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SDL Warns On FY17 Adj. EBITA To Be Below Current Market View

SDL plc (SDL.L), a provider of content management and language translation software and services, Friday warned that adjusted EBITA for 2017 on a like-for-like basis will be below current market expectations if certain deals are not closed by December 31, 2017.

The company said its sales pipeline for the year 2017 is in line with expectations, but is reliant on the closure of certain software deals. The company said these deals may not be processed and fully awarded by December 31, 2017.

In its trading update for year ending December 31, the company said it experienced a faster than forecast shift from perpetual licence sales to Software-as-a-Service or SaaS sales. This has resulted in higher costs recognised in the year, with revenues deferred into future years.

In Language Services, SDL is pleased to report continued revenue growth and a recovery in gross margins, as expected. The company has fully addressed the margin pressure and the two challenging contracts in Asia reported in the first half results. Language Services automation programme, 'Helix', is on track and set to deliver further gross margin gains during 2018.

Further, the company said it will rationalise parts of its global operating and organisational model during 2018. As a result, SDL has taken action to reduce parts of its cost base. The company expects to recognise an exceptional charge in 2017 of approximately 3.5 million pounds and a slightly lower charge in 2018.

The outlook for industry remains very positive, the company said.

SDL added that it remains committed to delivering double digit revenue growth and mid to high teens profit margins over the medium to long term.

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