GB Group (LON: GBG), the Chester-based identity verification and fraud prevention business, saw its shares crash today after warning that its Americas Identity division has weakened again, forcing a cut to full-year revenue guidance.
The stock fell around 24.2% to 175.80p, from Thursday’s close of 232.00p, having opened at 187.80p and touched a day low of 169.00p. The fall took the shares below their 52-week low of 180.6p.
GB Group said in a trading update today that first-quarter revenue in its Americas Identity business was only marginally below plan, but growth has not improved in the second quarter, hit by higher-than-expected volume attrition on a few material customers. The company said its sales pipeline remains strong, but normal sales-cycle timing means the impact is unlikely to be mitigated within the current financial year. As a result, GB Group now expects group revenue growth of just 1-3% for the year, down from its previous mid-single-digit guidance, alongside an adjusted operating profit margin of approximately 21%. The company is continuing a one-off £6m investment in its GBG Go platform’s innovation roadmap, announced in June.
The company also confirmed that Tom Schutz, Chief Revenue Officer for the Americas, has left the business. James Gothard, the group’s Chief Operating Officer, will take on interim responsibility for the Americas operation.
The reversal is striking because GB Group told markets at its June results, published on 2 June, that the same Americas business had returned to growth in the fourth quarter of the last financial year, crediting leadership changes and improved sales productivity, with new business running at three times the prior year’s level. Today’s update abandons that narrative just weeks later, pointing to renewed weakness in the same division.
The scale of the drop reflects how central the Americas recovery had become to the investment case, given the region’s history of leadership and execution problems over the past two years. Investors will now watch for confirmation of how deep the renewed weakness runs when the company next updates the market.