XREF Limited

XF1 Details

Recent Partnership to Bolster Growth in US Market: XREF Limited (ASX: XF1) is primarily engaged in the development of human resources technology.

Partnership with PageUp: The company recently notified about its integration agreement with PageUp, a leading talent management platform. The partnership came on the back of demand from mutual clients of Xref and PageUp. The combined platform will be accessible to more than 50 mutual clients of the companies. The partnership offers XF1 with a strong platform to accelerate growth in the United States through PageUp’s strong brand and client base in the country.

New Major Client: As per another recent update, the company notified that Texas A&M University has been signed in as a new client, following an extensive tender process and multi-vendor trial period. As a part of the agreement, XF1 will assist Texas A&M University in the recruitment of all staff including, student staff positions, new academic hires, volunteer staff for sporting events, etc.

Financial Highlights: During the year ended 30 June 2019, the company generated total sales amounting to $10 million, up 42% on prior corresponding period. Recognised revenue for the year was reported at $8 million, up 66% on prior corresponding year. During the year, average revenue per account (ARPA) contributed by newly acquired clients was reported at $9,756. Pre-existing clients contributed an ARPA amounting to $17,417. During the year, the company also witnessed significant growth in the number of active clients with total 915 clients using its platform at the end of the period.


FY19 Income Statement (Source: Company Reports)

Sales by Region: Asia Pacific made the highest contribution to the company’s sales, followed by North America and EMEA. In percentage terms, the three regions contributed 81%, 10% and 9% of the sales, respectively.
Partnerships: Partnering with leading ATS providers has been an important part of the company’s growth strategy. In FY19, the number of clients using Xref’s services through integrated platform partners increased at a rate of 92%. Credit usage from the channel was reported at $1.4 million, up 290% on previous year. Currently, the company’s platform is being offered through 16 integrations, some of them being, JobAdder, Checkr, Equifax, Oracle Taleo, Talent App Store, Workday, Zapier and RapidID.

RapidID Acquisition: The most recent acquisition was of Rapid ID Pty Ltd that offers disruptive ID verification and fraud prevention platform, offering its clients with seamless procedures for onboarding and risk analysis monitoring. The acquisition was carried out for a total consideration of A$1.5 million, partly in cash and Xref shares. Cash component of the consideration stood at $600,000 and the remainder was paid through shares. The acquisition of RapidID provided the company with access to its significant client base that includes Uber, Judobank, Easypay, Sunsuper, Creditor Watch, Health Engine and Experian.

Outlook: The company is looking forward to drive future growth through automated education support campaigns for its users. In FY19, Xref platform users witnessed a rise of 55% as compared to prior corresponding year. In addition, the company is also focusing on bringing in new business from its core offering, new products and additional features and tools for its platform.

Stock Recommendation: The stock of the company generated negative returns of 3.75% and 19.79% over a period of 1 month and 3 months, respectively. In FY19, the company witnessed 42% increase in credit sales along with a positive response from major global markets, driving international sales component to 19% of total credit sales. The company further showcased its potential by signing in Texas A&M University as a client, which is expected to offer significant value to the business going forward. It has been benefitting through its partnership and integration with global partners that enable more efficient use of its platform. Considering the above factors, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.445, up 15.584% on 09 October 2019, taking cues from the recent partnership with PageUp that is expected to escalate the growth of the company in the US market.

 
 XF1 Daily Technical Chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.