Shares in Datalex hit turbulence as accounting error is reported

16 Jan 2019431 Views

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Irish airline e-commerce player Datalex misses the runway on vital targets.

Shares in travel software company Datalex fell by close to 60pc in trading yesterday (15 January) after it issued a shock profit warning. The company revealed that it may have overstated revenues in relation to a major customer in the first half of last year.

‘The fundamentals of the business remain strong. We are confident this is a once-off and we will return to profitability in 2019’
– AIDAN BROGAN

Around €112m was wiped off the company’s market capitalisation, which on Monday (14 January) stood at €190m. Shares fell from €2.44 on Monday to €1 by the end of trading yesterday.

The company had been expected to report EBITDA (earnings before interest, taxes, depreciation and amortisation) of €16.2m for this year. Last year it reported EBITDA of €14.2m. However, the company now expects to report an adjusted EBITDA with losses of between minus €1m and minus €4m.

Major Irish investor Dermot Desmond of IIU holds a 26.8pc stake in the company.

Bumpy landing

According to reports, accountancy firm PwC has been called in to undertake an independent review of what happened.

It is understood that Datalex, one of the Irish tech scene’s few publicly listed companies, overestimated the costs it could charge for a contract signed with a major European airline, believed to be Germany’s Lufthansa. As a result, revenues that were expected to be booked by the company in 2018 will not be recognised until this year and 2020.

Speaking yesterday, CEO Aidan Brogan commented: “Today’s announcement is extremely disappointing for me personally, for the team at Datalex and for our supportive shareholders.

“For my part, I can assure all our stakeholders that we have already identified certain key areas that require improvement, and are taking corrective action. The fundamentals of the business remain strong. We are confident this is a once-off and we will return to profitability in 2019,” Brogan said.

Datalex’s digital commerce platform is used by global airlines including Aer Lingus, JetBlue, Lufthansa, Philippine Airlines, Swiss International Air Lines and Virgin Australia, and enables a travel marketplace of more than 1bn shoppers across the globe.

Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com