ASX tech share Xref rallies on 834% profit boost

Expenses increased over the year to support continued revenue growth and product development.

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Key points

  • Xref share price surges 8%
  • The ASX tech share saw profits rocket 834% in FY22
  • Fast-growing demand in the United States helped drive the strong results

ASX tech shares are broadly outperforming today with the S&P/ASX All Technology Index (ASX: XTX) up 1.22% compared to a 0.58% gain posted by the All Ordinaries Index (ASX: XAO).

But ASX tech share Xref Ltd (ASX: XF1) is charging far higher, up 8.3% to 39 cents per share.

This comes following the release of the human resources technology company's full-year results for the 12 months ending 30 June (FY22).

Here are the highlights.

Xref share price soars on rocketing profits

What else happened with the ASX tech share during the year?

FY22 was a record year for sales and revenue for Xref.

Total expenses were up 20% from the prior year, to $16.9 million. That was largely driven by higher marketing spending and increased wage costs. The company said the extra spending will support continued revenue growth and product development.

The company said it remained the number one ranking reference checking company on peer-to-peer review site G2, with an average 4.7-star rating. Its global Google review rating is 4.8 stars, while Capterra reviews also award the ASX tech share with 4.7 stars.

What did management say?

Commenting on the results sending the ASX tech share higher today, Xref CEO Lee Seymour said:

All regions grew strongly in FY22. North American revenue grew 49% year on year with revenue from the United States growing by 129% when compared to FY21 showing strong demand for Xref's products from this area…

Clients who joined Xref prior to FY2020 accounted for 60% of revenue in FY2022. Clients who joined in FY2021 grew by 131% in FY2022 and revenue from new clients grew 32% when compared to the previous year. This demonstrates Xref's strong track record in client retention and increasing customer life time value.

What's next?

Xref did not offer specific guidance for the year ahead.

However, the ASX tech share did note its continued growth plans, stating, "The first half of FY23 will see Xref preparing to launch products to grow the marketplace and platform subscriptions."

How has this ASX tech share been tracking?

Despite today's rise, the Xref share price remains down 42% in 2022. That sees the ASX tech share underperforming the All Ordinaries, which is down 9% year to date.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Xref Limited. The Motley Fool Australia has recommended Xref Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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