Suspended software company Getswift Ltd (ASX: GSW) released its quarterly report to the market today. The company's shares remain suspended while management works to respond to the ASX's queries.
Currently, Getswift plans to release a market update by Friday of this week and it may hope to resume trading following that.
Although light on detail, today's quarterly report revealed that Getswift's revenue grew 22% on last quarter to $321,000. This is a 255% increase from this time last year, and revenues are now around $1.2 million annualised.
However, cash flows did not keep up with revenue and Getswift reported just $160,000 in receipts from customers. Surprisingly, cash receipts were lower than the previous quarter's take, which is not what I would expect from a growing software business.
There was no commentary from management to explain this discrepancy, however prior quarterly reports also show that revenues run ahead of cash flows, which may reflect the company's billing cycle.
Getswift burned around $2 million in cash during the quarter. While the burn rate is expected to accelerate following forecast investment into research & development and establishment of a customer support centre, Getswift has $96 million cash in the bank following two recent capital raisings.
This gives the company enough cash for around 10 years at current burn rates. Getswift's cash outflow forecasts for next quarter indicate a ~50% increase in research & development spending and a ~100% increase in staff spending, which could indicate that management is starting to invest in support and sales teams as well as new product features.
However in dollar terms, spending on these functions is currently still very low.
Overall Getswift has given the market a number of reasons to be concerned, such as reportedly failing to notify the market of lost contracts, and today a relatively weak quarter.
While revenue growth was good in percentage terms, Getswift is not growing nearly fast enough in dollar terms to justify today's valuation, in my opinion.
This, combined with the concerning media reports and queries from the ASX, says to me that the company is better off avoided. As a result I'll continue to steer clear of Getswift when it returns to trade.
