Xref : $5.8m Q4 sales delivers a record year for Xref

Quarterly Business Update

Q4 FY2022

For personal use only

ASX Announcement/Press Release: 5th July 2022

Xref Limited (ASX: XF1)

$5.8m Q4 sales delivers a record year for Xref

Human resources technology company Xref Limited (ASX: XF1), ('Xref' or 'the Company') is pleased to report another strong trading performance during the final quarter of the Company's 2022 financial year (Q4 FY2022). Unaudited results for the quarter show sales of $5.8 million and strong cash receipts of $5.5 million. Revenue also reached $4.6 million.

Xref has achieved $21 million in sales during FY2022, up 35 % on the previous corresponding period. Revenues totalled $18.6 million for FY2022, up 28 % on the previous corresponding period. (Unaudited)

Revenue from the use of Xref Credits grew 27% and sales of Xref Credits grew 4% when compared to the previous June Quarter. However, the lower demand for cryptocurrency reduced Identity checks sold by RapidID by 62% when compared to the same period. As a result, sales were $5.8m, 9% lower when compared to Q4 FY2021. For this reason, the following operational update compares growth figures with the proceeding Q3 FY2022 results. Despite the decline in demand for crypto Xref is excited to launch the Trust Marketplace. Sales of identity and graduate checks as well as additional checks from vendors on the Trust Marketplace will replace the reduction in sales from the Crypto market. RapidID was highly dependent on crypto clients previously and the new growth plan will diversify the revenue sources of Rapid and therefore de-risk that part of the business. A detailed update on the Trust Marketplace will be released during its website launch in September.

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$3 $2 $1 $0

Q1 FY2022		Q2 FY2022		Q3 FY2022	Q4 FY2022
		Expenses		Collections		Revenue		Sales

Executive Director / CEO Lee-Martin Seymour said: "During the fourth quarter many of the organisations we work with had been adversely impacted by floods, sickness, salary pressure, rising interest rates, the effects of war in Ukraine and the Australian federal election. However, due to the broad sectors and regions that contribute to our revenue we have once again broken records, remained profitable and demonstrated our resilience. We are delighted to launch our new investor presentation which showcases our new platform, strategy and value and signals what is set to be a very exciting year ahead."

Chairman / Tom Stianos said: "The results for the financial year 2022 signal a strong performance. Sales growth and profitability allow us to continue to invest in growth and execute our strategy. The team have delivered consistent growth throughout the year whilst keeping costs flat during a time of continued market uncertainty."

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Operations Update - June Quarter 2022

Group sales reached $5.8 million during the quarter, up 16% on the March quarter. Xref credits used during the quarter totalled $4.1 million and, together with the Marketplace net revenue of $0.5 million, contributed to a quarterly revenue of $4.6 million.

Sales +16%

Revenue +8%

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Xref credits used via integration partners, represented 35% of all credits used during the quarter and grew by 11 %, to $1.4 million, when compared to the March quarter.

New notable clients introduced during the quarter include: Calvary Healthcare, Kimberley Clarke, Spriggy, Capitec, Coles, Ministry of the Environment - New Zealand, Mitre 10 and Seneca Family of Agencies. Further information about these new clients follows as an appendix.

Cash collections were $5.5 m in the quarter, up 10% on the March quarter. OPEX increased 1% with the addition of further headcount and increases in wages and salaries. COGS of $0.6m during the quarter included commissions paid to sales staff in Xref and the associated cost of 3rd -party checks via RapidID. It is expected that as Xref grows its subscription base and RapidID attracts volume discounts, COGS will reduce. The cash flow surplus for the current quarter was $0.8 million and cash at the bank on 30th June 2022 was $11.7 million, up 11% on the March Quarter.

	Cash Balance +11%			Cash Surplus $0.8m
Millions$	15			Millions$	6
10			4
	5				2
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		Q3 FY2022	Q4 FY2022
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								Expenses		Collections

Xref has improved all marketing metrics relating to effectiveness and lead generation with the continual optimisation of digital channels and marketing investment. This has resulted in a 130 % increase in lead flow, with 2600 leads captured in Q4 FY22. Clients who were newly acquired in FY22, contributed 28% of total sales, further validating the quality of customer acquisition and conversion. Xref has been successful in optimising via digital lead generation.

