What does the company do?
· They are a global background referencing firm
· They verify pre-employment referencing, ID verification
· The product suite is:
o Xref
o Xref lite
o Rapid ID
o Template builder (builds questionnaires)
o People search
o Xref API
To check a reference you go into the platform and put names of referees, they then request a reference via e-mail, it runs the e-mail through a fraud detection algorithm/software that checks things like response time, serial number of device sent, was the e-mail sent from a business address etc. and gives a validation score. Customers can choose which data to use for validation
People search provide "Independently referenced people" for recruiters to advertise.
They grow customers by giving an opt in option for people while giving a reference.
Rapid ID allows companies to verify an individual's ID but they cannot keep a copy of the persons ID.
9 years old was a profitable private company.
Why float if they are profitable? People wanted the service from overseas to they listed on the market to get money to expand
Targeting being cashflow positive by Q4 2019
Target market
· Expanding into Canada and the Nordic countries as especially in the Nordic countries with strict labour laws so once someone is hired it is very hard to fire them, so they are very careful with their hiring process.
· Their staff mostly work remotely so that they have staff in the target countries.
· They moved into Texas Uni
Strengths/opportunities
· They are multi language.
· They are introducing a 360degree product as some companies do exit interviews.
· They are making it so that companies can track people through different positions in the same company, for example with Texas Uni.
· They are looking at doing verification/references for the trust economy e.g. uber, air bnb, lyft etc
· They operate on a credit system where they presell background checks they then monitor the pre-sold checks against the amount of checks used. So no need to chase bills and they can monitor the gap between credits sold and credits used for system utilization.
· They have an API to plug into the major recruiting software programs e.g. oracle etc.
Competitors/threats
· There is some biggest competitors are checkster and skill survey, but both are based in the US and you pay in US dollars and the data is stored in the US and kept under US laws. With Xref you pay in local currency and the data is stored on a local server in that country and subject to local laws.
· Could be exposed to economic cycles, as hiring will slow in a global recession
Competitive advantage?
· Regulatory advantage in that data is stored in the existing country
· First mover advantage
· Economy of scale/large client base
Who has skin in the game?
Squirrel holdings owns 18.5%
Timmothy David Griffiths - CSO / co-founder
West Ride investments owns 18.5%
Leigh-Martin John Seymour - CEO / co-founder
The rest is owned by insititutions.
Data source
Ord Minnett broker notes & 2019 annual report
Balance Sheet
8mil cash
11mil current assets
590k Non-current assets
11898323 total assets
8.7mil total liabilities
Total equity/net book value = 3,158,865
Profit and Loss
Sales doubled since last year to 8048169
Total loss of 8318251
5.1c per share loss
Cashflow
· Burnt 5mil cash last year
· Q1 and Q2 are usually low quarters
· The company has had 290% growth in the last 2 years
Will it require funding?
Ord Minnett notes predict they will need a capital raise of $3m in 2021.
Management have stated that they want to be cashflow positive by Q4 2019
Directors pay: 1.5mil for directors (300k less than last year)
Options outstanding = 10437026
