CVCheck has added $5m in annual top line revenues in just two short years as regular and recurring demand for its CV and resume checking services from a stream of serious corporate clients starts to hit the company accounts. Revenues booked in FY18 were $12.5m , up from $7.1m in 2016 and $10.43m in 2017.
The somewhat unique tech company is now hurtling headlong towards that magical breakeven mark that can often elude technology companies that fall in love with their technological development program and forget to make money.
Importantly, management appears to have put a lid on costs too with the bottom line dropping from a loss last year of $3.8m to a loss of just $2.5m this year.
Interestingly, the company’s marketing expenditure tends to be consistently rewarded by revenue growth that either matches or exceeds the quantum of money spent each year on marketing and business development.
In FY17, CVCheck spent $1.79m on its advertising and promotional efforts and reported a $3.34m increase in revenue, which included just over a million dollars in contributions from the newly acquired New Zealand business. This trend was repeated again in FY2018 with a $2.1m marketing spend resulting in a corresponding $2.1m increase in revenues.
Whilst the top line increases have been closely coincident with the company’s annual marketing spend, CVCheck says the key is in the recurring nature of the revenues attached to the corporate client base it has been securing courtesy of its annual marketing spend each year.
The company’s growing corporate client base represents both a source of repetitive revenue and offers CVCheck the opportunity for further growth by cross selling the company’s armoury of resume checking services.
Corporate and SME segments grew by 24% for CVCheck in FY2018 and were responsible for 60% of the company’s FY2018 fourth quarter revenue.
Interestingly however, CVCheck’s $17m market cap appears to be getting crowded out by some of its peers, even some with considerably smaller market segments.
One such peer is ASX listed human resources service provider Xref, which offers automated reference checking as its principal product, a product that is just one of CVCheck’s offerings.
Xref reported revenues of $4.8m and a net loss of $8.9m in FY2018. Xref ‘s market cap is nearly $71m and its shareprice is 48c a share.
Further highlighting this disconnect, Sydney based research house Ord Minnett recently set a price target of 90c a share for Xref based on its “short sales cycle”, “significant addressable market” and “land and expand” strategy.
Ord Minnett said that Xref clients tended to expand their use of its product over time, which in turn would lead to rising revenues.
In other news, CVCheck has recently bolstered its team with the appointment of veteran technology industry executive Ivan Gustavino as its Chairman, replacing Chris Brown who retired on the 13th of August.
Mr Gustavino has over 25 years of experience in technology companies and has been an advisor to or investor in a number of high growth tech plays.
He is currently a non-executive director of mining technology company Imdex and Managing Director of mid-market corporate advisory firm Atrico.
He was previously Chairman of Optimatics where he was instrumental in restructuring the company to become a global software player for water infrastructure and systems.
There is more road to cover as CVCheck continues its drive towards break even and then onto profitability but with a five year revenue graph that resembles a hockey stick, this is one tech company that might just get there sooner rather than later.
19 Oct 2023
