With a strong cash position, Xref is poised for growth as market share expands
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Special Report: COVID-19 has proven the value of Xref’s tech solution to improve hiring practices.
For HR tech platform Xref (ASX:XF1), the COVID-19 pandemic has provided an opportunity to streamline operations and prove out its business model as the company continues its drive towards cashflow break-even in the year ahead.
The business is coming off a strong trading result in the June quarter, where investors responded to the 4C filing by sending XF1 shares 16 per cent higher on Friday.
“We’ve got a business platform now that’s sitting on $8m in the bank, with no cash burn and a great opportunity ahead,” Seymour said.
“And that’s a result of the work we did earlier this year to create a nice lean productive business that’s ready to scale.”
Seymour added that the company’s core value proposition – an online solution to employee reference checks and ID proofing – was being proven out in the current environment.
“This pandemic has really forced organisations to realise they need to at least have the capacity to carry out business functions remotely,” he said.
“You can see that echoing into recruitment because people need to be far more diligent in checking who applicants are and what they do.
“So that’s playing right into our hands, and we’re really sitting in the best possible position to take full advantage of the way those practices are changing because of COVID-19.”
In terms of Xref’s key post-pandemic opportunities, Seymour said the company had an early head start via the nature of its client base, with 80 per cent of revenues derived from the Asia-Pacific region.
In that sense, New Zealand has provided a good leading indicator for the market rebound, having led most countries in eliminating the virus risk.
“The rebound there has been strong, and we didn’t lose any clients, they just put a pause on hiring,” Seymour said.
“When activity returned and clients started to rehire, they came straight back onto our platform, so we’ve had a really nice rebound in usage there and we’re looking forward to a similar pickup in the Australian market.”
That said, Seymour added that markets were beginning to see the pandemic as a 12-month disruption, with a time frame of “March (2020) to March (2021)”.
“In that environment, a key opportunity for us is to make sure we’re focusing on the ‘trust’ sector – health, government, education and aged care,” he explained.
“The ability to serve those sectors has been really meaningful for us, and if we hadn’t built market share in those sectors five years ago, the fallout from COVID-19 would’ve been different.
“But that client base has really helped us navigate through COVID-19 in a strong way.
“I think it makes us recession proof focusing on those sectors, and as the world gets back to work there’ll be a nice uptick for us.”
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.