With businesses thriving for growth and working towards expanding global presence in a reformed and advanced way, accessing and efficiently verifying the information is the need of the hour to ensure smooth functioning. The times where lack of information and incomplete verification created hassles for an effective business is long gone, and managing and controlling the plethora of information presently, is an all-together new business!
Let us get to know about one such business, CV Check Limited (ASX: CV1), and understand the positive cash results it has been generating off late:
Company Profile: CV Check is an information technology player, specializing in online global screening and verification service. In the business since 2004, the company was listed on the Australian Securities Exchange in 2015 and has its registered office in Osborne. CV1 caters to private organisations, employers, individuals and government bodies, with its online checks available on demand.
The company conducts over 300,000 verification checks each year, with the goal to ensure that related parties exchange their personal or professional information safely. The company launched its information-screening platform in 2006, enhancing its technological services across the ANZ region. Its proprietary online platform is cvcheck.com, where users can access the CVCheck brand. Few of the checks that the company conducts are:
- National Police Checks.
- Employment Reference Checks.
- Employment and Qualification Checks.
- Credit, Financial and Business Checks.
- Traffic Checks.
- Predictive Psychometric Assessments.
- International Checks.
Few of CV1âs clients (Source: Companyâs report)
Strong Stock Performance: On 8 July 2019, at 3:23 PM AEST, the stock of CV1 was trading at A$0.237, up by 7.73 per cent, with a market capitalization of A$60.06 million and ~273 million outstanding shares. The stock has generated returns of 57.14 per cent, 122.22 per cent and 340 per cent in the last one, three and six months, respectively. The YTD return offered by CV1 has been staggeringly high, standing at 340 per cent.
Positive Cashflow Quarter, 3rd in a row: In its most recent financial update, CV1 reported a third consecutive cash flow positive quarter in Q4 FY19, embarking on a strong start to FY 2020. For the quarter ending 30th June 2019, CV1 generated $26k from normal operating and investing activities, an impressive 105 per cent ($704k) leap on the previous corresponding quarter. With this positive cash generation, the companyâs cash balance stands healthy at $3.1 million.
In the last quarter, the company had generated $233k from normal operating and investing activities, reporting an improvement of 152 per cent ($677k).
Commenting on the Q4FY19 result, CEO Rod Sherwood pleasingly stated that this result is significant, as the company managed to deliver it despite the costs associated with doubling the strength of its sales department and marketing expenses incurred in the quarter.
As an icing on the cake, on the B2B front, CV1 successfully bagged Visy Industries as the white labelâs foundation large enterprise customer. The company had released Phase One of its âwhite labelâ screening & verification solution during H2FY19, which resulted in this event, adding on to the growth in CV1âs path towards enhancing its B2B clientele.
In the last quarter as well, the companyâs B2B receipts were up by 17 per cent on the prior corresponding period and amounted to $2.1 million.
Positive ARR in FY19 via B2B wins: On 19 June 2019, leading online integrated screening and verification company advised that it has been progressing and delivering great results through its B2B segment, which had resulted in a strong Annualised Recurring Revenue, which was over $9 million (YTD) already.
July commenced well for the company, with the acquisition of its New Zealand business assets. Large enterprise customer base, successful tenders and a higher average revenue per account have been reportedly the primary drivers of the companyâs strong performance. This can be rightly stated as post adjusting the acquired NZ FY16 revenue of A$1.1 million, the CAGR of the ARR for three years to FY19 (YTD) was reported to be 32 per cent.
CV1âs Growth Trajectory (Source: Companyâs report)
B2B base strengthening CV1âs stature: On 4 June 2019, the company made a noteworthy announcement, informing the market that in May alone, it has secured more than 10 new Large Enterprise customer engagements. Few of these customers include:
- G4S Australia Limited.
- Kennards Hire.
- Bluefin Resources Pty Ltd.
- Bluestone Resources Inc.
- National Hearing Care Australia.
- Singtel Optus Pty Limited (two additional satellite divisions).
- A chief Hotel Chain.
- An Industry peak body.
These customer additions contributed to more than 3 per cent, or ~A$350,000 of ARR to the B2B growth segment. In this context, it should also be noted that the expansion of this customer base was made possible despite the Federal Election, which was held in the same month.
CEO Rod Sherwood added to the success story news by stating that the company had maintained a marvellous customer retention rate of more the 90 per cent, that is delivering a healthy increase in ARR.
CV1âs B2B shifts (Source: Companyâs report)
Financial Performance: For the quarter ending 31 March 2019 (Q3 FY19), CV1 reported a Revenue from business customers of $2.1 million, 17 per cent up on the prior corresponding period. Overall revenue was reported to be $3.1 million. CV1âs Gross margin was 54 per cent (up by 3 per cent on pcp when it was 51 per cent). The EBITDA stood at $0.1 million. On a positive note, the companyâs net loss narrowed to $40k, which depicted an improvement of $0.6 million on the pcp.
Business segment growth: CV1 stays committed to a customer engagement hub in Melbourne, with the aim of driving B2B customers in the large Eastern States market. Last year in November, a platform integration connector to SAP SuccessFactors had been completed, post which two major enterprise client integrations had been tested. CapGemini was involved to work on an integration, and they were overwhelmed by the ease and simplicity of CV1âs integration solution.
CV1âs integrated technology is made available on virtual HR and employment management platforms like Springboard, JobAdder, PageUp, SnapHire, SAP SuccessFactors and WorkDay, being the most recent.
Recently, the company reported that the Public Fundraising Regulatory Association (PFRA), leading player in Charities and Not-For-Profit industry sector regulating compliance for over 85 major enterprise members, adopted CV1 as part of its regulatory function. Besides, Australian Red Cross, The Smith Family and Wesley Mission are among other such bodies that have adopted CV1 screening & verification technology.
The company is further exploring strategic options to accelerate growth by leveraging its first-rate technology and market position. As reported by the company, with a solid pipeline of large enterprise client wins pending related ARR is expected to grow strongly.
An all-inclusive update, with Q4 Appendix 4C and Quarterly Cash Flow report would be released around 31 July. Investors and market experts would be keen to understand these reports and anticipate CV1âs future prospects and wins!
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