Xref reaps benefit of strategic turnaround with a bumper trading result in April
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Special Report: The strong result is evidence that Xref’s strategic focus on streamlining the business is beginning to pay dividends.
Throughout early 2020, recruitment technology company Xref (ASX:XF1) has been focused on business efficiencies as it pushes towards cashflow break-even.
And in its April trading results this morning, the company offered proof that its strategic pivot is being backup by strong execution.
Sales revenue rose to $860,000, a 31 per cent increase on the prior-year period, while cash expenses fell by 27 per cent.
The result was particularly impressive in the current market environment and reflects the strength of the company’s client base, as the effect of the COVID-19 pandemic continues to drag on the global economy.
And it was the by-product of “a number of difficult but critical moves to ensure the stability of the company”, CEO Lee-Martin Seymour said.
“The management team, board and executive have worked tirelessly to re-invent our cost structure while our operations teams have continued with their unwavering focus on sales and support.”
On the revenue side, gains were driven by sharp growth among Xref clients in essential services sectors such as health, government and education.
Of the $860,000 in monthly income, 18 per cent came from new client sales while 71 per cent came from essential service industries.
And while revenue is climbing, Xref’s management team has also been able to execute on a strategy to sharply reduce costs – proof of the platform’s ability to scale up with a capital-light business model.
Among the key initiatives, Xref has streamlined its European operations and cut global headcount by more than a third.
The result is a “dramatic and immediate reduction in cash expenses”, Xref said. As an example of the accelerated trend, monthly costs in April were 29 per cent low than average expenses through the first quarter of 2020.
Quarterly expenses for the June quarter are now forecast to total just $2.2m, a reduction of more than 50 per cent on the previous forecast of $4.6m.
Xref has also executed on a number of key strategic partnerships to drive product growth across multiple jurisdictions, including a recent deal with Greenhouse – the $US1bn recruitment platform headquartered in New York.
And the overall success of management to drive revenue growth while also cutting costs leaves Xref well-positioned for further growth as it pushes towards cashflow break-even later this year.
“Xref has proved itself as an essential tool during uncertain times and I could not be more proud of our team and product for the outstanding value we continue to deliver.”