Shares of Bytes Technology Group, which is listed in London and Johannesburg, plunged more 27% on Wednesday after the IT firm said its operating profit for the first half of fiscal 2026 would be marginally lower due to delayed customer payments and longer-than-expected readjustments from internal restructuring.

Trading in the first few months of the year was hurt by macroeconomic pressures, leading to deferred customer decisions, particularly among big companies, the firm said in an update to the London and Johannesburg stock exchanges ahead of its AGM.

The stock fell as much as 27.43% to £3.69, the lowest since April 2023, before paring some losses to trade down 23% at £3.91 by 8am in London (9am SAST). On the JSE, where Bytes has a secondary listing, the shares were trading 23.6% lower at R92.82 as of 10.38am.

Bytes, which provides software, cloud and AI services and which was unbundled from JSE-listed Altron Group five years ago in a restructuring, is moving from a generalist sales model to specialised, customer segment-focused teams — a shift that has taken longer than expected, it said.

Also weighing on its performance in the first half are changes to Microsoft’s enterprise agreement programme, which the company had disclosed earlier, where certain transactional incentives have been reduced.

The impact of the changes are weighted more to the first half due to high levels of renewals in March and April, Bytes said.

The firm posted an operating profit of £35.6-million for the first half of fiscal 2025. On Wednesday, it said it expects gross profit for the first half of fiscal 2026 to be flat.

Taken aback

In May, it had said it was “well positioned” to deliver another year of double-digit gross profit growth and high single-digit operating profit growth in the 2026 financial year.

Read: Ayo in hot water: JSE says investors were kept in the dark

“Investors will be slightly taken aback by the more cautious AGM statement, which now flags flat year-over-year trends versus May guidance for double-digit gross profit growth,” Jefferies analysts said in a note. — Judes Joseph, (c) 2025 Reuters

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