A recovery in SLI Systems (NZE:SLI) growth remains stubbornly elusive, with falling revenues and rising losses in line with our forecasts. SLI Systems is treading water from a momentum perspective. However, operational metrics provide signs of encouragement, with ARR increasing slightly, and a substantial uptick in client retention rates. As of H218, SLI will employ a more indirect sales strategy, which could improve uptake of the solutions available. Double-digit revenue growth and 10% margins would imply 20% upside.
FY17 results: Treading water
The FY17 results reflected SLI’s current transitional state. Revenues fell 10% to NZ$32m, while losses before tax increased significantly to NZ$1.6m. Net cash decreased 17% to NZ$5.6m, though the rate of cash burn was substantially lower in H2 than in H1. Operational metrics were more encouraging, with the key annualised recurring revenues (ARR) and customer retention rates nudging up to NZ$31.1m in constant currency and 93%, respectively (FY16: NZ$30.1m, 86%).
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