If your thoughts are in anyway anchored to the current share price, it is reasonable to pose the question. Like many companies, Xref have been impacted by COVID-19, this on the back of a track record of steady /sustained growth but relentless cash burn. Revenues have been impacted by COVID-19, but have not fallen off a cliff. So confident they will get the momentum back on track over the next couple of months.
The tipping point for me is the declared intention back in November, well before COVID, to navigate their way to cash flow break-even. Whether the loss of a cornerstone shareholder in FIL prompted things or simply the realisation that it is pointless to the throw the kitchen sink at growing your business but ignore the pathway to profitability.
Credit to them, they got within a whisker of cash flow neutrality in the June quarter, despite COVID-19. The closure of the Scandinavian office, centralisation through London presents a sustainable reduction in the expense profile without materially compromising the future growth story. Don’t believe the FY results will be pretty, but the run rate entering FY2021 and the accompanying narrative should paint a much brighter picture. The re-rate will follow, so IMO, just a bit of patience required. Their market footprint is impressive.
Rokewa
XF1 Price at posting:
14.0¢ Sentiment: Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)