Demand for the Xref’s disruptive reference checking technology has delivered record revenues, as the company aims to expand in North America and Europe.
The Australian jobs market is at its strongest since 1974, with the unemployment rate now at 3.5%.
The jobless rate inched higher by 0.1% in August (from 3.4% in July), but it was only because of an increase in the number of people looking for work.
Data suggests there are plenty of vacancies across parts of the booming mining sector as well as IT. Companies like ASX-listed Droneshield for example, have doubled their workforce in the last couple of years.
According to the ABS, the number of people having multiple jobs also reached a record high of 900,000, as the cost of living and mortgage rates rise.
This all bodes well for disruptive HR tech company Xref (ASX:XF1), which focuses on automating the candidate reference process for employers, as just one part of its growing offering.
For the year ended June, Xref delivered another record year of sales and revenue with a 36% increase in group sales YoY, and a 29% increase in group revenue to $18.6m.
The company also continued its profitability path, registering an increase in net profit after tax of 834% to $730k.
Xref CEO Lee-Martin Seymour told Stockhead his company’s strong performance was in line with the increasing desire of companies around the world to safeguard their company from breaches in fraud, privacy and discrimination.
“Employers globally are very focused on doing more checks than they ever have, verifying graduate status, doing the referee checks, doing the ID checks,” Seymour told Stockhead.
“And that has created an awful lot more demand for our services.”
Cutting edge technology
Xref’s cutting edge Candidate References technology allows employers to verify a candidate’s reference and ID together with other key checking services, on one platform.
Feedback from the Xref platform typically only takes 24 hours, increasing the speed of hire while reducing reference frauds for clients.
“We are the global leaders in automated reference checking, and we’re the first mover and we’ve been in that market since we built the platform 13 years ago,” said Seymour.
One thing the platform focuses on doing really well is fraud, or more precisely, fraud prevention.
“We have a sentiment engine to look at the tone of voice of the referee, and a word count engine to look at the amount of content and intent of the referee.
“We would also know when the reference has been provided by the same person or the person in the same geolocation, or for any reason it just looks fraudulent.
“We call it unusual activity, and we flag that unusual activity to the employer,” Seymour explained.
The company has since added different services to complement the core product, such as Exit Surveys and the soon-to-be-launched Employee Pulse platform.
When released in FY23, the Employee Pulse platform will allow the HR department to continually survey and measure the overall satisfaction of all employees.
The addressable market for this platform is huge, with 440 million employees within Xref’s key markets.
The company also released its Exit Surveys platform in November last year.
The Exit Surveys platform does what its name suggests, creating a survey for exiting employees.
Through the platform, departing employees will get details of their tenure verified, complete with line manager authentication. It allows an employer to build a database of past employees with ratings on their skills and competencies, along with exit sentiment.
Seymour says a platform like Exit Surveys became more crucial as a result of Covid.
Statistically, 20% of employees would consider coming back but yet, companies are spending millions on searching to find fresh candidates.
“During Covid we had customers like Qantas, Crown Resorts or big retail companies that were losing thousands of people,” explained Seymour.
“And they were doing it very quickly, but coming out of Covid they can’t revisit and dip back into that pool of employees because they never recorded whether that person was happy when they left, or whether they would want to come back.
“And more importantly, they never recorded whether the line manager thinks that this is someone who should be hired back in the first place.”
Global expansion
The ability of Xref to sell its platform across multiple channels means the business is very scalable.
After expanding rapidly in the ANZ region, the company is now looking to the larger markets of North America and Europe.
While the ANZ region has an addressable labour force market of 15 million people, Europe has over 120 million and North America has 180 million.
Seymour believes that Xref will sustain its profit position and deliver exceptional growth this year.
“In 2020, we made $10 million of losses in the first year of the pandemic. But fast forward just one year and we’d dropped our headcount by 40% and grew by 60% and become profitable,” he said.
“That was an amazing turnaround in the middle of Covid. One year on and we’re still growing by 40% and our profit has gone up 800%.
“So not only have we delivered fantastic results, we’ve also invested heavily into new innovation.
“Whilst many companies have sat on their hands just trying to survive during Covid, we’ve actually bought technology that’s never been seen because that’s what the world needs,” added Seymour.
This article was developed in collaboration with Xref, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.