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8common Limited (ASX:8CO) is a micro-cap financial technology company with the market capitalization of around $6.56 Mn as on 1 March 2019. The group is in the business of developing and distributing of a software solution which include Expense8, Realtors8, and Perform8. Travel and Expense management and card Application & Management are the key areas of expense8 and is primarily used by large Australian enterprises including companies like Woolworths, Broadcast Australia, Amcor and State and Federal government agencies including the Federal Department of the Prime Minister and Cabinet and the NSW Department of Education.
On 1 March 2019, the company has released an update on the key developments of its business. The revenue from continuing operations of the company stood at ~$1.48 million in the six months ended 31 December 2018, with an increase of 25% on the prior comparative period. The SaaS revenue stood at ~$0.942 million an increase of 19% on the prior corresponding period.
The EBITDA of the company excluding significant items stood at -$0.129 million in the half year ended 31 December 2018 as compared to an EBITDA of $0.031 Mn in the prior corresponding period. The key drivers to the result for 31 December 2018 were impairment of assets which is a non-recurring expense, and which is attributed to the closure of Singapore subsidiary entities. The closure of these entities will result in a lower future operating cost. One-off expenses related to strategic advisory and the sale of the Realtors8 business has also impacted the results.
The company had a strong half year led by the Expense8 business which has continued expanding client footprint especially within NSW (approximately 66,000 users) and Federal (approximately 12,000 users) government, with extending the contract of Expense8 for 1 year by NSW Department of Education.
As per the company, growth is expected to continue with the adoption by existing clients of the travel platform and new clients on Expense8. Two material contracts were announced recently which includes Federal Government agency for the provision of Expense8 services. The contract will be implemented for a period of three months with up to a cumulative extension of six months, and the contract value amounts to $505,384 inclusive of GST. Secondly, an existing contract extended by $137,060 including GST from the Federal Department of Finance.
Performance of the company during the December 2018 half year demonstrates that Expense8 have opportunities going forward with its highly attractive business model with strong monthly recurring and usage-based income. Highly valuable and long-term contracts across State and Federal Government agencies combined with blue-chip corporate clients provide a strong base to grow the Average Revenue Per User.
The company is on the path towards positive operating cash flow. It is currently in a position where it has completed a shift towards becoming a Financial technology (Fintech) company, and the ability to focus on a core sector and platform has generated significant benefits for them.
On the price-performance front, the stock of 8Common Limited last traded at $0.043 with a decrease of ~4.44% during the dayâs trade and with a market capitalization of $6.56 million. It has a 52-week high price of $0.071 and a 52-week low price of $0.025 with an average trading volume of 207,051.
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