AD1 Holdings (AD1:AU) announced today its half-year report for the six months ended 31 December 2022. Operating revenue stood at AUD 3.5 million (USD 2.35 million), up 15.2% over the prior corresponding period.

The company operates a number of SaaS work/business-related platforms such as Apply Direct (recruitment marketing), Jobtale (recruitment platform), Art of Mentoring (strategic mentoring platform) and Utility Software Services (CRM for the energy sector)

The group said revenue increased despite the loss of LPE (Locality Planning Energy) revenue from the Utility Services Software (USS) business.

Cash receipts from customers of AUD 3.0 million (USD 2.0 million), 21% lower on the previous corresponding period due to delays in customer payments, which have now been corrected, according to the group.

AD1 Holdings Chief Executive Officer Mr Brendan Kavenagh said, “We are pleased that the Group revenue from contracts with customers is up 15% on the prior corresponding period despite the loss of a key customer in our USS business as a result of the national energy crisis. This growth was mainly driven by increases in our AoM (Art of Mentoring) division and its successful launch into the US market.”

AoM continued to build strong momentum in the US with an increasing sales pipeline of over AUD 4 million in potential lifetime value (LTV) in North America, with further growth expected in the upcoming months,” Kavenagh said. “AoM has witnessed significant adoption in North America as an increasing number of companies see the benefits of the AoM product in attracting, developing and retaining employees.”

The AoM business showed significant growth with 57% growth on over the prior corresponding period and increased its cash receipts from customers by 17% to AUD 1.45 million (USD 0.97 million). AoM signed a new contract with the US Department of Labor for an initial one-year term with a total contract value (TCV) of over AUD 0.13 million (USD 0.09 million) and an option to extend annually for a further four years, resulting in a potential LTV of over AUD 0.63 million (USD 0.42 million).

In its ApplyDirect business, the group said it continues to service its existing customer base while delivering growth. The business is currently onboarding its latest customer, Incolink, onto the platform and working with customers to migrate from their existing ‘legacy’ platforms onto the latest version ‘Gen3’.

During the period, the group launched its Jobtale platform and said early feedback from pilot customers has been positive. Jobtale provides a purpose-built recruitment platform that organisations can use to create appealing and informative job ads to attract top talent.

The national energy crisis has impacted the USS business with a 12% decline in revenue on a YTD (year to date) basis as a result of key customer LPE exiting the retail market. Additionally, USS worked on a billing platform for a large multinational over the last 12 months under a fee for service arrangement, however the contract did not convert. As a result, the group reported an AUD 2.6 million (USD 1.74 million)  impairment on intangible assets on USS.

After a five-year term, USS’s largest customer agreement with BlueNRG is set to expire in March 2023 and the company is currently in advanced discussions to finalise a new agreement.

Looking ahead, the group said that although it has delivered year-on-year revenue growth, cash burn rate has been high which prompted the Board to review the company’s strategy and take steps to refocus on building a sustainable growth platform for the future.

As revenue continues to improve across the HR tech businesses with year-on-year revenue up 47%, AD1 will concentrate on expanding this segment with a focus on growing the AoM vertical.

With the product investments made over the last 18 months, the company said it is confident that it can increase revenue while continuing to implement its cost reduction strategy and realise improved efficiencies.

While the group published its results today, AD1 Holdings shares last traded on Friday when shares closed at AUD 0.007 (USD 0.0047), no change on the day and 16.67% above the 52 week low of AUD 0.006 (USD 0.004) set on 16 February 2023. The company has a market cap of AUD 4.91 million (USD 3.29 million).