Xref Limited (XF1) Earnings Call Transcript & Summary

Welcome, everyone, and thank you for joining Xref's Investor Update Conference Call. [Operator Instructions] I would now like to hand the call over to your speaker, Lee-Martin Seymour, CEO and Founder. Please go ahead, sir.

Good morning, everybody, and thank you for joining us. Happy Easter to everybody. Hopefully, everyone is well into their school holiday enjoyment and have a good weekend. Together with the exec, we have managed to make absolutely sure that we get our figures out to you as soon as we can. Obviously, we're very excited about them. But given the fact that in early March, we gave you an update on the highlight figures of January and February, it was prudent that we come out and complete the story. So as James said, we'll be opening the floor up to questions at the end. I will be picking out some detail within the release from this morning to give a little bit of extra color. But obviously, make sure that your names are provided so that you can ask the question at the end of the call, and I'll try and keep it as short and sweet as I can. So this morning, revenue for Q3 is up 36% to $3 million; sales, $4 million, up 62% on last year. Our receipt from sales, our cash receipts were up 46% to $3.5 million. And cash expense is down 17% on last year to $3.5 million, so obviously, very close to a breakeven event, which is very exciting for us. And our cash balance today is just over $6.2 million. Obviously, releasing these figures is really good to understand that we're producing these figures given 40% less head count than we had this time last year. So our business has changed significantly as we progress out of the pandemic. And the Xref business today looks very different to what it did in Q2, Q3 last year. And the majority of the reason for that is that we are very quickly turning into a marketing-led business, and the efficiencies that we've built into the platform over the last 5 years since being listed are well and truly paying off for us right now. During the quarter, our new clients contributed 13% towards our sales. We actually had nearly 80 new enterprise clients for Xref. It doesn't include any clients that are currently using our Xref Lite product but 80 new significant clients across the regions that we operated in. And we also invited a new client, the Mr Price Group out of South Africa. That was a sale that was made from our U.K. teams, very delighted to bring on a new region during the quarter. And then around Australia, we had APRA; in the U.S. and North America, Baylis. And what you'll see from our new clients is that there is a very heavy weight on health care being a good part of the trust economy that we work in. Our revenue, as I said, grew 36% at $3 million. $300,000 of that was revenue from RapidID, our net revenue from RapidID less our operating costs. So if you had a look at our current run rate of just under $300,000 worth of revenue a week, we're running a plus $15 million run rate, which is very exciting prospect as we start to gear up for FY '22. So you'll see I included the January and February graph in our last release, which showed -- we do tend to always do this because it's a great indicator of what's to come, but it showed in early March how we recovered from the Christmas period. We've not only seen a really nice rapid growth back to peak levels actually preceding the pre-COVID levels, but we also see -- saw a reduced impact during the weeks of sort of 52 and into 1 being the Christmas, New Year period. So we're starting to see that seasonal fluctuation really get a lot lower as we're bringing revenue in from different areas. You can see that we've included this graph again 4 weeks later to show the continued growth of the revenue as we moved out to the 12th week of the year. And you can see actually the black line on that graph being the effect of COVID and what we started to experience during March last year. So our integration, for many of you that know the business, we have 30-plus integrations with applicant tracking systems around the world. 29% of all of the credits that are consumed during Q3 have been done on other platforms, not our own. So a cracking result, 29% of our references are being collected in platforms that we don't service and again support our efficiencies that we've built in. So that particular part or channel of our business grew 61% to $800,000 when compared to last year and actually 14% when compared to the preceding quarter of Q2, so a great result. And that strategy of integrating ATS platforms 5 years ago, another example of long-term structure paying off. In terms of our sales, $3 million were sold as Xref credits and -- I'm sorry, $3.2 million were sold as Xref credits, and the remainder was via RapidID. So we've seen a really big increase in the requirement of IT services and security via this business. And I need to draw your attention to the fact that we have a gross revenue figure of RapidID of about $900,000. And then we have a net revenue figure, which is the margin that we collect off the back of the checks that we procure for customers. So we are a DBS provider, and we do pay for the checks that we go and collect, so a bit of a different model than what you've seen from Xref over the last 10 years but certainly paying dividends as it adds to both our sales figure and to our revenue in a good way. Now for some people that know the business, this isn't new news. But today, our sales is driven by our ability to acquire clients via our self-serve platform, Xref Lite. We have enterprise sales teams that are second to none. The work that these people are doing at the moment is incredible, and they really do focus on the enterprise-level clients. We then have 30 channel partners that I've already spoken about that bring business in. But at the moment, we have a really big change going on within our business, and we are moving very well from being a