(Reuters) -Consultancy and marketing services provider Next 15 Group warned on Thursday that its fiscal 2026 profit would likely fall materially below market expectations, a day after it disclosed 'potential serious misconduct' at its California-based venture-building firm Mach49.

Shares of the firm tumbled as much as 21% to 228.5 pence, their lowest since April 22.

On Wednesday, Next 15 said it had terminated the employment of three members of the senior management at Mach49 and was in the process of reporting the matters of misconduct to relevant law enforcement agencies.

Next 15 did not disclose what the concerns were. Reuters could not immediately reach Mach49 or the three terminated employees for a comment on Thursday.

The firm said it had uncovered the misconduct while assessing the final earnout payment related to its acquisition of Mach49, and has decided not to make any further payments to Mach49's selling shareholder under the earnout agreement.

London-based consultancy Next 15, which acquired Mach49 in September 2020 as part of its innovation strategy, sharply cut its outlook in September 2024 after Mach49's largest client chose not to renew its contract following a three-year term.

The warning triggered a steep sell-off, with shares plunging around 50% at the time. They have since fallen a further 32% through Wednesday's close.

On Thursday, the company said that allegations of misconduct at its venture arm have reduced the likelihood of converting pipeline opportunities into revenue.

Analysts expect Next 15 to post an adjusted operating profit of 80.5 million pounds for the year ending January 2026, according to a company compiled poll.

Separately, it also said CEO Tim Dyson will retire after 33 years at the firm, and Sam Knights, currently CEO of a Next 15 subsidiary, has been appointed as his successor.

(Reporting by Chandini Monnappa and Raechel Thankam Job in Bengaluru; Editing by Shailesh Kuber)