Superloop Limited (ASX: SLC) shares are down more than 13% this morning following a big FY19 earnings downgrade. Here’s what you need to know.

About Superloop

Superloop is an independent provider of connectivity services within the Asia Pacific metro region. It operates a network of fibre and wireless assets in Australia, Hong Kong and Singapore and aims to benefit from the exponential growth in data consumption.

Earnings Downgrade

Superloop released its 1H19 Investor Presentation in February this year, including FY19 statutory EBITDA guidance of between $13 million and $18 million (read more about EBITDA here).

Today, guidance has been downgraded and the company now expects EBITDA to be between $7 million and $8 million.

The nearly 50% cut to guidance is a result of negotiations for a commercial agreement taking longer than expected. While this agreement would’ve significantly increased EBITDA, Superloop was unable to finalise the contract before 30th June.

Superloop noted that the negotiations are still ongoing and will be reflected in future earnings if they are successful.

Looking Ahead

This is unfortunate news for the company, but it sounds like the agreement is still on the cards for FY20. Superloop says they are in discussions with their lenders to ensure that the revised guidance is still within the terms of their existing debt agreements.

Superloop is expected to release full-year results in the week starting 26th August 2019, so more details should be available then.

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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.