sales-led business to a marketing-led business, and we are seeing the results of that echo through our sales figures. So our sales figures tend to be our crystal ball of what's to come, and that's telling a very good story. In fact, the sales from RapidID grew 608% over the quarter year-on-year. So we're having -- we've seen some really good things from that business, and its share of wallet in our business is growing over time to 24% of revenue. However, saying all of that, we are still seeing a lot of growth in our North American and European businesses. We're still not complete in terms of vaccines in those areas, and those areas are still -- a lot of those areas are still in lockdown. So we're very excited by the prospect that we're bringing these record figures in without the full impact of North America and Europe. And as we progress through this calendar year, I'm sure you'll see more of those revenues reappear. So in terms of the cohort analysis, I really do enjoy sharing this because I think it's great for us to see the clients that joined us more than 4 years ago. All of our clients between 2014 and '17, they contributed 30% -- just over $1 million of sales within the quarter. But then every quarter -- sorry, every cohort since, including the clients that joined us in '21, are very even in what they're providing us. 19.4% of revenue was provided in Q3 from clients that have joined us this financial year. So you're starting to see a really strong level of revenue foundation within our business. Cost control has obviously been a big topic not just because of pandemic. We started to shift our focus to being marketing-led self-serve with an awful lot more efficiencies built in the business as early as Q2 FY '20, and we start to sort of wind down our head count as early as November 2019. This is really paying off for us at the moment. And we've been able to provide these figures, as I said, with 40% less head count. But from reducing our office space -- our marketing spend, you can see the marketing spend on the 4C right now. You can see it's an awful lot less. In fact, our spending for Q3 was a few hundred dollars over what we had planned. Some of that went to an early annual subscription of Salesforce.com. So we pay our CRM subscription for 60 people upfront and annually. We attracted discount in doing that, but we chose to do that in Q3. And we also had some extra costs associated to the final salary and departure of Tim Griffiths from the business. But costs remained flat, and we have -- I mentioned in my comments, as part of this quarterly, that we are signaling breakeven for Q4. We are very busy currently on product investment, and we are building a new platform that will extend our services, use our current technology but extend our services past just talent teams into HR and payroll around the world, and taking all the lessons that we've had for the last 10 years and compiling them into one well-rounded platform. We've been developing since last September, and I can tell you that we've already seen the first reiteration of the extensions of the platform and it's a very exciting space in our business right now. We'll be sharing more detail on just that during Q4. Now again, I've put in here our update on our G2. We have been announced a leader again for the spring time frame. G2 is really important for us, and it's probably worthwhile you guys knowing why. You can give a review on Google without being a sanctioned user. However, on G2, you have to go through a process to be able to give a review on our platform. It's also somewhere that all North Americans go to, to select the technology in which they're going to use within their business. So it's incredibly important to us. And we invite all of our clients to give reviews on that platform. So it's a good channel. However, we're doing really well in the Google review space, not just Google in Australia but in North America and in Europe. So I'd invite you to google Xref Canada, Xref U.K., except Australia, and have a look at those reviews. What I would say is that we are really pioneering the level of reviews on our business because of how much our clients enjoy using our platform. I'd urge you, if you are involved in any other technology businesses right now, to make absolutely sure you are reviewing the Google reviews and asking them whether they have made those public. It's a large piece of the work that we do. It generates a significant amount of lead flow for us. So it is important for our marketing-led initiatives. I won't go through our management comments today, but I will give you some key takeaways from what I've just said. There is a lot to be excited about, and we have moved ourselves into one of the best positions we've been in, in 10 years. Our revenue run rate is $15 million plus today. Our sales growth is 62%, and it is really our crystal ball to our future revenue. Our breakeven has been signaled for Q4, but what are we doing to make that breakeven sustainable? Well, we're building products that build far more self-serve that we have -- than we have today. It pushes us into a new area of marketing-led initiative. It extends our addressable market past just talent teams into HR and payroll and gives us the opportunity to sell into a whole new market that we're already in. And it also provides us the ability to bring about some change within our business model. Yes, we are a credit-based business model and we always will be, but to allow people to engage in our services with a hybrid layer of subscription and credit means that we can service more markets and more regions around the world. So they are our key takeaways. We're exceptionally busy in the business today, but I am always available for one-on-one if you want to contact me directly. We will be giving some further information out around new platform as we get into Q4. But I'd like to open the floor up to any questions. So James, if you could do that for me.

