Home > Industry > iSelect Crashes, CEO Out, Shares Down 60%

iSelect Crashes, CEO Out, Shares Down 60%

Shares in comparison insurance website, iSelect, have today plummeted over 60%, following a ~69% earnings downgrade for fiscal year 2017, and the resignation of CEO & MD Scott Wilson.

Disclosed in an ASX announcement today, iSelect slashed its upcoming EBIT guidance from $26 million – $29 million to $8 million – $12 million.

The company also announced the immediate departure of CEO, Scott Wilson, following a five-year tenure.

Responding to the news, iSelect shares plummeted from $1 this morning to 38 cents. Just after midday, shares were down 52% to 48 cents.

The news follows an ~80% decline in company shares over the past 12 months. Trading through April and March also reportedly fell below expectations.

iSelect claims the earnings downgrade stems from the weak performance of its health, telco and energy divisions, following market uncertainly and lower than expected marketing leads.

Despite the earnings downgrade, iSelect affirms its balance sheet remains strong – with no debt and a cash balance of $21.1 million as at April 22nd.

For the comparison insurance website, June is historically its biggest trading month, contributing the majority of second half earnings. Despite this, iSelect has reduced its guidance citing continued market conditions.

Non-Executive Director, Brodie Arnhold, has been appointed interim CEO, as the company’s board searches for Mr Wilson’s replacement.

To remedy results, iSelect Marketing chief, Warren Hebard, has embarked on a full strategic review of marketing efforts, affirming company success relies on a mix of traditional and digital methods:

“iSelect’s business model depends on both building long-term brand equity and short-term lead generation – the mix between traditional media and digital spend may be carefully balanced to ensure both objectives are met”.

Improved results are expected to bear fruit in fiscal year 2019:

“As such, the mix of marketing spend is being adjusted in the near-term to allow for the continued support of iSelect’s long-term growth strategy, while better supporting short-term lead generation”

“While this has increased near-term costs, the benefits are expected to be seen in fiscal year 2019 as consultants have already moved from selling 1.5 products per customers to 1.74 year on year, and net promoter score has increased”.

You may also like
Myer Responds To ASX Sales Leak
The Reject Shop Receives “Opportunistic” $78m Takeover Bid
Wesfarmers Claim Bunnings UK Could Have Succeeded
Tech Stocks Hit Again On ASX
Optus Net Profit Down 36%