IDE commits to more cost cutting action as pandemic eats away at profits

MSP says it is already enjoying fruits of £22.5m contract win last month

AIM-listed IDE Group's is expecting its revenes to fall sharply and its profits to be slashed for its full-year 2020 results as Covid impacted its business.

The managed service provider, ranked #154 in CRN's VAR 350, reported in a trading update that it expects total turnover to tumble 15 per cent to £23.6m for its year ending 31 December 2020, while EBITDA is expected to drop sharply by 54 per cent to £500,000.

IDE put severe cost-cutting measures into action during its FY20, including redundancies to reflect the decline in "certain service lines" as a result of the pandemic while also continuing its datacentre consolidation, which it expects to see the benefits of in its current fiscal year.

It warned that further cost reductions are expected in the coming months, "given the ongoing level of churn in certain service lines, in particular cloud and networks".

The trading update caused IDE's share price to plummet up to 10 per cent since market opened this morning.

IDE has suffered declining revenue figures for the last number of years and last year said that it was taking "positive steps" to stabilise the business.

However, it's not all doom and gloom for the service provider. Last month it saw its share price surge 70 per cent on the back of a big contract win. The contract is with an unnamed existing customer is valued at £22.5m over the next three years, with the possibility of extending it for a further two years.

"There has already been a good level of engagement with the partner with a pleasing level of underlying contracts already awarded under the contract," the firm stated.