Datalex, an Irish business that develops retail technology for airlines, has issued a warning that continuing lockdowns in China will prevent this year’s annual revenues and profits from returning to pre-Covid levels.
The Dublin-listed company now says that second-half revenues and profitability in China will be “negatively impacted,” contrary to earlier predictions that the Chinese market would experience a considerable comeback.
The group anticipates $22.5 million to $23.5 million in revenues and $5 million to $6 million in adjusted profitability for the entire year.
The company has experienced “increased prospects” as a result of high customer interaction with the shift to digital retail, according to Datalex, yet preparation for the realisation of these opportunities has slowed down activity levels in the services sector.
As several projects are being delayed until 2023, it is now anticipated that services activity levels will be lower than anticipated in H2 2022, according to Datalex. Revenues in 2022 will be unfavourably impacted, whereas growth in 2023 will be positively impacted. While short-term forecasting has been challenging, Datalex CEO Sean Corkery said: “We remain optimistic in the capabilities of our business to grow in the medium to long term.
“Airlines are concentrating on enhancing their digital offerings, and Datalex is ideally positioned to help. As we continue to execute on client renewals and build on our excellent pipeline of potential new customers, I am extremely encouraged by the strong engagement the team is having with current and prospective customers across the globe.
“Additionally, I’m delighted to inform that EasyJet and Virgin Australia’s activation as new customers is going well. All of which we anticipate will lead to significant revenue growth through 2023 and beyond.
After securing Virgin Australia earlier in the year, Datalex announced in September that it had secured EasyJet, referring to the agreement as a “important strategic milestone.”
Due to lower transaction volumes in China, first-half revenue declined 17% to $10.4 million, and operating expenses increased 13% to $13.8 million, resulting in an EBITDA loss of $2.1 million.