany-based Conject Group.

“In the short and medium term we’ll look at bolt-on technology acquisitions, and in terms of large acquisitions obviously we want to do a good job of integrating the Conject acquisition before we do too much,” Aconex founder and chief executive Leigh Jasper said at the time.

“But there are certainly more opportunities we will look at down the track.”

Aconex will report its first half FY17 results before the market opens on February 21.