SLI System reports net loss, as expansion costs rise faster than sales; Shares drop

Wednesday 26th February 2014

SLI Systems, the retail search engine software company, turned to a loss of $2.3 million in the first-half, as a 12 percent gain in sales was offset by a 53 percent increase in operating costs. The company's shares fell 5.4 percent.

Total revenue and other income was $10.7 million for the six months ended Dec 31, the Christchurch-based company said in a statement. It did not provide any pro forma numbers but figures from its May prospectus show revenue in the six months ended Dec. 31, 2012, at $9.6 million. The company had a profit of $795,000 in the year earlier period, according to the prospectus figures.

Shares in SLI Systems dropped 15 cents to $2.65, making the stock the second-worst performer on the New Zealand stock exchange All Ordinaries Index today. The stock listed at $1.50 in May.

SLI Systems, which includes Warehouse Stationery and Qantas Airways as clients, listed year to raise capital as it sought to attract big international retailers as clients. It says its online shopping search engines boost sales, making it easier for customers to find goods and recommending alternatives.

"The strength of this benefit is illustrated in the strong growth we've seen in the number of search queries SLI services for our customers," chief executive Shaun Ryan said. "In the month of December 2013 we served in excess of a billion queries across our global customer base. That was 50 percent higher than the number of queries we served in December 2012."

Operating costs rose to $13.3 million from $8.7 million a year earlier. Employee costs rose 47 percent to $7.8 million as it hired 18 new full-time staff, growing its full-time employee numbers to 137. Its cash balance was $13.6 million.

Annualised recurring revenue, a favoured measure of sales for software-as-a-service firms, rose 26 percent to $21.6 million, with total customers at 445, slightly under its forecast, with a retention rate of 91 percent.

The company affirmed its forecast ARR of $25.9 million for the full year as given in its prospectus. It said it will continue to chase sales in Japan, and build on existing client bases in Brazil, New Zealand, Australia, UK and US.

BusinessDesk.co.nz

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