From NBR ... could be a new customer announced around June 2021

Plexure sees higher revenue, lower losses in upcoming results

But closed borders have made IT workers scarce, which could suppress future results.

By Dita De Boni

Tue, 09 Mar 2021

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Digital outreach by enterprise clients is up over Covid

Listed mobile marketing solutions company Plexure is tracking ahead of its initial guidance in the current financial year, but the company warns labour shortages could potentially prove a drag on results.

This morning the dual-listed company updated its initial guidance given in November 2020, around the time it completed an oversubscribed $32 million placement and $5m share purchase plan and listed on the ASX.

Plexure said it expected to surpass the November guidance, with total revenue for the year to March 31, 2021 coming in at $29.2m; $200,000 or 1% ahead of the initial forecast, and 15.8% ahead of last financial year-end.

Breaking that down further reveals that revenue from licences is expected to be 4% below the original forecast, as a result of the global ravages of Covid-19 on the broader hospitality sector.

However, the expected drop in licences would be offset by an increase in services revenue of 9%.

Overall, the impact of slightly increased revenue but lower operating costs means the forecast pre-tax loss of $5.6 m would be 20%, or $1.4m, less than originally forecast.

Plexure – which says it has 219 million end-users on its platform in 61 countries - works with the likes of McDonald’s, White Castle, 7-Eleven, Super Indo and Loyalty NZ, providing software that delivers targeted marketing, loyalty programmes, analytics and order and pay functions to customers through their mobile phones.

CEO Craig Herbison told NBR that in markets around the world people were not going out as much but using delivery curb-side pickup or drive-thru, all of which was good for the company because they were things it enabled.

But there was still a huge number of hospitality businesses that had disappeared over the time, and the impact of Covid was not over yet, he said.

Plexure CEO Craig Herbison

“Strong balance sheets will prevail in the coming year – luckily for us we do have a lot of enterprise customers that do have exactly that. But we have not seen the tail of Covid economically, as it would relate to any business, let alone the technology sector.”

New customer
Just prior to listing on the ASX in November 2020, Herbison said he was confident Plexure would have a new enterprise customer sign-up to announce in the new year.

At the time, Herbison said the company was currently in the request-for-proposal stage with a large offshore client. He would not get into specifics, but said the client was in the company’s existing target markets of grocery and quick-service restaurants and was not New Zealand-based.

Asked this morning about that new customer, Herbison said talks with it were ongoing.

“The good news on that front is that the process is continuing; for this sort of technology that we are looking to deploy this is a fairly big deal for us... it's taking longer than we would like and they would like but there's a lot of due diligence that needs to be done."

Herbison said Plexure had originally hoped to be able to announce the deal prior to the first half-year results, but now thought it would be in the first half of the calendar year. It was a deal of a size that would ensure it was notified to the markets, he said.

Staff shortages
Employment and contractor expenses are set to come in 5%, or $1 m, below the forecast for the year. A shortage of IT workers in the country is the reason, and Plexure staff numbers end the year at 153 rather than the 190 originally included in the forecast made to the ASX on listing.

Herbison told NBR the company already employs people from 29 different nationalities and had always benefitted from the fluid market for software developers and data scientists. That market has tightened substantially as a result of the closure of the New Zealand border in March last year.

“What you are seeing is that flowing through into businesses like ours in terms of the pool that is coming into the market and available,” Herbison said.

Two other issues were also at play - one, the fact banks and utilities were increasing their mobile and digital engagement efforts and hiring the expertise to in-house positions, and two, that many tech companies had completed capital raises last year and therefore had the budget to be also hiring more techies.

Herbison said his inbox was filled three of four times daily by overseas companies offering software engineering services, but Plexure so far wanted to keep its development onshore for the purposes of quality control.

Plexure has not been able to hire as many people as it said it would prior to its ASX listing

He said the company was now actively recruiting in centres outside Auckland, and boosting its remote workforce to make up the numbers.

“We don’t feel we have exhausted the New Zealand market just yet… but as you see in our results, our cost plan – we’ve overachieved, underachieved – whichever way you want to view that – because we haven’t been able to get that talent. We do have a fairly aggressive plan for further hires next year with what we see ahead of us, so it remains a challenge, but we remain focused on New Zealand and opening up [our hiring] to all of New Zealand … hopefully with the vaccine and other things the borders will open up."

Plexure had met Minister for Trade and Export Growth Damien O’Connor earlier in the year but did not get the sense that there were plans afoot to loosen the borders for IT workers.

The most recent Digital Skills Aotearoa survey found a surge in the growth of in demand for IT professionals, with some 4462 jobs created in the sector in 2019; the sector has grown almost 5% each year for the past five years and currently employs 114,4540. Generating $16 billion to GDP, it is the country’s country’s third-largest export sector.

By Dita De Boni

Senior journalist

Contact the Writer: [email protected]

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