Lead Flow +130%

Q4 FY2022 Sales Mix

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	2		1.5
	1.6		1
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		<2017	2018	2019	2020	2021	2022

Q4 FY2021	Q4 FY2022	Client Year Joined

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New XF1 investor Presentation - Talent is on the move

Xref's new investor presentation is now available on xf1.com. Showcasing new products, strategy, and the unaudited financial results for FY2022.

Shareholder Roadshow - August 2022

CEO and Founder Lee-Martin Seymour together with the Chairman, Tom Stianos, will be available to present Xref's Annual Report and the new Investor Presentation week commencing August 22nd 2022. Feel free to request a suitable time via xf1.com.

Business Update: Investor Call - 5th June

Chief Executive Officer, Lee-Martin Seymour will host an investor call to provide a business update on Tuesday, 5th June 2022 at 14:00pm AEST. The number for Australian investors is 1800 093 431 and for international investors is [phone]. The conferenceID is 71873950#

For a full list of toll-free international dial-in numbers for all regions please click HERE.

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In Focus - Unaudited FY2022 Financial Results

• Revenue - record revenue result of $18.6 million, up 27% from $14.7 million in FY21;
• Sales - record sales result of $21 million, up 35% from $15 million in FY21;
• Cash Receipts from Sales - receipts of $20.9 million, up 41% from $14.8 million in FY21;
• Operating Cash Surplus - operating cash surplus of $4.4million generated during FY22 compared to an operating cash surplus of $1.9 million incurred during FY21;
• Cash Surplus - $2.5 million of free cashflow generated during FY22 after investing $1.4m into new product development and excluding the receipt of $1m due to the exercise of Warrant/Options;
• Cash Balance - a resulting balance of $11.7 million at 30th June 2022 compared to $8.2m at 30 June 2021.

Group sales reached $21 million, up 35% on the previous corresponding period (FY2021). Credit usage by clients grouped in non-essential industries is outpacing essential business recruitment demonstrating confidence in a return to normalcy, post-pandemic.

Xref continues to execute a data-drivenmulti-channel marketing strategy generating 7000 leads during FY2022 up 103% from the previous financial year.

Cash surplus for FY2022 is $2.5 million compared to a $0.25 million last year. Xref has now achieved six consecutive quarters of positive cash flow and has traded profitably for the full 2022 financial year. Cash at the bank on 30th June 2022 was $11.7 million.

A staged release of Xref's new platform began with the launch of the new 'Exit Survey' platform in November 2021 and will continue during the new financial year including Xref Pulse surveys and Xref's new Trust Marketplace.

The full FY2022 Annual Report is due for release the week commencing August 22nd 2022.

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Outlook

Talent remains on the move and employers are facing an extremely competitive market. Employees, many of whom may have stayed in 'safe' roles are now buoyed with confidence to make a transition to something new. Employers will face a need to move quickly to hire the best talent so having the right processes in place to make confident hiring decisions quickly has never been more important.

The staged release of the enhanced platform, including Xref Pulse Surveys and the Trust Marketplace will continue throughout FY2023. These new services will dramatically increase Xref's global addressable market. This strategy is expected to grow Xref's share of the North American market via channel partners, wholesale, and self-serve subscription sales.

As talent acquisition grows to become increasingly remote on a more permanent basis, automated reference surveys, identity verification, and other pre-employment checks will continue to grow in demand. As a result, the Trust Marketplace will be in a good position to broaden relationships with Digital Trust Partners for more integrated checks, increasing availability for the global marketplace of checks. In addition, the recently announced Graduate Verification Service offered by RapidID will add further revenue as retail and wholesale distribution grow.

The Group expects further growth in overseas regions will reduce the impact of seasonality. Xref expects it will be able to maintain it's achievement of a net profit after tax for FY2023 along with cash flow profitability. Xref will also continue to invest in growth through data-driven digital marketing with the self-serve initiative continuing to bring inbound leads. Through digital marketing, product innovation and leading customer service, Xref will continue to be a thought-leader and trusted partner to talent acquisition and HR teams globally.

Having been publicly listed for six years, we have strong shareholder support, in the form of both institutional and retail investors. It is important to us that our shareholders remain up-to-date with our emerging story and are clear on our value and strategy moving forward.

For further information:

Xref Limited

Lee-Martin Seymour

Founder, CEO, Director

1. [e-mail]

1. [phone]

Authorised by the Board: Xref Limited (ASX: XF1)

Appendix 4C item 6 explanatory note

As required by listing rule 4.7C.3, the amount of $150,000 shown at item 6 within this quarter's 4C is payment of directors fees and salaries to executive directors, plus statutory entitlements.

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