SLI first-half loss widens by 75%, says cash burn easing

Tuesday 24th February 2015

SLI Systems, the online retail search engine developer, widened its first-half loss by 75 percent as it chases growth in the US e-commerce market and says its cash burn is slowing.

The Christchurch-based company reported a loss of $4 million in the six months ended Dec. 31, wider than a loss of $2.3 million a year earlier, it said in a statement. Revenue climbed 27 percent to $13.6 million. SLI's annualised recurring revenue, its preferred financial measure which is based on forward subscription revenue, rose 34 percent to $28.9 million in the 12 month period ended Dec. 31.

The search engine developer is investing to fund its growth plans as it hopes to capitalise on the growing e-commerce market, particularly in the US, and says its software as a service is the second biggest after Oracle to provide online retailers with suggestive search engines.

At the balance date the company had $7.4 million in cash, compared to $13.6 million a year earlier, and said it had sufficient cash for current plans and its net cash outflow was "trending down in the coming months" as it focused on becoming cash flow positive.

“We are expecting growth for the six months to 30 June 2015 to be stronger than for the six months to 31 December 2014,” said chief executive Shaun Ryan. “We have a large pipeline of potential new business that is supported by strong e-commerce market growth, and we are confident in our ability to convert these expressions of interest into recurring revenue for the business.

“We are forecasting that our revenue will grow faster than our expenses, resulting in a downward trend for our monthly cash outflow,” Ryan said.

SLI's staff costs increased 35 percent to $10.4 million in the period. Last December the company hired Neil Thomas, a California-based Adaptive Insights executive, as chief revenue officer and president of North America as part of its push into the world's largest economy.

In October co-founder Geoff Brash resigned as vice president of the company, ending 13 years with the business, after halving his stake to about 2 percent as the company's escrow period ended.

SLI listed on the NZX in May 2013, selling shares at $1.50 a piece to raise $15 million in new capital, while $12 million went to existing shareholders.

The stock last traded at $1.09 and is rated an average of 'buy' based on the opinion of two analysts surveyed by Reuters, with a median price target of $2.

BusinessDesk.co.nz

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