SLI Systems (SLI.NZ) today reports continued strong year-on-year revenue growth but a reduction of ARR by 3% constant currency in line with guidance amid a period of significant change for the company.
Operating revenue grows 24% to $35.0 million from $28.1 million, in line with May guidance
Annualized Recurring Revenue (ARR) fell 3% on a constant currency basis
SLI lost three large customers, as advised to the market in May, due to insolvency or change of control
While decelerated growth continued in FY 16, all major regions recorded significant growth in ARR from new customers and upsells to existing customers
Net losses before tax narrows significantly to $162,000 from $7.6 million in the prior year
Cash position improves to $6.8 million from $5.6 million at the end of the prior period as cost controls result in positive cash flow of $1.2 million (FY 15 outflow of $5.8m)
New Chief Executive Officer drives a refocus of the business, including the recruitment of a new Chief Revenue Officer, a new Chief Marketing Officer and a new Vice President of Customer Success
SLI retains its leadership as most chosen SaaS site search provider to the USA’s top 1,000 online retailers2
Operating revenue for the year to 30 June 2016 increased 24% to $35.0 million from $28.1 million in the prior year. This result was in line with the $35 million guidance given in May. ARR at year end fell 3% on a constant currency basis to $31.2 million. On a reported currency basis ARR fell by 10% reflecting the recent strength in the New Zealand dollar against the US dollar and the British pound, currencies in which the company generated respectively 64% and 21% of sales in the 2016 financial year.
Net loss before tax of $162,000 was a significant improvement over the prior year’s $7.6 million loss position. Cash inflow rose to $1.2 million compared to an outflow of $5.8 million in the prior year. The company’s cash position rose to $6.8 million ahead of the prior year’s $5.6 million.
SLI Systems Chairman Greg Cross said: “The 2016 financial year has been a period of significant change for the company. Chris Brennan took over as Chief Executive Officer in October 2015 and since then we have recruited three key executives: a new Chief Revenue Officer, a new Chief Marketing Officer and a new Vice President of Customer Success. Drawing on the expertise of these new recruits and the broader management team, SLI has put in place new business processes and organizational structures to lift the performance of the business for the long term.
“These changes were the right decisions and we are confident these will lead to an appropriate growth trajectory of the business and prevent the unfavorable performance events that have weighed on ARR in recent periods. We have conserved cash allowing the company to post an (albeit temporary) net cash inflow for the period. Moreover, we expect these investments in the business to deliver a return to growth in ARR in the current financial year.
“The company remains in a strong financial position. Although we expect net cash outflows in the coming year as we return to a growth trajectory, we remain confident that we have sufficient cash resources to support the company’s plan. We are looking forward to the remainder of the year with cautious optimism,” Mr. Cross said.