Shares in cyber security company NCC Group slumped by more than a third on Friday after a profits warning, due to deteriorating market conditions in the US, including the collapse of Silicon Valley Bank and its impact on customer confidence.
The company cut earnings guidance, with group adjusted operating profit now expected to be within a range of £28-£32m, compared with November forecasts of around £47m.
NCC said market volatility had “materially increased” and was having a significant impact on near-term cyber security revenue and profitability, particularly in the North American technology sector and to a lesser extent in the UK.
It now expects cyber security revenue growth on a constant currency basis to be low single digits compared to the high single digit growth outlined in its 2023 interim results.
“The Software Resilience (escrow) business remains on track to perform as set out in our FY23 interim results, with revenue growth in H2 FY23 offsetting most of the decline seen in H1 FY23, with a full year outturn of 1% revenue decline still expected,” the company said, adding that it was now reviewing its cost base.
Buying decision delays and cancellations were now exacerbated by North America tech sector client layoffs with staffing has not yet normalised, “so continued sector layoff rounds are introducing more uncertainty”, the company added.
“Turmoil in the banking sector following the failure of Silicon Valley Bank has further knocked market confidence leading to reduced appetite to spend on technology projects across sectors. Recent interest rate increases in both the US and UK are creating further inflationary challenges for clients.”
Reporting by Frank Prenesti for Sharecast.com
