The market may be edging higher today, but the same cannot be said for the ASX All Ords share in this article.
In morning trade, investors have sold this share down by as much as 30% to $1.75.
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Which ASX All Ords share?
The share that is crashing down to earth on Wednesday is Cogstate Ltd (ASX: CGS).
It is a neuroscience technology company aiming to optimise brain health assessments to advance the development of new medicines and to enable earlier clinical insights in healthcare.
The company highlights that its technologies provide rapid, reliable, and highly sensitive computerised cognitive tests across a growing list of domains. These support partners in the delivery of electronic clinical outcome assessment (eCOA) solutions that replace costly and error-prone paper assessments with real-time data capture.
Why is it crashing?
Investors have been selling down the ASX All Ords share following the release of a disappointing business update.
According to the release, timing-related deferrals are expected to have a short-term impact on reported revenue and profitability in the first half of FY 2026.
It notes that Clinical Trial sales contracts are progressing well and it expects to execute sales contracts of approximately $37 million to $40 million during the first half. This represents 82% to 97% growth on the prior corresponding period. It will also be the company's second-best half-year result for contracts executed.
This performance is being supported by a record level of pipeline opportunities and ongoing conversion of those opportunities into contracted work.
However, timing delays are expected to impact revenue recognition in the half. This is primarily due to contracts signed late in the December quarter, which provide limited time for revenue to be recognised within the period.
Additionally, management notes that the mix of revenue is a contributing factor. Upfront license fees will represent a smaller share of revenue, with license revenue expected to be approximately 19% to 20% of total revenue in the first half. This is consistent with the 19% recorded in the prior corresponding period, but down from 31% in the second half of FY 2025.
As a result, total revenue for the first half of FY 2026 is now forecast to be in the range of $25 million to $26 million. This is an increase of approximately 5% to 9% on the prior corresponding period. Disappointingly, it falls short of its previous guidance for between 18% to 20% revenue growth.
Making things worse is that management expects its costs to be higher during the half, putting pressure on its margins. For example, its EBIT margin is expected to be 14% to 17.5%, compared to 28% during the second half of FY 2025.
Cogstate's CEO, Brad O'Connor, commented:
Cogstate's future has never looked brighter. We are seeing a record level of opportunities from an expanded customer base and across more indications, and those opportunities are now translating into higher levels of sales contracts.
The expected value of sales contracts to be executed in this December half is the second-highest half-year result in the company's history and is a higher quality outcome because of the diversity of contracts. Our best half-year for contract sales was the December 2021 half, when we executed $54.5 million of sales contracts, with more than $30 million attributable to a single large trial. In contrast, the largest contract executed in the current half is just over $6 million.
