By Marie Mannes and Izabela Niemiec
(Reuters) – Swedish cloud communication services provider Sinch AB said on Tuesday it expected no further adjustments after reporting a hit to its second-quarter earnings from a cost reassessment and denied a short-seller’s report that it had overstated its 2021 revenues.
Sinch shares tumbled as much as 28% on Monday after short-seller Ningi Research accused it of incorrectly classifying invoices that have not yet been billed as revenue, and overstating the performance of some operations.
The company later interrupted its silent period ahead of quarterly earnings to say that a reassessment of historical cost of goods sold would affect its core earnings (EBITDA) by 162 million Swedish crowns ($15 million) in the quarter. At the same time Sinch said it “strongly opposed” Ningi’s claim that it had overstated its 2021 revenues.
Sinch, which reported first-quarter core earnings of 760 Swedish crowns, acknowledged during a conference call with analysts accounting glitches, but dismissed again the short seller’s claim about overstated revenues. It also said it saw no need for further reassessment of its financials after one that resulted in the adjustment to second-quarter earnings.
Sinch shares, which fell further 25% ahead of the call, were down 12% in late Tuesday trade.
“Taking into consideration that the company currently is in a quiet period, I feel that they gave sound responses to a lot of the issues which needed to be answered,” said Axel Karlsson, active trading manager at Nordnet.
($1 = 10.5648 Swedish crowns)
(Reporting by Marie Mannes and Izabela Niemiec in Gdansk; editing by Milla Nissi and Tomasz Janowski)
