Oxford Metrics Issues Profit Warning, Shares Plummet

Oxford Metrics has issued a profit warning, indicating that profits for the upcoming fiscal year will be “materially” lower than anticipated, resulting in a significant drop of around 20% in its share price.

The company, known for its smart sensing software, provides technology utilized in creating digital avatars for projects like Abba Voyage, the virtual reality concert. It noted that clients across various sectors are becoming increasingly cautious in their purchasing decisions during the second half of the financial year, resulting in “extended buying cycles”. Consequently, several sales opportunities have been deferred to the next fiscal year.

Established in 1984, Oxford Metrics operates out of Oxford and also has offices in California, Colorado, and Auckland. The firm develops software that it claims facilitates the interaction between the real world and its digital representation. Their technology is employed in diverse fields such as healthcare, engineering, video gaming, and movie production to capture motion and generate visual effects.

The company’s Vicon motion-capture technology is utilized by numerous organizations, including prominent institutions like Imperial College London and Boeing, as well as developers like Epic Games and Lux Machina Consulting, known for its work on titles such as House of the Dragon and Barbie.

As a publicly traded entity on London’s junior stock exchange since 2001, Oxford Metrics revealed that its performance in the sectors of engineering, life sciences, and Vicon is expected to slightly underperform compared to the previous year. Its entertainment division has faced challenges due to a persistent slowdown in the global gaming sector and a subsequent contraction in content creation.

The company’s projected revenues for the fiscal year ending September 30 are estimated to range between £40 million and £42 million, which would be a decrease from the £44.2 million reported last year and below market consensus expectations of £48.6 million.

The decline in sales has led management to predict that adjusted profits before tax will fall “materially below” current market forecasts of £7.8 million.

Following the announcement, the stock experienced its most substantial single-day drop in over two decades, closing at 62.5p after a decline of 16.5p or 21%.

Analysts from Deutsche Numis acknowledged that while the reduction in forecasts is disappointing, the company’s leading market position and available opportunities remain robust.

Despite the revenue delays, company executives reported a strong pipeline of potential projects and a solid financial foundation.

With approximately £50 million in net cash, Oxford Metrics is poised to actively pursue several mergers and acquisitions in the smart manufacturing domain, aiming to bolster its recent acquisition of Industrial Vision Systems (IVS).

Last November, Oxford Metrics acquired IVS, which specializes in machine vision software and automated quality control systems used across multiple sectors, for £8.1 million.