Special Report: The results demonstrated the strong customer retention Xref has built among its global client base.

HR tech platform Xref (ASX:XF1) is off to a strong start in the 2021 financial year.

The company booked $2.4m of credit sales in the September quarter, which flowed through to $2.5m of cash receipts.

The result demonstrated Xref’s ability to generate durable cashflows, after successfully navigating the impact of COVID-19 in the June quarter.


Operational efficiency

Shares in Xref rose more than five per cent in morning trade as investors responded to the result.

Discussing the numbers, CEO Lee-Martin Seymore said Xref said client usage has already bounced back to “pre-Covid levels”.

At the same time, Xref has achieved that top line growth while also reducing costs by almost 50 per cent.

“Our business is starting to benefit the system-based efficiencies we have strived to implement. And as we start to leverage the opportunity ahead, our ability to break even is within reach,” Seymour said.

Xref’s cash outflows for the September quarter were down 48 per cent to $2.85 million, down from $5.4 million in the same period last year.


Growing demand

The company also flagged a number of opportunities for growth in the post-Covid economy, as it takes advantage of the shift to remote work solutions.

In that context, “employers’ desire to improve governance is increasing and they are seeking improved ways to perform candidate verification”, Xref said.

And with a market-leading tech platform built to streamline the employee reference checking process, Xref is bullish on its client growth prospects in the months ahead.

The company added 45 new clients in the quarter, including the Department of Treasury (Federal) in Australia and a global customer base which spanned across New Zealand, Canada and Scotland.

In addition, sales to clients in non-essential sectors rose 70 per cent in the quarter, “demonstrating a promising return back to pre-COVID-19 levels”, Xref said.

Rounding out the strong result, customers acquired before the 2017 financial year comprised more than a quarter of overall sales – strong evidence of Xref’s ability to maintain clients over time.

Executive director Tim Griffiths said the company is also focused on building out its system integrations, both in-house and via its 30-strong network of channel partners.

“Staying focused on the core business and removing all distraction has seen the Xref management team navigate the pandemic well,” Xref chairman Brad Rosser said.

“As the world returns to the new normal, Xref can take full advantage of the upside while focussing on break-even and growth.”


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.