SLI Systems narrows first-half loss as revenue grows, costs kept in check
By Jonathan Underhill
Feb. 26 (BusinessDesk) - SLI Systems, the online retail search engine developer, narrowed its first-half loss as sales rose and costs were little changed, saying it had enough cash to get to cash-flow breakeven without seeking more funds.
The loss was $502,000 in the six months ended Dec. 31, from a loss of $4.1 million a year earlier, the Christchurch-based company said in a statement. Operating revenue jumped 30 percent to $17.4 million, while its preferred measure of growth, annualised recurring revenue, rose 23 percent to $35.6 million.
SLI shares have dropped 18 percent in the past 12 months, to trade recently at 76 cents, about half the level of the 2013 initial public offering price of $1.50. The software developer missed its sales forecast for the second half of the 2015 year but is optimistic new chief executive Chris Brennan and Martin Onofrio as chief revenue officer, both Silicon Valley veterans, can drive growth in revenue and earnings.
“The board of directors and I are aligned in our opinion that SLI can and should achieve materially higher growth rates than we have experienced in the recent past,” Brennan said. “We are a vital component of a multi-trillion dollar global market that is characterised by strong growth and is driven by a number of global trends that we expect to support growth well into the future.”
The company had $5.6 million of cash on hand at Dec. 31, little changed from six months earlier. It anticipates the cash balance "to decrease in short term" as it focuses on becoming cash flow break-even while growing, which it expects to achieve without needing to raise more capital. Its gross margin widened to 76.4 percent from 74.7 percent a year earlier.
SLI didn't give guidance on the full year, but said its plans include taking action to lift its customer retention rate back to historical levels of 90 percent from 87 percent currently.