Global volatility weighs on tech market favourite Aconex

Local technology market favourite Aconex has blamed global volatility for a shock earnings downgrade.

Aconex co-founder and chief executive Leigh Jasper.

Local technology market favourite Aconex has blamed global volatility in the wake of Donald Trump’s ascent to the White House and Brexit for a shock earnings downgrade that sent the company’s share price into a tailspin.

Aconex, which provides process and project management solutions to the construction industry, has downgraded its fiscal 2017 revenue forecast from a range of $172 million-$180m to $160m-$165m, with the company citing the US presidential election and Brexit as key factors hurting sales in the British and US markets for the first half of fiscal 2017.

Full-year earnings have been slashed from $22m-$25m to a range of $15m-$18m.

The downgrade sent investors fleeing with Aconex shares ending the day 45 per cent lower at $3.10, their lowest level since mid-2015, in a stunning loss of confidence in a company that until recently was seen by investors as a beacon of the local technology scene.

The company’s market valuation ticked over the $1 billion mark last year and, with consistent revenue growth and strong investor support, Aconex’s shares were trading as high as $8.75 in late July.

Its shares stumbled late last year after a partial on-market selldown by founder and chief executive Leigh Jasper and executive director Rob Phillpot, but investor reaction in the wake of the downgrade appears severe given Aconex’s strong position in the relatively under-penetrated global construction collaboration software market.

RBC Capital Markets analyst Paul Mason said investors might be worried about Aconex’s growth trajectory.

“Aconex has revised its organic growth projections to about 10 per cent compared to the previous forecast of 20-25 per cent and the market might be wondering if 10 per cent is the new normal,” Mr Mason said.

Aconex said lower-than-expected first-half sales performance in the British and US markets, currency fluctuations and market uncertainty in the wake of Brexit and the US presidential election had all taken a toll on numbers.

“We have seen slightly slower new sales in the UK and the US being primary markets where we were down in our expectations,” Mr Jasper told analysts in a conference call. “That said, primarily it hasn’t flown through to revenue quite as quickly as we’d expect given a high proportion of very long contracts in our sales results over the last six months.”

Mr Jasper added there had also been some teething issues with its $96m acquisition of European rival Conject Holding.

“We also saw some one-off impacts associated with bringing the Conject business into Aconex,” Mr Jasper said.

Management emphasised that the company’s trading in Australia, New Zealand, Asia, Europe (excluding Britain) and the Middle East regions remained in line with expectations.

However, there are concerns that the volatility that has put a freeze on buying decisions in the key British and US markets may continue for some time further, damaging Aconex’s prospects.

Despite the downgrade, Mr Jasper struck a positive note, saying that despite the delays in decision making, Aconex’s overall pipeline was still robust.

“I think the way we see this is really, if you like, a pause in the growth in business rather than a change in the long-term outlook for how we would expect the business to grow,” he said.

But the company’s overall revised forecast was almost 35 per cent below the $23.1m consensus estimate and a far cry from the upbeat outlook expected by Morgan Stanley analysts. The analysts advised investors in a recent note to clients to load up on the ­company’s shares believing Aconex would “show strong sales ­momentum”.

Aconex is due to release its full first-half results on February 21.