Diligent, with cash pile, mulls growth options, acquisitions
Diligent, sitting on cash, mulls growth options, acquisitions
By Paul McBeth
March 3 (BusinessDesk) - Diligent Board Member Services, which last week restated its financial statements, is mulling options for growth, including acquisitions, as the first port of call for the pile of cash it’s sitting on.
Chief executive Alex Sodi told analysts the first option to use its US$56 million in cash and equivalents would be to grow the business before considering any redistribution to investors.
“We’re a software-as-a-service company – the key is growth when we look at use of cash,” Sodi said. “Can we use it better to grow? I would say that’s what we are going to focus on first.”
When asked whether Diligent was contemplating any acquisitions, Sodi said it’s something the company is looking at in how it uses its funds. He didn’t give details.
Diligent’s board has been mulling ways to use the steadily increasing cash position since 2012, though last year’s accounting woes which forced a restatement of the firm’s revenue figures put that on the backburner.
The company re-filed its accounts on Friday after incorrectly recognising revenue too early under US GAAP accounting rules. The effect of the restatements reduced previously reported revenue by US$4.6 million in the year ended Dec. 31, 2012. Diligent is still reviewing internal controls and will provide greater detail and an updated assessment in its annual report.
The shares rose 2.5 percent to $4.97, and have surged 28 percent this year after investors punished the stock in 2013 over its accounting errors.
Sodi said the company is contemplating a US listing, though no decision has been made.
The company grew in all markets last year, with a faster pace of expansion in Australasia and Europe than in North America, which represents about three-quarters of the firm’s revenue.
Diligent has been looking at ways to expand its offer and expects to make an announcement on a new product in the “next two months or so,” he said.