Oxford Metrics hit by profit warning

Oxford Metrics warned that profits would be “materially” lower than expected this year, wiping about a fifth off the value of its share price.
The smart sensing software company, whose tools are used as part of the process of creating the digital avatars for Abba Voyage, the virtual reality pop concert, said that customers in all its markets were exercising greater caution in purchasing decisions during the second half of its financial year, which has led to “extended buying cycles”. This has pushed a number of opportunities in the sales pipeline into the next financial year.
Founded in 1984, the Oxford-based company, which has offices in California, Colorado and Auckland, develops software that, it says, “enables the interface between the real world and its virtual twin”. Its tools are used in healthcare, engineering, video games and Hollywood films to measure movement and create visual effects.
Oxford Metrics’ motion-capture Vicon technology is used by thousands of companies and institutions, ranging from Imperial College London and Boeing to the Fortnite developer Epic Games and Lux Machina Consulting, the virtual production specialist whose credits include House of the Dragon and Barbie.
The company, which has been listed on Aim, London’s junior stock market, since 2001, said its performance in engineering, life sciences and Vicon is expected to be slightly behind on the previous year, while its entertainment segment was hit by “the ongoing slowdown in the global games industry and subsequent content creation contraction”.
Oxford Metrics told shareholders that it now expects to report revenues in the range of £40 million and £42 million for the year that will end September 30, lower than the £44.2 million generated last year and shy of consensus estimates of £48.6 million.
Weaker-than-expected sales means management now anticipates adjusted profit before tax to be “materially below” current market expectations of £7.8 million.
The stock suffered its worst single day performance in more than 20 years as the guidance cut led investors to sell. The shares closed down 16½p, or 21 per cent, to 62½p.
Analysts at Deutsche Numis said that while “forecast downgrades are disappointing, the group’s market-leading IP, market positioning and opportunities are undiminished”.
Despite the revenue delay, bosses said the group continues to have a healthy pipeline as well as a “strong financial position”.
With net cash of about £50 million Oxford Metrics is able to continue “its active pursuit of a number of M&A acquisitions within the smart manufacturing space to enhance our recent acquisition of Industrial Vision Systems (IVS)”, it said.
Oxford Metrics acquired IVS, a specialist in developing machine vision software and automated quality control systems used across various sectors, last November for £8.1 million.