Bravura is “reconfiguring” its business … the stock crashes 55%!

Nick Sundich, November 3, 2022

It is not often you hear company management admitting their firm needs to be reconfigured, but that’s just what Bravura Solutions’ (ASX:BVS) management did this morning. Shareholders have punished the stock sending it down by more than 50%.

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Bravura needs to be reconfigured

Bravura, a provider of software solutions for global financial institutions, had been undertaking a strategic review and provided shareholders with an interim update along with FY23 guidance. The company, using language you’d typically expect of external management consultants or short-seller firms, literally said,’ The business will be required to be reconfigured to scale our product across customers’.

While the review found that the company had solid foundations, the pace of change in the industry from a traditional services model to a technology solutions provider will require the company to realign itself to create “product discipline”. In other words, the company developed its products in every direction without much focus.

Bravura Solutions (ASX:BVS) share price chart

A soft FY23 expected

Adding insult to injury, Bravura announced a downgrade to analysts’ consensus forecasts. The company still expects modest revenue growth of $270-$275m (up from $266.7m in FY22), but expects EBITDA of $10-$15m and an NPAT between breakeven and a $5m loss. Considering it made $45.3m in EBITDA and a $25.7m NPAT last year, this would be an enormous drop. It also told shareholders it would suspend dividends until it had transitioned through the current reset.

The company said that the repositioning would return it to a stronger footing, but investors are not hanging around for that, sending shares down more than 50%. Bravura’s market capitalisation is barely a tenth of what it was in January 2020, prior to the Corona Crash.