- Data centre specialist DXN (DXN) has seen a puzzling drop in its market share, despite forecasting a 257 per cent increase in its full-year revenue
- The company’s share price fell 15.8 per cent yesterday after DXN reported that full-year contracted sales are expected to be $4 million lower than previously estimated
- It seems the market mistook the company’s lower contracted sales forecast as an indicator of overall performance, causing the share price drop
- However, it appears the contracted sales drop has not been reflected in DXN’s full-year revenue forecast, which is expected to be $5 million for FY20 — a 257 per cent increase on FY19
- Before market open Wednesday, DXN is trading at 1.7 cents per share
Data centre specialist DXN (DXN) has seen a puzzling drop in its market share, despite forecasting a 257 per cent increase in its full-year revenue.
Late in trading yesterday, DXN reported that full-year contracted sales are expected to hit $8 million, which is $4 million less than the company’s previous estimates.
It seems the market mistook the company’s lower contracted sales forecast as an indicator of its overall performance. As a result, DXN shares began dropping rapidly and, at market close, were trading 15.8 per cent lower.
However, contracted sales only reflect the company’s expected re-occurring sales, which have naturally lowered as COVID-19 prompts industry customers to re-evaluate capital expenditure commitments.
Turning to the expected full-year revenue, DXN has forecast a $3.6 million increase year-on-year to $5 million (unaudited). Consequently, although forecast contracted sales were lower, DXN reconfirmed its guidance that revenue will be 257 per cent of last year’s revenue.
DXN’s higher expected revenue is unsurprising, given its strong performance in recent months. At the beginning of May, DXN revealed that March quarter customer receipts were up more than 218 per cent compared to the previous quarter.
More recently, DXN purchased Tasmania-based Data Centre 3, which it revealed today will contribute a minimum of $860,000 per annum in revenue for the next three years.
It seems a skittish market, tense with recent volatility, has dropped DXN shares before the full story could come to light.
Before market open Wednesday, DXN is currently trading at 1.7 cents per share.