Calnex shares fall 30% amid revenue warning

Calnex CEO Tommy Cook

Shares of Linlithgow-based telecoms testing and measurement firm Calnex Solutions plc fell about 30% after it published a stark update on trading and outlook for the full year to March 31, 2024, and beyond.

Calnex said revenues for FY24 will be 20% to 30% below current market expectations, depending on the timing of orders.

Calnex’s customers include BT, China Mobile, NTT, Ericsson, Nokia, Intel, Qualcomm, IBM and Meta.

Calnex went public at 48p per share in October 2020 and its shares soared as high as £1.95 in January 2023. However, the firm’s shares have plummeted since January and are now down 60% year to date.

Calnex shares currently trade around 66p, giving the firm a stock market value of about £58 million.

“In the first six months of FY24, the company’s order inflow has remained at the subdued levels experienced at the start of the year, with the precise timing of future customer orders remaining uncertain,” said Calnex.

“The cautiously improving outlook for the sector identified earlier this year has not developed momentum and the company is aware that certain customers have elected to delay projects and associated orders in response to continuing wider economic uncertainty.

“These factors have led the board to conclude that H2 FY24 will be slower than anticipated.

“The challenging market conditions mean the board now anticipates that, whilst revenues are expected to increase in H2 versus H1, revenues for FY24 will be in the region of 20-30 per cent below current market expectations, depending on the timing of orders.

“No customer orders have been cancelled and all are expected to be fulfilled once the delays to customer project spending are relaxed.

“The company’s balance sheet remains robust, with cash at the end of September 2023 of £13.5 million, following investment in inventory.

“The cash position enables the company to continue to target growth opportunities in its key sectors and maintain relationships with customers as they plan future investment in their projects.

“Calnex’s sales pipeline remains strong and the company’s close relationships with its customers leaves it well positioned to convert the sales pipeline to orders once spending patterns normalise.

“The board is confident in a return to growth in FY25, with Calnex able to deploy its suite of products to target opportunities in both the Telecoms and cloud-computing and related sectors.

“Costs are closely monitored with investment in new products subject to stringent assessment.

“The company is actively targeting new markets with its expanded product range, and recently launched, or soon to be launched, enhanced product lines within existing and new key markets …”

Calnex CEO Tommy Cook said: “Whilst the telecommunications market outlook is currently challenging, the expansion of our product portfolio to areas outside of telecommunications and our strong sales pipeline mean we are confident in a return to growth in FY25.

“Looking to the longer-term, the underlying market drivers continue to build, such as the need to upgrade telecoms infrastructure to deliver the promise of 5G, and to enhance data centre operations to support the demand for cloud computing and advancements in AI and Virtual Reality technologies.

“As a result, our confidence in the long-term prospects for Calnex remains high.”