COVID-19 Impact on Operations

In accordance with the regulations of the Ljubljana Stock Exchange and applicable legislation, Datalab Tehnologije, d.d., is publishing the following message:

The Datalab Group is taking all necessary measures to ensure uninterrupted operations. At the end of February when the first cases appeared in Italy, we conducted a large-scale work-from-home test for all employees to see how to ensure that our operations aren’t impacted in the event of a pandemic. We wanted to make sure that all employees have access to essential tools and portals, and can use in-house e-Business services to continue regular operations.

As part of our social responsibility and respect of our employees’ health, a part of our employees has been working from home since 9 March, and all Group employees since 16 March. The foundation of our remote operations are IT solutions that facilitate cloud-based operations, and our employees’ active cooperation.

You can find out more about the organization of work in different Datalab departments in the link below. The departments facing the biggest challenges are support, implementation, and sales. How Datalab is Organized during an Emergency (in Slovene)

We provided our employees with disinfectants and important information on how to use them. In addition to the health of our employees, we place great value in protecting our users’, business partners’, and other stakeholders’ interests.

Datalab Management is drawing up measures to ameliorate the business and labor-related consequences. On 16 March 2020, a crisis council was established for this purpose and the first meeting was held the same day. Some conclusions from the first crisis meeting:

We expect a significant decrease in economic activity, especially in terms of investment volume, for at least one year. The worst-case scenario is a complete loss of revenue from new license purchases, and a reduction in Upgrade Contract subscriptions. However, we expect to see an increase of revenue from digital tools for remote work, and revenue from services related to their implementation. In anticipation of long-term consequences, we:

• Decided to take advantage of our excellent credit score and creditworthiness to ensure long-term credit lines with banks in order to create liquidity reserves and investment capital for takeovers and market seizure during the post-crisis period.
• Started reviewing related costs and how to reduce them.
• Downsized the sales team as we expect a drastic reduction in new orders.
• Started negotiations with employees about temporary cut in salaries, and back pay if our results allow it.
• Adopted guidelines for faster implementation of our remote work tools and digital services with our existing clients, allowing them to use the tools for free for the duration of the pandemic and the period right after, specifically until 31 August 2020.
• Refocused development efforts on remote work tools.

We will implement the above measures without delay, most of them by the end of March.

Due to the most likely loss of the 4th quarter, we will not be able to reach our revenue goals and the growth that was forecast for this year. The loss of revenue will most certainly affect profits, which will probably be lower than expected. We will direct our efforts into gaining new users, especially for digital services, which is strategically important for continued revenue and profit growth in the coming years.

We will update our projections and predictions of results for FY’20 at the beginning of April when the situation is clearer.

 

The Management