The Whispir Ltd (ASX: WSP) share price is having an explosive day on Tuesday.
In afternoon trade, the communications management systems provider's shares are up a massive 46% to 73 cents.
At one stage today, the Whispir share price was up 72% to 85 cents.
Though, this beaten down tech share is still a world away from its 52-week high of $2.95.
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Why is this tech share rocketing?
The catalyst for the rise in the Whispir share price on Tuesday has been the release of a positive update on the company's quest to be profitable.
According to the release, an internal restructure to place the company on track to be cash accretive from the third quarter of FY 2023 has been approved by the board.
Whispir intends to reduce its workforce by 80 roles or 30%, delivering annualised savings of approximately $14.3 million. The company will also scale back its investment in R&D, via a reduction in headcount in the product and technology teams, until sufficient cash is being generated to ensure sustainable and self-funded reinvestment.
Savings will also be realised across marketing, customer services, and administration functions, with the direct sales teams largely unaffected. Approximately 70% of the roles affected are based in Australia. A total of $1.8 million is anticipated to be incurred as a one-off restructuring cost.
Management highlights that this cost reduction will ensure the company's current annual recurring revenue (ARR) of $62 million exceeds its annualised cost base.
In light of this, with cash reserves of $17.1 million, Whispir will not need to raise capital to fund its ongoing operations. This had been a major concern for investors, which explains the rallying Whispir share price today.
Profitable growth
Whispir's CEO and founder, Jeromy Wells, commented:
We have taken this step to enable Whispir to establish itself as a profitable growth business. The Company has been through a period of significant growth which means that there are now areas that can be scaled back to pre-COVID levels for a period as the Company transitions to growing sustainably and profitably without the need for additional capital.
With this restructure we expect the Company will be both EBITDA positive and cash accretive from next quarter onwards. Given our confidence in the Whispir platform and the substantial growth opportunities for our Company, we are no less ambitious for the future. This plan ensures we will now have the financial stability to grow profitably and self-sustainably from this coming Quarter.
