SLI Systems expects new San Jose-based CEO to lift revenue growth in largest market

Wednesday 30th September 2015

SLI Systems, the online retail search engine developer, says it expects the appointment of a Silicon Valley veteran as chief executive will drive revenue growth in the world's largest e-commerce market where it has lagged behind other regions.

Christchurch based SLI today named Chris Brennan as CEO, starting the San Jose office on Oct. 9, while founding chief executive Shaun Ryan, who steered the company through its 2013 share sale and listing, will move into a role as chief innovation officer.

North America accounted for 56 percent of SLI's annualised recurring revenue (ARR) as at June 30 but ARR growth in that market was just 12 percent in constant currency terms, lagging behind growth of 34 percent for the Asia Pacific region and 25 percent for the UK. The company had 51 full-time equivalent workers (FTEs) in North America at June 30, accounting for 29 percent of its workforce, compared with 91 FTEs, or 52 percent, in New Zealand.

"The growth rates we have seen in ARR - we're looking for a considerable improvement on that," chairman Greg Cross told BusinessDesk. "The US is by far and away the largest e-commerce market in the world and a very large growth opportunity for us. Bringing in a very seasoned, very experienced American-based CEO will enable us to get growth back to where we need it to be."

He declined to give a target for ARR growth and wouldn't comment on whether the company would hire more workers in the US pending the assessment of Brennan and his team.

SLI's loss widened to $7.1 million in the year ended June 30, from $5.7 million a year earlier, while operating revenue rose 27 percent to $28 million, in line with guidance. At balance date the company had $5.6 million of funds on hand and it said it was on track to be cash-flow breakeven in the near term and won’t require further investment.

"Our strategy puts us clearly on a path where we will not need to raise more capital," Cross said.

The company's shares last traded at 83 cents, compared with the sale price in its 2013 IPO of $1.50 a share. The stock peaked at $2.90 in January 2014.

Ryan, who held 11.35 percent of the company's stock as at June 30, said last month that the shares were "significantly under-priced" compared to other software-as-a-service companies, which were valued at upwards of four times annualised recurring revenue. With ARR of $34.6 million, that suggested a market value of at least $138 million for SLI, he said on Aug. 25. At today's price the market value is about $51 million.

Asked if SLI needed to do more to sell its message to investors, Cross said the company did its best to telegraph its story to the market "but ultimately the market and investors set the price."

BusinessDesk.co.nz

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