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Highlights:
- Touchstar lowers 2024 revenue forecast due to order delays and slower conversion times.
- Shift in customer purchasing patterns leads to reduced aggressive orders.
- Strategic review remains underway, with updates expected in coming months.
Touchstar PLC (LSE:TST), the mobile data solutions provider, saw its shares plummet by 23% after announcing that its 2024 revenue is now expected to fall short of previous projections. This adjustment stems from a notable shift in customer purchasing behavior, with clients increasingly adopting “just-in-time” purchasing models. This change has not only impacted the volume of aggressive orders previously anticipated but has also introduced longer conversion times for transactions.
Compounding the situation, Touchstar reported that a significant order initially scheduled for delivery in 2024 has now been postponed to 2025. This delay, attributed to changes in customer schedules, will impact the company's profit expectations for the current year.
Despite these challenges, Touchstar’s management remains optimistic regarding cash generation in the second half of 2024. The company expects that, while this year’s revenue may fall short, cash flow will hold steady, allowing Touchstar to meet its goals in 2025. The company’s strategic review, launched in September, continues as planned, with updates promised to shareholders as developments unfold.
In early trading, Touchstar shares dropped 24p, bringing the stock price to 81p. This reaction reflects investor caution surrounding the revised revenue forecast and the shifting dynamics in customer purchasing patterns. Nonetheless, the company’s stable cash projections and ongoing strategic initiatives are intended to mitigate current year challenges while positioning Touchstar for improved performance in the year ahead.
