- Half yearly record revenue of $4.4 million, representing growth of 31%
- Record first half credit sales of $4.7 million, up 12% year-on-year
- 80 new enterprise and 235 new Xref Lite clients introduced globally
Xref Limited (ASX:XF1), the human resources technology company, today reported its most successful first half-year to date. Unaudited results for H1 FY20 show credit sales reached $4.7 million, up 12% from $4.2 million in H1 FY19; and credit usage reached $4.4 million, up 31% from $3.3 million in H1 FY19. Cash receipts totalled $6.0 million, a 25% increase on the $4.8 million achieved during the previous corresponding half.
While softer market conditions in Australia slowed growth during December, stronger sales in January point to a rebound in Xref's growth rate during H2.
There were 80 new clients introduced to Xref during the second quarter, including: Tennis Australia, Cricket Australia, Knox Grammar School, and Sigma Healthcare in Australia; the Ministry of Housing and Urban Development in New Zealand; Universal Music in Singapore; the University of Alberta, and Teach for America in the United States; EY in Norway; and Kelly Services and Lenovo in the United Kingdom.
235 new customers on Xref Lite
There have been 235 new customers registered to use Xref Lite since the service was launched in October 2019. Xref Lite is an on-demand reference checking solution powered by Xref's enterprise platform. It opens up a significantly wider market of potential customers seeking a reference checking solution for lower recruitment volumes. The successful launch of Xref Lite has allowed Xref to realise its ‘One Day’ customer acquisition goal (set in FY19). After discovering Xref, a prospective client can create an account and complete a reference check within 24 hours and on a fully self-service basis.
The go-to-market strategy for Xref Lite includes:
- Integration partners - the Lite product can be used to introduce Xref to their customers;
- Viral and digital marketing - the Lite product provides a low-risk, low-friction introduction to Xref. The fast set-up and low upfront cost are attractive to new prospects and it will encourage those who interact with Xref as referees and applicants to try the Xref service in their own business.
Xref CEO and Co-founder, Lee-Martin Seymour, said, “Xref Lite allows potential customers to experience our market leading reference checking service quickly and inexpensively. For smaller companies (which were not historically Xref's target market) the Lite product may remain their primary reference checking service. For larger companies, Lite provides a quick and effective means to trial our services before moving to our enterprise solution.”
55% Growth in Channel Integrations
Credit usage by integrated customers was $1 million for the first half, representing a 55% increase on H1 FY19. The number of companies using Xref through an integration increased to 215. Xref currently has 23 live integrations and will be adding another five by the end of Q3 FY20.
Notable integration announcements for the last quarter included partnerships with PageUp and CVCheck.
Xref’s integration with talent management platform, PageUp (PageUp release - 9th October 2019), has been completed and is now in the testing phase of development. Once live, PageUp users will be able to use Xref through their existing PageUp dashboard, and the reference checking tool will become available via the company's online marketplace. At launch, more than 50 mutual clients will have access to the benefits of the integration.
The integration with CVCheck’s platform (CVCheck release - 19th November 2019) is nearing completion and will be launched, with a joint go-to-market strategy, in February 2020. This partnership comes as a result of demand for a best-of-breed solution to all candidate verification requirements, across the ANZ region. Both businesses are dominant in the market and the partnership creates a powerful platform that builds on the strengths of each company and offers both greater reach across a region they are already performing exceptionally well in.
Christmas Period Recovery Rate
Xref monitors hiring recovery rates and hiring trends to predict the resilience of the industry and forecast activity. Australian clients usually take six weeks to return to peak credit usage levels due to the impact of the Australia Day holiday at the end of January. However, by week four of 2020, credit usage had already achieved 93% recovery, representing a very promising start to the year in Australia. In the Northern Hemisphere, Christmas and New Year holidays are shorter and, over time, the Group expects its geographic expansion will result in less seasonality in overall usage.
Cash Outflow trend
Cash Outflows for Q2 FY20 were $5.3 million, in line with Management’s expectations and the estimate provided in the September 2019 Appendix 4C. Estimated Cash Outflows for Q3 are $4.8 million and Cash Inflows are expected to continue to grow during the remainder of FY20.
Cash Outflows are expected to remain flat for Q4, at $4.6 million
With revenue continuing to grow and costs expected to remain flat, Xref is moving towards its goal of achieving cash flow break even in Q4 2020
Xref Cash Flow Forecast to June 30 2020
RapidID Cash Flow Forecast to June 30 2020. (Xref acquired the RapidID business in July 2019.)
Cash on hand at the end of December was $5.74 million and the Company remains debt-free.
“Despite H1 FY20 being our slowest half, August, October and November 2019 produced $3 million in credit sales. Unfortunately, a lower than expected result in December left us short of our credit sales target for Q2. The rebound in both Sales and Usage seen in January has confirmed this was a seasonal lull. We are seeing strong growth in leads from all regions, coming from our 23 channel partners, the recently released Xref Lite and Template Builder products as well as the wonderful advocacy shown by our clients globally. We have built a strong sales team, great leadership and outstanding support teams that work together to position us as a best-in-breed solution globally. We are fast becoming a marketing-led business, fuelled by automation, that has started to shift the needle on growth at the same time as focusing on reaching break even.”
Executive director / CEO Lee-Martin Seymour
“We are at an extremely important junction in our journey and we’re proud to say that every Xref employee is focused on driving revenue growth, whatever role they hold. All business decisions are being made and actions taken with growth and profitability at the top of the agenda. Individual productivity, partner performance, system efficiency, lead flow and customer success are all under constant analysis as we maintain an unwavering focus on the opportunity ahead.”
Executive director / CSO Tim Griffiths