Daily ShareChat: Diligent

By Jenny Ruth

Wednesday 28th October 2009

Diligent Board Member Services's third quarter update "made for encouraging reading with revenue and sales continuing their steady climb," says McDouall Stuart.

The company reported additional annualised license fees of $US0.567 million on 30 net license sales and said more than half its customers were opting to pay yearly fees in advance rather than in quarterly installments, boosting cashflow.

Sales of $US1.3 million for the quarter brought nine-month sales to $US3.5 million compared with $US2 million in the same nine months a year earlier.

"While sales have not grown at the exponential rate expected at the time of the IPO, the new streamlined business model appears to be achieving satisfying results, particularly in North America where Diligent has concentrated its marketing efforts," the broker says.

"With economic conditions in the US continuing to be tough, this bodes well for the future as business confidence lifts from what is clearly still a very low base."

The company is forecasting it will break-even at the operating cashflow level by the third quarter of 2010, coinciding with the scheduled repayment of a $US6.8 million loan.

"Provided Diligent continues to keep a tight grip on expenses and sales growth meets targets ... then there is every likelihood that the loan will be repaid in full," McDouall Stuart says.

(no recommendation)

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