Comparison website iSelect (ASX: ISU) has slashed its earnings guidance by more than 60 per cent, sending its share price tumbling as the company's CEO Scott Wilson resigned immediately.
The company cut its underlying earning expectations for 2018 to between $8 million and $12 million for the full year, well down on its previous guidance of $26 million to $29 million.
ISU shares plunged 55 per cent to a record low of $0.44 on the announcement on Monday, saying trading conditions in March and April were below company expectations because of volatile markets, fewer leads and higher digital customer acquisition costs.
After five years at the company, Scott Wilson handed in his resignation and independent non-executive director Brodie Arnhold has been appointed acting CEO as the company searches for a replacement.
iSelect is a comparison website which sells health, life and car insurance and is also a mortgage brokerage along with energy, broadband and financial referral services.
Scott Wilson (pictured) had taken iSelect on a strategic direction with the aim of becoming a "one-stop life admin" store but that failed to translate to an increase in new leads.
In its ASX update, iSelect says its health, energy and telco verticals had been hit by market volatility and lower-than-expected leads because of changes to its marketing strategy, including reduced search-engine marketing in favour of more traditional marketing methods.
iSelect says it is reviewing its marketing strategy to address the issue of fewer leads.
"iSelect's business model depends on both building long-term brand equity and short-term lead generation," iSelect says in its trading update.
"The mix between traditional media and digital spend must be carefully balanced to ensure both objectives are met. 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."
The company also reported its health insurance verticals had experienced softer overall demand in the wake of industry-wide premium increases and ongoing affordability issues.
The energy and telecommunications segment was affected by higher digital customer acquisition costs, but life and general insurance had been performing to plan.
At the market open on Tuesday, ISU shares had gained nearly 8 per cent to $0.48.
Business News Australia
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support