[Operator Instructions] Our first question comes from [ Stella Wang ].

I just got 2 questions, please. The first one is, obviously, channel partner is a key partner for you guys for both sales and retaining of the customers. I just want to get some more color on how many of your new clients last year you've gained from this channel. How much are they doing to help you gain new clients?

Okay. So a great question. And I'll add some color on it. I don't have the actual figures of channel clients for the year-to-date that have joined us. But what I can explain is a couple of different ways that the clients go around engaging from a channel perspective. So if you're a client today, you're probably not moving from another automated reference checking provider to Xref. You are moving from a manual-based workflow to automate it through Xref. So clients don't tend to switch us out -- switch somebody else out to use Xref. They're -- basically, their journey is all new within automated referencing. So what we tend to find is clients come to us. They probably use Xref Lite to see how it works. They then use us directly on our native platform. But they always have an idea that they would love for this to be request -- reference request to be made from their business-as-usual platform. Some of them are confident enough, given the amount of reviews or peers that they have in the industry, to go straight onto an integration. So they will sort of spin the wheels, figure out how it works and then turn the integration on for their large teams from day 1. Most will give it a go within a pocket of their business. And once they're confident that it's working for them, then they will move it into an integration. Now there are clients that much prefer to use our native platform than a couple of the integrations we have. Not all the integrations are seamless, and not all of them provide the rich level of features and benefits that we have within Xref. So sometimes, we do see people giving the integrations a go but saying, "Hang on a minute. I'd much prefer to make a request than my peers," but review the details within Xref because it's far, far richer. So what I'm trying to say is not all the clients are the same. Some will engage with us first, and we won't know that they're from a channel partner, and then they will end up integrating. And some of them are brought to a supply channel but they end up just using us natively. So to get those figures, you're sort of talking about a much bigger collection of data. It isn't as simple as just how many have been found by channel. But I can say that we do an awful lot of channel marketing and -- especially in North America, where Xref isn't as known as we are in the APAC market, we do enjoy going into new clients with the credibility that's already been built by some of the vendors over there. So we do use it as a carriage. Whenever we have built an integration with an ATS, it's rich and we build it with a mindset of not having that client come back to us. When somebody has used our open API and has built their own integration with their own service, it's not always as best as -- as good as it could be, and we find that clients do tend to rather use our services. So they're all very different. Hopefully, that's adding some color.

I see. That's very -- that's really useful color. It sounds like Xref Lite is more of an initial client acquisition tool than the channel itself. So maybe next reporting, you can give some more number or colors on how Xref Lite is doing.

Sure.

Yes. Depends on what [ LTI is in use ] but...

