Nagarro Shares Fall as Company Lowers Margin Guidance
By Maitane Sardon
Shares in Nagarro experienced a decline on Monday after the digital engineering company revised its margin guidance for 2023 due to a decrease in second-quarter earnings.
Lower Gross Margin Projection
Nagarro disclosed that it currently carries excess production capacity, resulting in a downward revision of its gross margin outlook from 28% to 26%.
Adjusted EBITDA Margin Expectation
Furthermore, Nagarro anticipates its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin to be 13% instead of the previously projected 15%.
Reduced Full-Year Revenue Forecast
The company now expects its full-year revenue to be approximately 915 million euros ($1 billion), down from the previous estimate of EUR940 million. Nagarro attributes this revision to adverse currency movements and scale-backs in a few projects.
Share Performance
As of GMT 0757, Nagarro's shares were trading 8.4% lower at EUR74.00.
Second-Quarter Performance
In the second quarter, Nagarro's adjusted EBITDA amounted to EUR28.9 million, compared to EUR40.2 million in the previous year. However, revenue increased from EUR210 million to EUR226.8 million.
Analysts' Perspectives
Stifel analysts noted that while they expected a softer top-line release, they also thought Nagarro would be able to quickly adjust expenses and potentially reduce headcount. The analysts also mentioned that management mentioned adverse currency movements as a possible factor, which they plan to explore further once the complete first-half report is released.
All Rights Reserved © 2024
Post a comment