Profit warning at data science agency due to weaker demand

Data science agency Jaywing has warned of softening demand over the past two months, with some clients delaying marketing spend until the economic situation settles or improves.

The company expects full year net revenues for the year end 31 March 2023 to be between £22m and £22.5m, with adjusted EBITDA ahead of last year as a result of a 5% reduction in overall group costs, but below market expectations.

Significant project revenues previously expected to begin in quarter four are unlikely to now commence by 31 March 2023.

Jaywing, which has offices in Sheffield and Leeds, adds it has recently secured a significant new client in Australia – Online Education Services – which has appointed the business as its creative agency in a deal which is expected to increase group revenues by about 5% in the year ending 31 March 2024.

Andrew Fryatt, Jaywing CEO, said: “While we are disappointed to see some clients spending less than expected in the fourth quarter of the financial year, we expect this to recover as conditions improve, and we are delighted by the substantial win in Australia.  

“Our cost management has mitigated the impact of this revenue shortfall, allowing us to continue growing adjusted EBITDA, and has also ensured that the group is appropriately structured to operate in these challenging market conditions.”

The agency notes the weaker demand has been particularly evident with consumer-facing brands as they tighten their own cost management in the short term.

It adds it is confident this reduction in marketing spend is temporary and represents delayed rather than lost revenues to the group.

Significant new UK client wins for the group include data modelling & management for LHV, fraud & financial modelling for Fair4All Finance, and brand/creative work for University of East Anglia.

Jaywing says the benefits of its acquisition of the Decision software last year are on track, with four new clients added since completion, and a number of additional client prospects in discussion.