We've actually just -- thanks for that, [ Stella ], to focus on Xref Lite. We've actually just integrated our Template Builder with Xref Lite. So I'd urge you -- all of you to go in, google Xref Template Builder, build a reference report. And what you'll find is once you build that reference report, you're taken straight into a pre-authorized account where you can take your first reference for free. We've reduced all of the friction out of the service. And so you can actually build a template and take a request within a matter of minutes, and that's bringing 3 types of client to us. It's bringing the tire kickers that we don't want to spend too much time with, that are just having a sticky beak and walking away. It's bringing the small business customers that don't need any of the enhanced feature in the enterprise platform, and they're very happy to get their credit card out and pay for services. But as you said, [ Stella ], it's bringing large enterprise clients to us that won't have a look at the level of our technology before they start talking to one of our enterprise sales teams. So it's serving 3 purposes. And in fact, Xref Lite is going to go -- is forming a very large part of our strategy moving forward because we are actually currently rebuilding Xref Template Builder and Xref Lite into the new platform. So it's even more inclusive. So yes, very exciting prospects. And I think we never knew how successful the Xref Lite would be because automated referencing tends to be new to a lot of people and so that they don't tend to self-serve. But as we've gone through the pandemic and the world has just woken up to the importance of human verification, they are hunting for us now and they are -- they get automated referencing. And so they are using Xref Lite to figure out how they can do it in their own businesses. So yes, very exciting space for us.

Great. I look forward to hearing more next quarter. Now my next and last question is, obviously, you've got to the automated template builder, but I think some of your clients, enterprise clients do require some client services. So I just wonder how much sale can your current cost base support before you need to invest in that client success part of the team for -- so generally how.

Okay. So we have 3 different areas of our sales suite. So we have our enterprise sales, people that look after a client from day 1 to day 90. And then we have our account managers that look after a client from day 90 onwards, and they would deal with the actual decision-makers or the wallet holders. Our customer success team globally looks after the users as well as any help that the candidates and referees need on the platform. So we're very well structured. To give you an idea of scale, our sales teams used to sell an average of $6,000 worth of credit to clients in their first 90 days. We are now selling double that, $12,000 average, to new customers within their first 90 days. So we're speeding up the land and expand, and that is a very number of factors that -- the market understanding the value of what we do, and that increasing exponentially on over time. That's the level of self-serve that's within the platform and will increase this financial year and the ability for us to acquire clients through marketing activities and then align those with the credibility that we hold on G2 reviews, digital reviews and client credit around the world. So I'd say that we are doing far more today with a smaller team than we used to, and it's to the credit of our platform, our self-serve, our marketing-led channels. We don't support the customers, the 29% of our revenue that comes in via integrations. So far more integrations, far more self-serve, far more marketing-led acquisition means that we -- that our cost base is not coupled to our growth. And I think over the last sort of 12 months, you've seen that we've been able to achieve this growth and moving our cost base. Yes, our head count will marginally go up, but I think what we're strategically targeting is profitable growth, sustainable, breakeven with the growth figures. And I think this year, shareholders have been asking us when are we going to get back to the growth figures. When are we going to find breakeven? Are we going to increase our addressable market and make the step change in our business? Well, we're delivering all that. Our step change comes from the shift of this business, the new product, the marketing-led, the self-serve, the efficiencies built in. We're showing the growth figures, and we've signaled breakeven, so I think very exciting year for shareholders of Xref.

Next question is from [ Mark Wenzel ].

It's another great result and certainly doing what you say you're going to do. So I appreciate that.

Thanks, [ Mark ].

I would just ask for a bit of information, I guess, about what your experience is in the North American market. I guess is it sort of reopening after COVID? What are you seeing over there in terms of usage of the Xref service?

