Shares in language translation technology specialist SDL (SDL) fell by almost a quarter after the group said like-for-like adjusted cash profits may not meet current market expectations for the year to December 2017. This depends on whether certain software deals, which Peel Hunt values at around £3m, close before the year-end.
Meanwhile, higher costs were incurred after a faster-than-expected migration from perpetual licence sales to software-as-a-service sales. Even so, the resultant revenues will flow into future years.
Language services achieved continued sales growth and a recovery in gross margins, with future margin gains anticipated during 2018 thanks to the automation programme ‘Helix’. This is good news, after margin weakness at the half-year stage.
The group has also been cutting costs; they expect to incur a £3.5m exceptional charge in 2017, with a lower charge in 2018. That said, management will increase investment in fast-growing segments including life sciences, while accelerating the development of machine learning.
