Infomedia Limited (ASX: IFM) provided an updated earnings guidance after the market closed on Thursday which didn't sit too well with investors. Infomedia provides information solutions to auto dealers through software designed to improve customer service levels, and to help repair and service vehicles by providing a comprehensive parts catalogue.
Although it boasts an attractive business model with strong recurring revenue levels and zero debt, it has been a rather volatile performer over the last 12 months which has been enough to turn some investors away.
Indeed, its shares have fallen 6.7% today after the company announced its preliminary unaudited net profit after tax (NPAT) result for the 2015 financial year of $13.2 million. That compares favourably to the $12.3 million result achieved in 2014, although it is below the $13.7 million profit forecast by management in February this year.
Infomedia blamed this on volatility in exchange rates, caused mostly by fluctuations in the Euro experienced over the last two months and the valuation of hedging contracts. It said that the pre-tax hedging gain of $0.35 million at 31 December 2014 had turned into a loss of $0.55 million at 30 June 2015.
At the same time, operating costs for the second half remained relatively flat due to the additional costs of business development and implementation for new business, including the contract signed with Hyundai Motor America earlier in the year.
Although the result is obviously lower than what investors were expecting, today's dip could actually be a great opportunity for long-term investors to start building a position. The shares are changing hands for $1.04, down from a 52-week high of $1.32.