Well, [ Mark ], we've been in North America for nearly 5 years, and we've been in a very safe part of North America. We've been in Canada and more specifically Toronto. And we find Toronto -- or we find Canada, sorry, of 30 million people very astute, very smart, very proud of Canada. It feels like home. It feels like Australia. And yes, I am a Londoner but Australia is home. And it's very similar to how it works here. People take -- I know it sounds odd, but people take references and verification on candidates because they care that they're hiring the right person into their organization. And that's very similar to that of Australia. So when we left the safe shores of our home market to go into North America, we chose Canada because, yes, we could get close to the U.S. to work it out, but we weren't going to burn a lot of cash making mistakes and similar mistakes that other businesses have done. North America is carved up into Canada, which is a safe haven for us. It's a really nice place to run a business. And then 52 different states, so Canada being the rooftop party of the U.S. The rest of the U.S., you can make very big mistakes. The West Coast is not interesting to us right now. There's not an awful lot of the trust economy. When I say the trust economy, I mean health, government, not-for-profit, education, aged care, childcare. All of these businesses tend to sit quite neatly if you draw a triangle between sort of Chicago on to New York, through Atlanta, down to Houston and back up again. This is a really nice triangle of a low trust environment, trust economy there. So we are focused in making absolutely sure that we pick the sectors in the U.S. that we know we're really good at that we have strong integrations that we can leverage that channel. And we don't see the U.S. as one entity. We see it as a sector within a state. Texas is really good for us. Texas is really good with aged care and not-for-profit and government, but I think the other thing is that we have slowly diminished our initial thought that we have to be there with an office and people. And what Xref Lite has shown us is that we do not and that we can go into the U.S. Yes, we have an LLC. Yes, we have a registered office in the U.S., but we don't need people on the ground there, and that we can -- the U.S. looks very, very different. They do not want them to speak to a salesperson. They want to try that your product, figure out if it's got the key things that they're looking for. And then when they'll use, they'll self-serve and use it until they need to increase their users or increase their features, and then they will reach out to an enterprise sale person at that time. We can then concentrate not on the land but on the expand. And I think that sort of rounds out our strategy for North America. It's not about states. It's about sectors within states. It's about self-managed platforms but having the people on the ground to focus on the expand when those businesses pop up and want to do more with our platform. I think with the new product moving from just talent into HR and into payroll, you've seen us integrate to 30-plus ATSs. Applicant tracking system is very small when compared to payroll systems. And if we had parts of our product integrated to a U.S. payroll system, I think that will be a very exciting prospect, and that's certainly an exciting day for Xref. So I think payroll systems within the U.S. is a really interesting space. And I think we've got an awful lot to offer, not just candidates but employees and ex-employees. So a big year for us. So does that answer your question?

Yes, yes. Absolutely. I don't know if you can -- I guess some -- well, sort of a bit of sort of insight, I guess, into how quickly they're rehiring and whether they're using Xref as well.

Sure. We've seen really good signs. Those areas have been really busy. Some of our [ Xref centers ] and teams in Europe and North America have been busy all the way through. And we've been able to retain the level of business that we have over there. But I think what we're really looking forward to is the nonessential sector coming back. I think if we -- what we've seen in Asia Pac is that our central sector, our health care, government, education, not-for-profit, they kept us stable to COVID. It was the hospitality, retail and travel sector that really sort of impacted our revenue numbers during Q4 last year and -- but as soon as Australia and New Zealand started to recover, we saw those nonessentials. We saw Crown casino and Qantas Airlines. We saw retail coming back in the hotel group. We actually have a lot of hotel groups in Europe and North America as a result of the security for housekeepers. So we have Dorchester and Savoy and -- such like in the mix call for this. So we're really looking forward to retail, hospitality and travel coming back online because that's really going to echo through our growth.

Yes. Fantastic. Obviously, the South Africa opportunity, obviously, you've got sort of foot in door with the health care area there. I mean do you see further growth in that market?

Look, I think what that says is that we don't have to be in a region to win a good and strong enterprise deal, but I think health care globally is such an amazing sector to add value to. And we're just very excited to be able to service a major client in a region that we've never worked in. So that particular deal was sold out of our U.K. business. We're seeing glimmers of those time zones help us. So for instance, New Zealand is a very close time frame to Hawaii. So we see the travel industry starting to get ready in that region, but we're better placed to sell out of New Zealand to Hawaii than we are out of Toronto to Hawaii because of the time difference. South Africa is on the same line as London. So it's a really easy market to sell into in terms of time frame, and we're sort of seeing those really helpful nuances around the tracks right now.

Yes. Fantastic. And you mentioned, obviously -- just the last question from my side, the expensing of the new platform cost. I mean is that likely to drop off once the new platform is sort of started? Or is that sort of going to be consistent in terms of new product development going forward?

