Shares of Northcoders Group plc, the provider of software coding training programmes, fell about 25% after it warned that it “expects revenue and profits for the year as a whole to be significantly below current expectations.”
That’s despite the firm reporting that revenue grew 46% to £3.5 million in the six months ended June 30, 2023, amid record demand for consumer bootcamp training, and that gross profit increased 32% to £2.2 million.
Northcoders is based in Manchester, Leeds, Newcastle and Birmingham.
“Budget constraints, workforce reductions and recruitment freezes have led to many corporate clients delaying and deferring budget commitment to Northcoders’ Academy, Your Return to Tech and Consultancy programmes,” said the firm.
“In particular, one client is undergoing a substantial business reorganisation leading to a division closure. As a result, their immediate demands for our services have diminished below the £0.75 million we had been expecting with the quantum now being uncertain.
“We are actively collaborating with them during this transitional phase and remain optimistic about the possibility of future work and contract fulfilment, as the client has expressed a keen interest in continuing our partnership.
“As a result of this contract, and the more cautious technology training market conditions, the group now expects revenue and profits for the year as a whole to be significantly below current expectations.
“With its strong balance sheet, the board remains confident in Northcoders’ ability to continue to deliver significant growth as it delivers its strategy and continues to build its reputation as a leading technology training provider in the UK.
“The company continues to work with blue chip corporates and now public bodies, as both hiring partners and customers, to improve the UK’s technology gap with digital transformation remaining a priority.”
Northcoders CEO Chris Hill said: “Our performance to date reaffirms our commitment to addressing the UK’s digital skills gap as a leading technology training provider.
“H1 2023 saw the group’s revenue increase to £3.5 million, a 46% increase compared to the same period last year, driven by high demand for consumer bootcamp training, generating £2.8 million in revenue, up 65% on H1 2022 performance.
“Northcoders’ strategic acquisition of Tech Returners in February has already yielded positive results, engaging several major corporate clients.
“The launch of ReFrame, the North’s largest Women in Technology conference in London, has significantly boosted the group’s corporate brand awareness.
“Demand for technology training beyond the original coding courses continues to increase, including for the group’s data engineering services, as well as cloud engineering tuition having launched successfully.
“The Business Solutions division signed its inaugural contract with a central government department project set for Q4 2023.
“As outlined at the trading update in July, the market continues to be challenging, with budget constraints, workforce reductions, and recruitment freezes affecting the Business Solutions division, which means our growth in the short term is expected to be slower than previously expected.
“Nonetheless, Northcoders remains a key enabler of growth and innovation and we are resolute in our pursuit of evolving to meet technology’s ever-changing demands, confidently providing sustainable long-term growth for all our stakeholders.”