Xref Posts 10% Revenue Rise Despite SEEK Acquisition Falling Through
Xref Limited reported a solid 10% revenue increase to $10.9 million in H1 FY2025, even as a proposed acquisition by SEEK was narrowly rejected by shareholders. The company plans to continue its growth trajectory as an independent ASX-listed entity with new product launches on the horizon.
- Revenue up 10% to $10.9 million in H1 FY2025
- SEEK acquisition offer failed to reach 75% shareholder approval
- Subscription revenue growth driven by 80 new clients, 95% on subscriptions
- Cash balance stands at $4.9 million with disciplined expense management
- New product launches and marketing initiatives planned for H2 FY2025
Revenue Growth Amid Strategic Uncertainty
Xref Limited (ASX:XF1), a global HR technology platform, has reported a 10% increase in revenue to $10.9 million for the first half of FY2025, reflecting steady progress despite a significant strategic setback. The company’s growth was driven by a surge in subscription-based contracts, with 80 new clients joining in the period and 95% opting for subscriptions, underscoring the successful transition to a SaaS business model.
However, the period was marked by the termination of a high-profile acquisition deal with SEEK, which offered $0.218 per share, a 61% premium over the pre-announcement share price. Although a majority of shareholders by number (79%) supported the deal, the vote fell short of the 75% threshold required, leading to the deal’s collapse. This outcome leaves Xref to continue independently on the ASX, resuming its growth strategy without the backing of SEEK’s capital.
Financial Discipline and Cash Position
Despite the acquisition uncertainty, Xref maintained disciplined expense management, with total expenses for H1 FY2025 at $12.9 million, 14% lower than the corresponding half last year and flat compared to the preceding half. Cash collections of $11.6 million exceeded cash used in operations ($11.4 million), resulting in a cash balance of $4.9 million at the end of January 2025. The company also secured a $2.3 million refundable R&D tax offset, bolstering its cash reserves.
With the termination of the SEEK scheme, Xref is now required to commence principal repayments on its debt facility, adding a new dimension to its financial management going forward.
Innovation Pipeline and Market Position
Looking ahead, Xref is focused on advancing its hire-to-retire platform, which includes automated reference checks, background checks, employee engagement surveys, and talent pooling tools. The company has an exciting pipeline of product enhancements and marketing initiatives slated for launch in the second half of FY2025. Key developments include expanded checks within the Trust Marketplace, growth of Self Sign-On and Enterprise Talent Pool features, and the recent release of the Employee Voice Report.
CEO and Founder Lee-Martin Seymour emphasized the company’s resilience and focus during the scheme process, highlighting the ongoing commitment to innovation and customer value. With a client base of approximately 1,800, primarily in Australia and New Zealand, and a strong retention rate of 84%, Xref remains well-positioned in the competitive HR technology sector.
Strategic Outlook
While the failed acquisition introduces some uncertainty, Xref’s management is confident in the company’s ability to grow organically. The focus will be on driving recurring SaaS revenue, expanding product capabilities, and improving operational efficiencies to pave the way toward sustainable profitability. The upcoming FY2025 interim report, due in late February, will provide further clarity on the company’s financial health and strategic direction.
Bottom Line?
Xref’s growth momentum remains intact, but the path ahead demands careful navigation without SEEK’s backing.
Questions in the middle?
- How will Xref manage debt repayments following the termination of the SEEK acquisition?
- What impact will the failed acquisition have on Xref’s ability to raise growth capital?
- Can Xref accelerate subscription revenue growth to achieve sustainable profitability?
