Dublin-based Escher Group forecasts lower revenues

Dublin-headquartered software firm Escher Group, which issued a profit warning late last year, has said it expect group revenue of $22 million (€20.1m) for 2015, up 4 per cent on the $21.1 million (€19.3m)reported a year earlier.

Escher, a provider of outsourced, point-of-sale software to the postal industry, warned of a shortfall in licence revenues in December. It had previously estimated full-year revenues of $24.2 million for the year.

Escher was founded in 1989 in Boston and moved its headquarters to Ireland in 2007 following a management buyout.

In a trading update on Thursday, the group said it expects licensing revenues to continue to be uneven and difficult to forecast this year as most new postal customers require one-off licensing agreements.

The company, which is due to publish 2015 results in early March, said full-year adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) is expected to nearly double to $4 million from $2.1 million in 2014.

Net debt at the end of December had fallen from $5.3 million to $2.7 million, the company said.

Escher's chairman Liam Church said its core retail services business continued to perform well last year with strong growth in maintenance and support revenue.

Mr Church added that the group continues to make good progress in developing its recurring licence and maintenance revenues, having secured significant contracts in Germany and the US last year. Such revenues are expected to amount to more than 50 per cent of 2016’s revenue.

“We have continued to make good progress in developing our emerging businesses and increasing our forward visibility, as well as completing the rollout of our software to new customers and securing new contracts. Additionally, two major customers are now in maintenance and support, which has enabled us to recognise the associated revenues,” said Mr Church.

In a note to investors, Davy said that while December's profit warning had dented market confidence in Escher, the transition to a more recurring-revenue-based model should lower volatility and improve earnings sustainability for the group.