Look, I think for the time being, we have 3 major areas of that platform. One will be released first. And we will have a staged release of other features and benefits that will form the -- I suppose the master plan. So we can see that dev is -- I would assume those dev costs would get us through probably the majority of FY '22. We've got an awful lot of things that we can get through within our strategy. We may even start our [ HCR IMS ] strategy to start integrating our services with mainstream HR systems. So it's come -- our dev team spent a lot of time on integration. Now they're spending a lot of time on building new products, and we might see them move back to integrating that new product into new environments globally. So it's -- we sort of reduced our workshop during the pandemic. And then I've spent 3 or 4 months during the pandemic scribbling on pieces of paper of what our new products would offer the industry. And I think -- we're delighted that we've been able to -- you can't really see it in the staff cost, but we increased our dev head count by 7 incredible developers right now. And we've got our workshop back, and we know exactly what we're going to build and what we're going to bring to market, so very exciting space and I'm -- I'll be excited to sort of share the new narrative as we work through Q4.

[Operator Instructions] The next question is from [ Deanna Mitchell ].

It's [ Deanna Mitchell ] here. Just 2 questions. Just in terms of the RapidID becoming a more meaningful part of your quarterly sales set, can you talk to more of that go-to-market strategy? Is it the same kind of client base or broader user cases? And the second question kind of is kind of weaving the questions from [ Stella ] and the previous person. Just talking about the recovery offshore, whether you feel comfortable the business is rightsized after the restructure and keeping costs tight during COVID. And for additional staff hires that you are thinking about, are they going to be more directed to the international sales or product development?

Sure. Okay. Thanks, [ Deanna ]. Great questions. Okay. So just to talk a bit about RapidID. So let me just separate our 2 worlds. We have, within RapidID, a world of KYC, know your customer. So that's very different to the world that Xref has been living for 10 years within HR and talent acquisition. So the services that RapidID offer is to check somebody's ID, so to collate their documents and then make sure that they are the person that's providing those documents and then running off to the government DBS service to check that those documents are legitimate. They can provide those services in the KYC market. And by the KYC market, I mean people that are trying online to get a cryptocurrency account, people that are signing up for their telco provider, people that are signing up for online banking accounts. So RapidID, before we bought them, had -- into this area. The part of all of that, that has become very busy is the origination of cryptocurrency accounts. People around the world are wondering where to put their money. They can't travel, and their hands are tied in certain areas of investment. But what has become very popular is people going out and getting their bitcoin accounts or their cryptocurrency accounts. And there are various vendors around the world that will provide you with a cryptocurrency account. We have 3 of them, 3 major ones in Australia. And RapidID has been very busy in originating or checking the IDs for customers that are originating cryptocurrency accounts. And if you google what's been going on in that market especially with the news around Robinhood in the U.S., people are very interested in this. And the human race have now decided that actually, if they all know someone that has invested in crypto and done quite well, so everybody wants to know what this market is all about. And we're checking all those IDs. So an awful lot of growth through RapidID has come from purely that sort of surge from the crypto market. But because of that success, we've seen things like H&R Block, where people can't get into offices to do their tax returns. So we're making sure that their ID is done online in terms of anti-money laundering and fraud. Coupled with that, we've seen a really big interest from the HR sector. Because they can't sit in front of the people that they're hiring, they're checking their IDs online. So we're seeing a really nice growth curve on the amount of our customers that are taking IDs as part of the recruitment process. In terms of the future for that business, I think it's probably wise to say well, we've had that business for 22 months. We have run it as a bubble albeit it's very well integrated to our service. But when you buy a business, there's always things to do. So we've worked hard at integrating that business into our back-end operations, but there were parts of it that we needed to rebuild as part of the overall strategy. So we've just rebuilt the whole web flow that gives us the ability to use ID services anywhere we want to go and under whatever brand. So I think when I come out with a bit of a new year's narrative story and more of a rounded-out strategy as we come out of the pandemic, I will be including the future of RapidID within the Xref group and certainly focusing RapidID on the provision of checks and services to our sectors globally. And to get excited about, finally, the markets that we work in, in the HR sector, getting very comfortable with taking ID checks, I think we were very smart. We bought a piece of technology very early before the market figured out that ID checks were going to be a thing. If we started to build it 22 months ago, we'd probably just about be finished now, ready for the new platform. So we made a really wise decision. And the margin that we're collecting from RapidID has meant that, that business has been a very, very good acquisition. And it is washing its own face, and we're learning an awful lot around checks and other data points within the planet. And what you'll see in the new platform is an area where you can consume fully automated checks around the world to make sure that the person is who they say they are. And I think every part of that acquisition and the integration of that acquisition has been done really well and in fact under the stewardship of David Haines, who leads ID and security for Xref, and was our very first employee in 2013, so a great story for David. And I'm sure some of you have met him. And if you -- if we come out and meet you directly, I'm sure you'll get a chance to meet David. So [ Deanna ], now remind me of the next question. Was it more to do with Xref Lite?

