AD1 Holdings notches up first ever cash flow positive quarter

Recruitment technology platform provider AD1 Holdings (ASX: AD1) has posted its first ever cash flow positive quarter, banking $217,000 in net cash from operating activities for the three months to 30 June.

The milestone achievement reflects the company’s focus on accelerating the path to break even, through the integration of software-as-a-service platform provider Utility Software Services Pty Ltd which was acquired last financial year.

At the time of the acquisition, AD1 said there would be a number of benefits including the addition of a significant revenue stream and important access to cost savings and synergies.

Outflow reduction

In today’s announcement, the company said a “significant reduction in outflows” compared to the previous year was remarkable considering the acquisition.

“The cost rationalisation program executed in the first half of the 2020 financial year extended the cost savings to approximately $5 million per annum,” it said.

“Importantly, this means that the company now maintains a cost run rate which is lower than AD1’s pre-acquisition cost run rate.”

In other quarterly news, AD1’s cash receipts for the year were $3.6 million, representing an increase of 52% on the previous year, while operating outflows reduced by $1.25 million (or 18%) and net cash outflows from operating activities reduced by $2.49 million (53%).

Contract wins

AD1 notched up a string of contract wins during the financial year, with highlights including the introduction of an employment platform solution for the Pharmacy Guild of Australia and the implementation of a utilities software for embedded networks provider iGeno.

More recently, the company has locked-in multi-year managed services agreement (MSA) renewals with the state governments of NSW and Victoria – the two largest employers in the country.

Services under the NSW MSA include the ongoing hosting and maintenance of the iworkforNSW careers platform and the provision of related digital services.

The careers platform was designed and implemented for the NSW Government in 2015 and has since delivered high levels of job seeker attraction and engagement.

Strong relationship

AD1’s chief executive officer Prashant Chandra said the renewals reflected a strong working relationship.

“It is very pleasing that both governments have chosen to extend their partnership with [us] on multi-year terms,” he said.

“The strength of the relationship is based on [our] ability to continuously innovate, ultimately providing a more cost-efficient and effective way for the country’s two largest employers to connect with job seekers.”

AD1 is also in late-stage discussions to secure new contracts across its career-platform and utilities software products.