Norkom posts 8% drop in revenue

FINANCIAL SOFTWARE company Norkom has reported an 8 per cent drop in revenue for the six months to the end of September.

Revenues declined to €22.6 million from €24.6 million after what the company has described as a “challenging period”.

Pre-tax profits for the half year fell to €252,000 from €3.178 million and adjusted earnings fell to 1.60 cent from 4.22 cent.

The results come in slightly ahead of expectations and guidance but were flagged at the time of the profit warning issued by the company in September.

Commenting on the results, chief executive of Norkom, Paul Kerley said, “We have experienced changes in market behaviour during the first half of the financial year, with customers engaging in longer sales cycles.”

The company had said that its sales cycle had lengthened due to a slowdown in the contracting cycle and delays in the introduction of new regulations, particularly in Asia.

By geography, Norkom’s Asia Pacific sales declined by 33 per cent while sales in Ireland declined by 47 per cent.

North American revenues increased by 2 per cent, strenghtened by signs of a continued recovery.

Mr Kerley, however, said that the company’s sales pipeline was stronger than in the first half of last year with the company securing five new clients in the period including Fifth Third Bank, Lombard International Assurance and RHB Bank.

The company has said that the majority of revenue from these new clients would be recognised in future periods due to the timing of the contract signings.

In a note to clients Davy analyst Simon McGrotty said that Norkom’s progress in closing new client contracts is encouraging and likely to help the company’s stock price; however, he described the company’s target of securing 20 new contracts in the full year as “ambitious”.