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SLI Systems shares soar 80% after maiden profit

SLI Systems shares soar 80% after maiden profit

By Tina Morrison

Feb. 23 (BusinessDesk) - SLI Systems stock soared 80 percent to its highest level in more than six months after the e-commerce software seller posted a maiden first-half profit as it changes strategy to a more self-service model, retained more customers, and reduced costs.

The Christchurch-based company posted a profit of $1.2 million, or 1.8 cents per share, in the six months ended Dec. 31, from a loss of $1.4 million, or 2.1 cents, in the year-earlier period. Operating expenses fell 8.4 percent to $6.2 million while operating revenue increased 6.9 percent to $16.5 million.

The company's shares jumped 20 cents to 36 cents shortly after the NZX opened for trading at 10am. Still, that lags behind the $1.50 sale price in its May 2013 initial public offer.

SLI is recovering from a $1.9 million loss last financial year as it reorients its product offering to allow customers to self-service and build their own capabilities more easily, amid a battle for market share among retailers whom it says are increasingly resisting the costs and logistics of deploying numerous technologies at once. Today it reported its first profit since listing in 2013, and a positive cash inflow of $793,000, lifting cash reserves to $6.4 million.

"We are navigating our transition to a new self-service product strategy, which is seeing the unbundling of our cloud-based software-as-a-service (SaaS) solutions from the professional services we provide our customers," chair Greg Cross said in a statement.

"Over the last six months we have invested to ensure our customers continue to extract the maximum value from our existing products. Meanwhile, we have decreased spending in marketing and sales to a level that is sustainable to align with the success we believe we can achieve. We have reallocated resources to the development of new products that we believe will accelerate and drive growth for the long term."

Cross said the global market for SLI's products "had never been stronger".

"E-commerce continues to grow, driving the adoption of digital marketing and online and mobile search," he said. "Meanwhile, the global economy, for the most part, remains strong and this is particularly the case in the strategically important US market, which is benefiting from recent tax reforms. These conditions, coupled with the implementation of our new strategy, give us confidence that SLI can return to sustainable growth and achieve the strong potential we see for our technology globally."

Chief executive Chris Brennan said SLI had made good progress over the past six months transforming the company's proprietary closed systems into open systems that will let customers choose how they implement and manage SLI’s solutions.

"We believe it will deliver an acceleration in customer acquisition and improve customer retention," Brennan said.

SLI said it has no plans to pay dividends for the foreseeable future.

(BusinessDesk)

ends

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