Call off the Search Party: failed recruitment site to delist from ASX
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Call off the Search Party – there’s no coming back for this failed online recruitment site.
Search Party (ASX:SP1) yesterday announced its intention to delist from the ASX after the HR tech failed to take off.
The announcement prompted a 60 per cent share price collapse to 0.2 cents, down from a high of 7.5c exactly a year ago.
Search Party posted a $15 million loss last year. Continuing negative operating cash flows prompted queries from the ASX in August.
The recruitment platform earned only $111,000 in sales last quarter, but burned $1.9 million. A $1 million research and development grant was to have kept the company going, leaving $24,000 cashflow for the September quarter, Search Party told the ASX.
But the recruitment marketplace maintains this isn’t the last we’ll see of them.
“Search Party’s redesign and development of its online product and hiring platform represents an initial design phase which is explorative and high risk in nature,” the company told investors on Tuesday.
“This will require extensive testing and analysis which may then drive further redesign and eventually lead to either the possibility of commercialisation or confirmation that the fundamental premises of the product model are uneconomic.”
Search Party sought to connect employers and recruiters online to make hiring faster and more effective, but their annual report spelled out a few fatal flaws.
“Search Party tackled too many problems simultaneously and in some cases too soon which combined with an unclear value proposition meant the company lost required focus,” the report said.
“Search Party sought to chase growth prematurely in its product development cycle, when its product offering was not fully ready.”
The tendency of recruiters to “bait and switch” was a key weak point.
Recruiters tempted employers with ideal candidates but almost always sold in alternatives to initially chosen candidates due to lack of availability or interest.
The ASX is likely to soon remove the company from the official list, with an annual general meeting scheduled for November 29.
In the letter to shareholders, the directors said they would buy back shares from eligible shareholders prior to delisting.