Investors were sprinting away from Dreamscape shares on Tuesday after it slashed earnings forecasts in half.

The owner of domain registrar Crazy Domains said first half EBITDA, or earnings before interest tax, depreciation and amortisation, would be between $2.8 million and $3.2 million.

In the six months immediately prior, EBITDA was $5.2 million.

Shares (ASX:DN8) plummeted 43 per cent to 13c, after it came out of a trading halt that began on Friday. They closed Tuesday at 13.5c.

It blamed higher costs, particularly those associated with being a public company, and less demand for its product.

Personnel, marketing and administrative costs increased by $2.5 million.

Dreamscape Networks (ASX:DN8) shares collapsed on Tuesday.
Dreamscape Networks (ASX:DN8) shares collapsed on Tuesday.

Dreamscape says it’s taking steps to cut costs, but the benefits won’t be felt until the second half of calendar 2018.

But it’s the drop in Australian business which is a real worry.

“Domain and hosting bookings in the Australian market had been flat with no industry growth since the start of the financial year. This has continued in the November to January 2018 period,” Dreamscape told investors.

Bookings were down 6 per cent in the half.

The company is pinning its hopes on the 59 per cent of Aussie SMEs which aren’t yet online, and the Singaporean business which is seeing huge growth — an increase of 20 per cent in EBITDA in five months of ownership.

Dreamscape assures that it is profitable, cash flow positive and committed to its Asia strategy.

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