Business

FD Technologies: Newry-based tech firm takes share price hit after reporting lower earnings

FD Technologies reported lower revenue and earnings for the six months to August 31 2023.
FD Technologies reported lower revenue and earnings for the six months to August 31 2023.

THE share price of Newry-based FD Technologies plunged to a ten-year low on Tuesday after the company announced a fall in revenue and earnings.

The London-listed tech firm reported a 3% drop in revenue to £142.5 million for the six months to August 31 2023.

Gross profit fell 1% to £59.4m for the six-month period, but that left the data-driven company with a half-year loss before tax of £4.5m.

Market forecasts for the group’s full-year 2024 earnings were downgraded on Tuesday morning.

The group now employs around 2,800 people across its three businesses: KX, First Derivative and MRP, including around 1,200 people across the island of Ireland.

A report from Investsec said the First Derivative division was "suffering from tough macro [conditions], similar to other capital markets IT services business, leading to forecast downgrades".

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But the market analyser was more upbeat on the group’s KX data insights business, which offers real-time data-driven intelligence for a diverse range of global clients.

The FD Technologies share price fell sharply as markets opened on Tuesday morning, dropping to an early low of £7.75 per share, the lowest recorded by the group since 2013.

It wiped around £150m off the company’s value overnight, before the price began to climb again throughout Tuesday.

FD Technologies’ share price had hit a summer high of £21.65 in June.

Seamus Keating, who took over as group chief executive in January 2020 following the death of company founder Brian Conlon, said the reduction in earnings was down to the level of investment FD Technologies had made over the period, particularly in the KX business.

“The share price in the first hour this morning is reacting to the reduction in the short term earnings,” he said.

“But the reduction in the short-term earnings is an investment in growth for next year and beyond in the KX business substantially.”

FD said annual recurring revenue (ARR) was up 15% in the KX business to £69.3m, with recurring revenue up 23%.

The group said “a significant H2 pipeline [is] providing confidence in delivering our FY24 target of ARR growth of at least 35%”.

FD Technologies employ around 1,200 people on the island of Ireland, primarily across Newry, Belfast and Dublin.
FD Technologies employ around 1,200 people on the island of Ireland, primarily across Newry, Belfast and Dublin.

Mr Keating added: “We’ve been asked over the last 12 to 18 months ‘are we investing enough and are we going fast enough in KX?’

“What we’re saying today is we’ve laid the foundations to accelerate the growth rate.

“That’s what the numbers here today are saying.

“The opportunity is there," he continued. "The world of analytics and in general, AI, is creating an opportunity and our platform of KX products give us a huge opportunity to accelerate growth.

“We are very convinced that this is the right time to increase the investment to make sure we can capitalise on that.”

FD Technologies’ share price rebounded slightly as morning trading progressed on Tuesday, but the value was still down by around one-third on Monday’s closing price.