Gresham Technologies shares tank 13 per cent as it ditches weak business unit
Shares in Gresham Technologies plonked over 13 per cent on Friday morning after it told markets it is discontinuing its low-margin legacy service, costing it £8.5m.
The software and services company said it has agreed with Australia and New Zealand Banking Group (ANZ), its largest customer by revenue, to “completely exit” the lower margin sub-contracting business, which provides IT freelancers to ANZ.
Gresham said it will leave the business behind from the start of next year but expects to lose £8.5m in revenue from the agreement.
But by focusing on its higher-margin Clareti software business, Gresham hopes to improve profit margins in the long run.
Aside from the £8.5m revenue deduction, the London-listed tech company said its revenue forecast for the financial year is staying the same, in line with expectations.
Gresham chief Ian Manocha said: “Discontinuing our IT contracting business will further accelerate our plan to become a pure-play subscription software company and enable us to focus on creating long-term value through our high-margin Clareti solutions.
“Whilst it has been a difficult year for financial markets, and customer budgets are expected to remain fairly tight, we have a solid pipeline of Clareti opportunities and a strategic plan aligned to customer priorities.”