SLI changes strategy

SLI changes strategy as retailers resist multiple e-commerce implementations, costs

By Pattrick Smellie

Aug. 23 (BusinessDesk) - Christchurch-based e-commerce accelerator SLI Systems is undertaking a major change in sales strategy as it battles for market share among retailers whom it says are increasingly resisting the costs and logistics of deploying numerous technologies at once.

The company announced a $1.6 million loss for the year to June 30, widening a loss of $162,000 last year, but says it has $5.6 million in cash on hand, just $400,000 less than it held at the beginning of last year and "directors remain confident the company has sufficient cash to transition to the new strategy and drive our current growth plans", chair Greg Cross said in a statement to the NZX.

"The loss includes a non-cash expense of $760,000 related to the accounting treatment of long term incentives payments to staff and non-recurring restructuring charges of $280,000 relating largely to a reorganisation of our US executive team. Cash outflow for the year was $1.1 million, including the one-off restructuring charge," he said.

Revenues for the year of $31.5 million were down from $35 million in the previous financial year, mainly reflecting unfavourable currency movements, said Cross. "Gross margins remained strong at 74 percent, slightly down from 77 percent in the prior year, due primarily to some increases in our direct headcount costs."

On an annualised revenue recurring revenue basis - a core internal measure of performance - revenues rose 3 percent over the year to $31.1 million.

Both the financial result and top-line growth were "not where we would like them to be" but SLI had spent a difficult year reorienting its product offering to allow customers to self-service and build their own capabilities more easily and responding to the market pressures on retail customers seeking to implement e-commerce sales engines.

"Retail dynamics and budget pressure to deploy many technologies simultaneously has meant that retailers are much more cost conscious," said chief executive Chris Brennan. "Our bundled software and service model has acted as a disincentive to customer acquisition and as a result, customers have been turning to less technically-evolved solutions. These pressures, which are evident in all of the geographies in which SLI operates, have been particularly acute in the Americas region and the mid-market where there is greater competition."

SLI was also separating software licensing from professional services as part of the move to encourage retailers to adopt self-service if they preferred that to using SLI's in-house expertise to configure its systems, which use machine-learning to predict shopper behaviour, improve search results, and drive greater sales. The self-service capability will become available later in the current financial year.

“Successful execution in the next year is crucial," said Brennan. We will carefully track the critical milestones with an eye towards continuous validation, achievement and avoiding the need for additional capital raising".:

SLI shares closed at 34 cents yesterday and have lost 58 percent of their value in the last year and sank to as low as 23 cents last month.

(BusinessDesk)

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