By Jenny Ruth
Wednesday 26th January 2011 1 Comment
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Start-up software company Diligent Board Member Services' fourth quarter sales result was very strong with 59 net additional licenses added compared with her expectation of 47, says Gina Meo, an analyst at First NZ Capital.
Record additional net annualised license fees (ALF) of US$1.6 million (NZ$2.1 million) in the quarter was 108% ahead of the same quarter in 2009 and well above here US$1.2 million forecast.
"This boost in ALF was driven not only by licenses being added at a rate quicker than expected but also from strong upgrades from existing licenses - that is, increasing the number of users per license - which created 18% of the net add to ALF," Meo says.
While fourth quarter revenue was up 50% to US$2.5 million, ALF "is a more useful measure to focus on in regards to cashflow."
The announcement by 25% shareholder Spring Street Partners that it has waived US$200,000 of the preferred share dividend owed it is "positive for first quarter cashflow but also highlights the continued strong support of Spring Street Partners," Meo says.
"With such a strong sales result reconfirming our investment thesis on the stock, we remain positive on Diligent's prospects," she says. Meo says she will look at upgrading her sales growth assumptions.
(Meo doesn't give a recommendation)
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