SLI first-half loss more than doubles on strong kiwi, major customer loss

SLI Systems more than doubled its first-half loss as a strong New Zealand dollar and the loss of three major customers at the end of the 2016 financial year continued to weigh on earnings.

The Christchurch-based e-commerce software seller's net loss widened to $1.28 million in the six months ended December 31, from $502,000 a year earlier, as revenue declined 12 percent to $15.7 million. Its preferred measure of growth, annualised recurring revenue, dropped 13 percent to $31.1 million.

The annualised recurring revenue fall was due to the strong kiwi dollar and customer losses, the company says. ARR was down 7.6% on a constant currency basis from $33.7 million in the first half of 2016.

SLI shares have fallen 40% in the past 12 months and last traded at 45c, well below the 2013 initial public offering price of $1.50, after the company overhauled its business in the wake of losing three major customers.

SLI hired a new chief executive and appointed three other senior managers last year to address the decline in revenue with a view to getting the company back on track in the 2017 financial year.

The company's customer retention rate by value was unchanged at 87% in the first half compared to the year before, while its gross margin on sales dropped to 74.4% from 76.4%.

SLI had $6 million cash on hand at the end of December, down from $6.8 million six months earlier. The company is not yet paying dividends.

"We are starting to see early signs the changes we are making can deliver the desired performance improvements. We are also in a strong financial position with $6 million cash on hand and more than $31 million of recurring revenue," chairman Greg Cross says.

"As previously indicated, we believe we have sufficient capital to meet our business plans but we continue to monitor cashflows and remain committed to achieving cashflow breakeven without an additional capital raise."

Chief executive Chris Brennan says the company is optimistic it will start realising the benefits of its changes in the latter half of this calendar year.

(BusinessDesk)