ASX-listed IT consulting firm RXP Services has taken a hit to its revenue due to changes in working arrangements brought about by COVID-19.
For the half year ended 31 December 2020, RXP reported revenue of $58.6 million, down 10 percent year over year from $65.1 million.
The company attributed the dip to COVID-19 restrictions and associated “sustained remote working arrangements” that impacted the sales process and sales conversion in Q2 2021.
“We entered FY21 with momentum and this continued during the first quarter of FY21, as businesses recognised the need to invest in brand development, brand awareness and call to action marketing,” RXP chief executive Ross Fielding said.
“Despite this, sustained remote working arrangements impacted the effectiveness and efficiency of our sales processes in Q2, resulting in softness in new project pipeline development and conversion.
“Pleasingly, we had strong support from existing clients, with client retention remaining extremely high, and project extensions occurring. In addition, we continued to have strong demand for our digital marketing services, along with some good bluechip client and project wins.”
The company also reported a non-cash impairment of $12.2 million related to the proposed acquisition by Capgemini announced last year. The amount was made to goodwill as a result of the fair value less cost to sell valuation in light of the acquisition.
The impairment also resulted in a reported net loss after tax for RXP at $10.2 million.
Looking ahead, RXP is expecting to have a positive second half of FY2021 with the help of strong support from existing clients and expected improvement in sales conversion.
“Despite the ongoing impacts we have seen from COVID-19 and the associated remote working arrangements, and the potential for ongoing uncertainty, we are seeing early signs of improvement in the operating conditions,” Fielding said.
“With many businesses now focused on a return to the office, we are seeing more face-to-face meetings, resulting in increased activity in terms of our sales processes. Combined with growing business confidence and greater clarity of client priorities, we look forward to a stronger result in the second half of FY21.
“In what continued to be a challenging environment, I want to thank our dedicated team for their continued efforts over H1 FY21, as well as the ongoing support from our shareholders.”