Diligent bolsters cash balance as sales growth slows in 3Q, still grappling with restating books

Friday 11th October 2013

Diligent Board Member Services, the software firm fined and censured by the stock exchange for a raft of breaches, continued to bolster its cash balance as sales growth slowed in the third quarter.

The New York-based company, which develops governance software, increased its cash balance by US$8.4 million to US$47.4 million in the three months ended Sept. 30, a period when it signed 122 net new client agreements compared to 168 a year earlier, it said in a statement.

The company released a truncated quarterly update as it continues to work on restating its books for the past three financial years after a series of administrative failings led to the firm recognising revenue too early.

"While we experienced slower new sales growth in the United States in the third quarter, our upgrade sales to existing US clients continued to be strong," chief executive Alex Sodi said. "New sales in other regions were slightly slower for the third quarter due to slightly slower sales in July and August."

Diligent maintained a 97 percent client retention rate, seen as a key metric for software-as-a-service firms. As at Sept. 30, it counted 2,305 companies as clients, with 3,239 boards.

Before discovering the raft of administrative errors which have forced the restatements, the company posted a tripling in annual profit last year with annual revenue more than doubling to US$43.7 million. Annualised sales were US$58.4 million in the 12 months ended March 31.

The shares fell 0.9 percent to $5.65 yesterday, and have plunged 31 percent from a high at the end of May before the extent of its mistakes became apparent.

BusinessDesk.co.nz

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