The second part of the -- the second question I had was more about additional staff hires and your comfort about talking about the -- you're talking about a recovery in offshore sales. Do you feel comfortable that after the restructuring, keeping costs tight during COVID that it's rightsized and whether the additional hires that Xref is considering this year will be directed to sales or product development?

Sure. Look, I think absolutely confidently that we are rightsized and I think that is really quite well demonstrated by the fact that on our 4C, you can see our $100,000-or-so worth of marketing spend. But when I tell you that $2.4 million worth of opportunity was created purely by our online efforts through marketing, I think you can see that for a very small marketing budget -- considering our marketing budget used to be 25% of our revenue and now it's -- of $3 million, it's $195,000. But that marketing budget is spent on SEO and PPC, et cetera. But we get far more bang for our buck. We have content that people click on that has been content that we have nurtured via SEO for years. 60% of our lead flow comes from a collection of content articles that get repetitively clicked on. And from those articles, you're probably sent over to create a demo or go and have a look at Xref Lite or use our Template Builder. So I would say that where we are right now, we have learned through the pandemic on how to acquire clients for a very small acquisition cost. Our acquisition costs used to be $17,000 to $25,000 depending on where you were. And so if you look at the [ AC ] enterprise clients that we've brought in, in Q3, it doesn't take long to get to a very large figure in the marketing spend. However, because we are far more marketing-led now, we have these I call -- in the business, I call them [ cooker knobs ]. And when talking to our marketing team, I would say, "Hey, something's happened in the news. Can we ramp up our PPC in New Zealand?" And all of a sudden, our team in New Zealand receive far more leads? So we are in a quite nice position that we can -- we're not throwing mud at the wall anymore. We are using our online presence. Whether it's our channel, whether it's our ratings, whether it's our online free assets or our content, we are moving those [ cooker knobs ] and putting our marketing dollars where they need to be throughout the quarter to generate the level of leads. And as our sales move forward, we can -- and especially with Xref Lite, we can take that revenue and push it straight into marketing. We're not talking about head count. We're talking about ramping content and PPC. So yes, there's a level of reinvestment, and that makes it far easier for us to keep our breakeven sustained. So although we're still profitable, we can -- we know exactly where to reinvest our money. And we've got 10 years of battle scars. We know what doesn't work. We haven't done an event in 12 months, and it hasn't hurt our business. In fact, it's focused on -- purely on online remote selling. And I think we've learned an awful lot. And although COVID was very tough for us all, I think Xref has learned lessons through the pandemic that will propel us forward, and it's been an incredible 2020 for this business. And as I've said before, we came in as a fat caterpillar and we've emerged as a colorful butterfly, and we've got everything to be excited about. But I would say that because of those things, our costs are not coupled together with our growth. And what we would be looking for if we did want to reinvest money and sustain a level of profitability, we know exactly where to put it. And the current marketing spend together with the amount of sales that we've generated tells that story already.

Congratulations on the quarter.

Thanks, [ Deanna ]. Really appreciate that. Thanks for that.

Thank you. We appear to have no further questions at this time. So Lee, back over to you.

Okay. Well, lovely to get questions, and thank you very much for those people that asked them. If you didn't manage to ask any, please contact us directly and we'll make an effort to contact you. But thanks for spending the time. With that, we'll obviously be reaching out as Q4 progresses with some updates of products, et cetera, but enjoy the rest of the school holidays, and we'll speak soon. Thank you very much.

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