iSelect plunges 68pc after it slashes profit guidance and CEO quits
Shares in iSelect dived after the comparison website’s CEO resigned and the company cut its profit guidance, partly due to reducing its search engine marketing.
iSelect (ASX:ISU) dropped 68 per cent on Monday morning — from Friday’s close of $1 to an intraday low of 32.5c on Monday — after announcing an earnings downgrade of almost two-thirds of previous forecasts.
The shares had recovered somewhat to 49c by 1.15pm AEST.
The company says full year underlying earnings will now be between $8 million and $12 million, down from the previous forecast made in February of $26 million to $29 million.
Scott Wilson, who was appointed managing director and CEO in October 2015, tendered his resignation effective immediately.
Independent non-executive director Brodie Arnhold has been appointed acting-CEO while the company searches for a replacement.
Chief marketing officer Warren Hebard has started a full strategic review of the company’s marketing strategy to address recent lead generation underperformance.
The company says both the Health and Energy and Telco verticals have been negatively impacted by market volatility and lower than expected leads due to changes in the marketing mix, particularly reduced search engine marketing.
iSelect says its balance sheet is strong with no debt and a cash balance of $21.1 million.
In February, the company announced a 7 per cent rise in revenue to $83.3 million for the half year. But profit for the six months to December fell 81 per cent to $478,000.
At that time, the CEO said: “The second-half has traditionally been a much stronger trading and cash generative period for the business, and we have a number of initiatives in place to deliver on the growth opportunities we are creating.”