=== Break Even Narrative Wrong ===
On the 1st of May the stock price was still at 9.7c.
On the 4th of May the company reported April numbers including cash receipts of 0.97m and cash expenses of 1m, demonstrating the proximity to break-even. In addition it made positive statements regarding further cost cutting. As a result, the share price rose up to 22c on the 11th of May.
Interestingly, on the 6th of July in its quarterly update the company did neither mention the cash loss for the reporting period nor the cash at hand at the end of June.
Investors had to wait until the 31st of July to read in the quarterly cash flow statement that the company has posted a cash loss of 0.6m, however, as this number included government support of 0.4m, the adjusted or normalised quarterly cash loss was 1.0m. I reckon this is still a substantial amount for a company, which revenues are sitting at 2.0-2.5m - and are currently not growing!
The revenues may even start to shrink as the leading indicator, credits used, was down 19% QoQ in Q4 2020. In my opinion, the statutory free cash flow in the next 1-2 quarters will also deteriorate because the Job Keeper will eventually run out and customers will become more hesitant to use and buy new credits. In particular, in the health and government sector (50%+ share) I assume the company has profited from huge government stimuli, that will eventually level off.
The other claim that I don't agree with on this website is that XREF has got a super-extra-ordinary product. I guess it is absolutely reasonable to estimate that between 10 and 20 competitors exist in Europe, Asia and America, some of which are doing better, and some worse.
By the way, I do own some XREF shares, but only as an equity story for 2022 and beyond. In the short term, I see material downside risk for the reasons stated. The big recession has still to unfold. Governments' gigantic mitigation measures will finally run out. Companies will go broke, this process has not really started yet. Reality will gain ground. I can see companies hiring less in 1-3 quarters than they hire now.
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