Diligent lifts annual profit 43%, sales at top end of guidance

Monday 2nd March 2015

Diligent Board Member Services, the governance software developer, has lifted annual profit 43 percent and reported sales at the top end of guidance as it continued to add new customers and announced plans to invest more heavily in research and development in the coming year.

Net profit rose to US$8.59 million, or 7 US cents per share, in calendar 2014, from US$5.9 million, or 5 US cents, a year earlier, the New York based, NZX listed company said in a statement. Some US$3.7 million of costs weighed on the bottom line, reflecting the firm's investigation into a series of administrative errors that saw the overpayment of options to management and the incorrect recognition of revenue, prompting a restatement of the company's accounts. That was on top of US$7.8 million of costs incurred in the 2013 year, also relating to these issues.

Revenue climbed 28 percent to US$83.1 million, eclipsing the top end of its November forecast of between US$82.5 million and US$83 million. Diligent added 5,100 customers in the fourth quarter to take its user numbers to 92,781. Its customer retention rate was above 95 percent, down from 97 percent a year earlier.

"We ended 2014 on a high note, generating fourth quarter revenue that exceeded the high end of our guidance range and full year revenue growth of 28 percent year over year," chief executive Alex Sodi said. "Our results demonstrate strong demand for Diligent Boardbooks and the continued execution of our growth strategy."

Diligent is still recovering from the setbacks of a series of administrative blunders that saw its share price plunge and led to two censures by the NZX. It has since hired a new finance chief and over hauled its processes as it works to restore investor confidence.

The firm continued to build up its cash holdings, with cash and equivalents of US$70.8 million as at Dec. 31, up from US$56.1 million a year earlier. The board didn't declare a dividend, and Sodi said the firm plans to invest in building the product and beefing up its global sales team.

"We plan to introduce a new SaaS (software as a service) collaboration solution called DiligentTeams during the third quarter of 2015," Sodi said. "The launch of DiligentTeams will be an important milestone in the evolution of the company, as we look to extend our best of breed technology beyond the boardroom and deliver even greater value to our customers."

The shares last traded at $6.12, and have gained 16 percent this year.

BusinessDesk.co.nz

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