Tuesday 10th November 2015 |
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Diligent Corp, the governance software developer, reported a 38 percent decline in third-quarter profit as the firm expanded its sales team and administrative costs rose in the US.
Net profit fell to US$1.61 million, or 1 US cent per share, in the three months ended Sept. 30, from US$2.62 million, or 2 cps, a year earlier, the New York based, NZX listed company said in a statement. Profit was dented by an 89 percent rise in sales and marketing costs to US$6.22 million, and a 51 percent increase in general and administrative expenses to US$7.35 million. That offset a 16 percent gain in sales to US$24.9 million.
Diligent has been investing in sales and marketing, and research and development to extend the business's global reach, including the launch of new products. The increased marketing cost in the third quarter was due to Diligent's expanded sales force, while the administration expenses were largely in the US and included state sales tax, higher accounting and audit fees as part of the company's efforts to improve its internal financial systems, and acquisition costs from the purchase of board management app BoardLink.
"We continued to build strong sales momentum in the third quarter, which from a bookings perspective was the largest quarter in gross sales that we have had in two years, led by significant up-sells from our existing customers," chief executive Brian Stafford said. "We are still building momentum in our new growth markets with nearly as many newly signed customers in those markets in Q3 as we had signed in the first half of the year."
The company trimmed the top of its forecast range for annual revenue, projecting sales of between $98.5 million to $98.8 million in calendar 2015, having previously forecast revenue of US$98.5 million to US$99.2 million. That was due to the appreciating US dollar, which it sees weighing on the fourth quarter, and includes the contribution of Diligent's recent acquisition.
Adjusted earnings before interest, tax, depreciation and amortisation fell 26 percent to US$5.03 million, while the Ebitda margin shrank to 20.2 percent from 21.9 percent a year earlier. Diligent expects its annual Ebitda margin to be between 24 percent and 26 percent.
Diligent generated a net cash inflow of US$4.5 million in the quarter, leaving it with cash and equivalents of US$68.8 million as at Sept. 30.
The shares last traded at $6.07, and have gained 15 percent this year.
BusinessDesk.co.nz
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