MENU

Revealed: Getswift Ltd reports revenues up 20% but cash receipts fall

digital

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.

Don't Buy A SINGLE Stock Until You Read This

While conflict overseas is all media talking-heads seem to mention these days, the billionaire founder of Tesla is losing sleep over what he sees as a far bigger threat.

Elon Musk Warns: This has "vastly more risk than North Korea"

If you missed your opportunity to get in on Google, Microsoft, or Amazon in their early days, don't let it happen again. This emerging technology trend could offer a second chance for anyone who wishes they took part in these millionaire-maker stocks.

Click here to discover more!

Motley Fool contributor Sean O'Neill has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.