The GBST Holdings Limited (ASX: GBT) share price climbed 2% to $2.60 this morning after the financial technology business today upgraded its guidance for operating EBITDA "before strategic R&D" to $20 million for financial year 2019. The group stated the upgrade was due to "greater certainty around client take-up and an ongoing focus on delivering our transformation."
The stock has probably not climbed further on news of the upgrade as the metric GBST is referring to in "operating EBITDA before strategic research costs" does not mean a great deal, as among other things, lower research and development costs may not be a long term win for the business.
On the bright side management also confirmed it has a "solid revenue foundation" for FY20 on the back of a strong pipeline of new client activity.
Further, it has also signed a 10-year contract to deliver a "major back office transformation program" with Canada Life UK using GBST's composer platform.
GBST is one of a number of financial technology or platform businesses on the ASX with substantial operations in the Brexit hit UK financial services market. Recently, Link Administration Holdings Ltd (ASX: LNK) blamed a UK slowdown for a big profit downgrade, while others such as Iress Limited (ASX: IRE) are also exposed to any further slowdown.
