Travel software company Datalex has said its earnings performance so far this year is ahead of expectations, despite the "very challenging ongoing market conditions" caused by Covid-19 that have negatively impacted its total revenue.
Shares in the company soared over 7% in Dublin trade today.
In a trading update, Datalex said that based on current assumptions, it now expects to report adjusted EBITDA on a constant currency basis of $3.75m to $4.5m for 2020.
This compares to its previous guidance of adjusted EBITDA of $0.75m to $1.5m.
Datalex said the improved projections is mainly due to the combined effects of improved revenues in the second half of the year and enhanced revenue recognition due to increased probability of certain customer renewals in 2020.
It also saw employee cost savings in 2020 and the release of certain balance sheet bad debt provisions.
The company said it had recently heard from two of its customers - one European and one Asia-Pacific based - that they will significantly cut or cease using its services in 2021 as they consolidate their technology.
"Whilst disappointing, the company will benefit from the internal cost adjustments made this year and further actions which will be taken to mitigate the impact of these changes as they develop," Datalex said.
But it also said that it had renewed a significant multi-year contract with its largest Chinese customer and have agreed terms with a number of its other existing Chinese customers.
"Critically our efforts are focused on and we continue to compete strongly for a number of new sales opportunities to grow revenue with new business," the company stated.
Datalex said it believes it is well positioned to benefit from the emerging recovery with products tailored to meet the post Covid needs of all airlines and which will accelerate their return to growth.
"Although the company continues to face significant challenges into 2021, our focused and proactive response to the challenges of Covid has increased expected earnings performance in 2020 and contributed to this revised guidance," its chief executive Sean Corkery said.
Datalex shares resumed trading in Dublin in July after they were suspended in April 2019 due to a delay in the publication of its full year results for 2018.
The company undertook an audit of its 2018 accounts last year after a review discovered "significant accounting irregularities" at the firm.
A PwC report said the company's figures for the first six months of 2018 were "materially overstated", with some revenue recorded before it had actually been received.
A delay to Datalex's publication of full year results led to the suspension of its Dublin-listed shares in April, while chairman Paschal Taggart and CEO Aidan Brogan also resigned.
Earlier this year, Datalex said it was including a targeted redundancy programme in its cost cutting plan as part of measures to deal with the Covid-19 impact.