Next 15’s share prices plummeted by 50% after losing a major client.
- The client chose not to renew a three-year contract, affecting future revenues.
- The decision is set to cause an £80m revenue shortfall by 2026.
- Next 15 has revised its financial guidance, affecting shareholder confidence.
- Despite growth in some areas, technology and public sector revenues remain weak.
Next 15, a prominent player in digital and communications services, faced a significant downturn in its market value as its shares plummeted by 50%. The drastic decline follows the unexpected departure of one of its largest clients, who opted not to renew their contract after a three-year engagement. This development has raised concerns about Next 15’s future revenue streams, particularly as it anticipates an £80 million shortfall by 2026.
The company’s venture building division, Mach49, is primarily affected by the client’s departure, highlighting the challenges Next 15 faces in maintaining its revenue growth. The London-listed firm has swiftly revised its financial guidance downwards, acknowledging the need to manage shareholder expectations following this business setback.
In a statement to the London Stock Exchange, Next 15 highlighted the dual nature of its financial performance. While its consumer-facing businesses have demonstrated robust growth, a persistent weakness in technology sector spending and reduced public sector revenues have overshadowed these gains. The company has communicated that the culmination of these factors will lead to lower than anticipated revenues and profits, falling materially below management expectations for fiscal year 2025.
Despite this negative outlook, Next 15 reported a modest increase in its full-year revenue, which rose by 2.5% to a total of £577.8 million, as of its latest results in April. This growth was largely driven by acquisitions, though it appears insufficient to offset the revenue shortfall from losing such a major client.
Furthermore, operating profits showed a 6.1% boost to £121.1 million, with the group’s liabilities concerning earn-out payments decreasing by £44 million, including £32.3 million associated with Mach49. The underlying profit margin improved, advancing by 80 basis points to achieve 21%. However, these positive metrics have not comforted investors, as evidenced by the sharp decline in share prices.
Next 15 faces a challenging road ahead, adjusting to significant client losses and financial hurdles.
