Xref Limited (XF1) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to Xref Investor Update Conference Call. [Operator Instructions] I must advise that this conference is being recorded today on Monday, 4th of May 2020. I would now like to hand the conference over to your speaker, Lee-Martin Seymour, Chief Executive Officer. Please go ahead, sir.

Good morning, and thank you for the introduction. Thank you for joining us this morning. We've got some good numbers on the call, so thanks for making time. I'm sure you are all very busy at the moment. It's delightful that we've been able to, in what is a very uncertain market right now, be able to share some good news of our April figures. So if you're using the call as a replacement of reading the update, I would urge you to, in fact, use it as a support. So if you could make absolutely sure that you read our update that went out this morning as we will be testing you on it on this call. So please read the update. I really want to use this time to open the floor up to any questions. But just to appraise the update that went out this morning, during the course of April, Xref had sales of $860,000, which was 31% growth on April last year. We received $970,000 worth of cash, which was 37% up on last April. Our expenses for April were $1 million. So for the mathematicians amongst you, we burned $30,000 within April, which was 20% -- sorry, which was a huge reduction on previous burn rates. So I'm hopeful that you're all very happy with that. And our cash expense estimate for the remainder of the financial year for the month of May and June are $1.2 million collectively, i.e., $600,000 of expenses per month, helped along by various subsidies around the world. So firstly, I'll get on to usage. So every part of our business during the COVID pandemic, which, for us in Australia, has really been since the beginning of March, every part of our business has been tested. And the reason for us to really come out with this news is because our platform and our business model has been -- has really stood up well. Our usage for April was $640,000. And in the release, we talk about the difference between essential and nonessential clients, and I actually talked and referred to this in the previous investment call. So we have gone back over history and had a look at all of our clients and deemed those that fit more in the retail-, hotel-, airline-type sectors as nonessential during COVID and those that sit in health, government, not-for-profit and education fitting into the essential services sectors. So we've been able to detail the change between last April and this April. And 50% of our usage, our credit usage last year, last April, was in the nonessential sector; and a very, very big change within this April, where only 27% of our usage was within the nonessential worker environment, and health rose from 26% up to 37%. So a really, really big -- a really big change, and it was very exciting to watch it on a daily, if not, an hourly, basis. So on top of that, we've had some sort of high-level results, including -- around the country. The government work, as referenced in Australia, was a particular highlight as well as health workers within North America and volunteer workers within Europe. So very different stories around the world. And as we went through April, we saw very, very different peaks and troughs within certain sectors that we are involved in. The good news was that 30% of our overall usage was -- our overall credits were requested from within one of our integrations. So again, our decision to allow clients to integrate through 28 of our current integrations, one of 28 of our current integrations, proves that even during these times, we are eminently sticky as a business as usual tool within their recruitment. And that usage through integrations grew 95% year-on-year, so a great result. What was exceptional during the month was our sales of $860,000, 21% of that came from overseas. 75%, as you can see within the graph, came from businesses that we deemed essential during COVID-19. And 18% of our overall sales were new -- brand-new businesses joining Xref, leaving the remainder as top-ups. So a cracking result. So our sales and account management teams have been very busy making sure that we're pulling in $860,000. Our finance team have been busy making sure that we collect $970,000 worth of cash during the month. And obviously, the exec team, the Board and senior management have been focused on making sure that our costs are reduced to a point where we can survive the pandemic and be fit and lean as we come out and make full use of the resurgence in the market as all of the people that have been made unemployed during COVID around the world settle back into new roles. So we have burnt $30,000, so just very, very shy of a cash flow breakeven event; however, we have estimated our Q4 expenses to be $1.2 million, i.e., $600,000 a month. And please note that in the December quarter, our monthly expenses were $1.8 million and in March, $1.4 million, so a huge amount of work has been done. And some of those things that we have -- some of those activities that we have executed on during April have been further headcount cut. We're about 61 people today. We actually decided to close our operation in Norway. So any offices or staff have been ceased, and all of those business, all of those clients and usage are now looked after by our team in the U.K. And something quite nice happened during the last part of March and beginning of April. We asked our global team if they would consider working a 4-day working week. This would, obviously, during COVID, have a 20% impact on their salary every month. And we proposed that Xref work a 4-day working week until the end of June. Most of our team came back with a resounding, "Yes, absolutely." However, they have opted, despite the 20% lowering of salaries, they have opted to work 5 days. And in fact, many of the Xref staff around the world are working tirelessly at the moment to bring about these changes. So the reduction in costs, the closure of Norway operational team, the 4-day working week initiative throughout the staff until June, together with government subsidies around the world, has meant that we've been able to become very lean very quickly. And it leaves us in a position where we can really focus on the marketing we're doing within the business, how we're leveraging the channel opportunities ahead? This month, we integrated with CVCheck's platform. We released the PageUp go-to-market launch. We released the LinkedIn ATS integration as well as the Greenhouse Integration. And we have -- and we are focused at the moment at a few more, so very busy time within our product stack as well. And a lot of focus is going in, not just to win new clients, but focusing on our current client growth. So many of our clients have joined us within the last 24 months, and that's when they have the most of the growth. So we're focused, not only on the essential services that are recruiting government workers, support workers, volunteers and health workers, but we are talking, on a very regular basis, to those clients that have found it quite tough, have let people go and have given a strong indication that when the market turns, they are pedal to the metal to reestablish their employee level. So great news on our part. I didn't really want to talk for too long this morning because I do really want to open up the floor to questions. But please, if you could, just as a reminder, make sure you work through that release. Lots of information on there. So could we open the floor to questions, please?

[Operator Instructions] Our first question comes from the line of [ Michael Nesse ].

The question is just relating to the shares you're going to issue sort of for forgone salaries. Can you just elaborate on that a little bit more?

Yes. So for the 12 weeks between the first of April and the 30th of June, our staff have -- are working a 4-day working week; however, most of them are working a 5-day working week. So we're working out what the salary loss, the overall salary loss would be to those individuals during that time. And we are going to be replacing that lost -- those lost earnings with fully paid or ordinary shares. So in fact, our staff has -- have given up salary in lieu of fully paid ordinary shares, which will be calculated on or soon after the 1st of July at the VWAP or the volume weighted average.

Okay. So it's roughly -- so 20% of the wage bill for that 12-week period is what we're talking about?

It would be, yes.

[Operator Instructions] We have no further questions at this time.

Okay. So we e-mailed most of you this morning the release. If you do have any follow-up questions or would like an audience with me directly, please, I'm sure you've got my mobile phone; at the very least, email me. But thanks for spending time with us this morning. It's a good sign that there's no questions. So have a great week, and we'll speak to you shortly.

Thank you. Ladies and gentlemen, that does conclude today's conference call. Thank you for your attendance, and you may disconnect your lines.