Investors Finding REFFIND Very Engaging
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It has been a very impressive performance by REFFIND in extending the client base, to more than 80: now it has to turn that into dollars.
Had it held on to its gains, it would have been the most successful initial public offering (IPO) of 2015: the lucky original subscribers to human resources (HR) technology company REFFIND Limited (RFN) watched the shares they bought at 20 cents through its June prospectus surge to $1.93 by late October. But the near ten-bagger understandably ran out of steam, and has since subsided to 73 cents, at which price float subscribers have to make do with making three-and-a-half times their money, in five months.
Established in 2014, REFFIND is a Software-as-a-Service (SaaS) company, which provides a cloud-based application that gives customers – usually large organisations – a mobile, innovative, collaborative and effective way of communicating with their employees, so as to engage with them better. The app is stored on the employees’ smartphones, and the client’s HR department is able to communicate with them through app-based notifications, at any location at any time of the day. The REFFIND platform has been designed from the employee’s perspective, and provides short-form content delivered in a fun, “gamified” and mobile environment.
The REFFIND solution is intended to replace the usual ways that businesses communicate with their employees, such as emails, voicemails, presentations, video feeds, and onsite training sessions. The App encourages personalised, fun and simple interactions with employees in a manner that is designed to maximise the employee experience. REFFIND is a subscription-based model where clients typically sign a 12-month subscription agreement to use the platform. Employers have access to an online portal that allows them to manage and administer users, create content, distribute it and view real time reports and analytics.
REFFIND has three product apps, the first of which to go live was REFFIND Employ, which is designed to manage, analyse and improve companies’ employee referral program. Employees are notified of job vacancies that their organisation is looking to fill, and they can simply refer the job to a friend or colleague – or any contact they wish – by ‘swiping’ on the app. Employees can be rewarded for referring the job. REFFIND Employ was released in February 2015, and the first enterprise customer, Fuji Xerox, subscribed in March 2015.
The next product, REFFIND Engage, is aimed at the employee engagement market, replacing the traditional in-depth written surveys of employee engagement, culture and workplace health, either in printed form or delivered to the desktop. REFFIND Engage allows companies to easily conduct a “pulse-check” of employees’ attitudes and opinions, and engage with them on important workplace issues, giving them real-time feedback.
The third product is an employer training tool, REFFIND Educate, which will handle workplace education and training and corporate communications, delivered in a mobile “edu-tainment” format. REFFIND Educate will compete with existing methods of corporate training, including face-to-face, outsourced courses, printed notes and online training. The company expects to release REFFIND Educate early in 2016.
REFFIND launched its prospectus in June, looking to raise $8 million through the issue of 40 million new shares, or 40 per cent of the company, at 20 cents each. Neither of the company’s founders, chief executive officer Jamie Pride and chief commercial officer Ben McGrath, sold their shares, instead, they placed their combined 48 per cent stake in the business in escrow until July 2017 – usually a reassuring sight for investors.
REFFIND hit the ASX screens with a bang in July, opening at 24.5 cents, a 22.5 per cent premium to issue price. That was only the start of the rise, which cruised to $1.93 by late October, helped by continual news flow of new clients, as Coles, AMP, Coca-Cola, Lion, Pacific Brands, Suncorp Group, Downer Group and McGrath Estate Agents signed on. In August REFFIND expanded out of Australia for the first time, striking a milestone strategic alliance with Randstad Technologies – one of the world’s largest recruitment firms – under which Randstad rolled out REFFIND Employ to its network of 400,000 IT professionals in the Asia-Pacific. Randstad is using the REFFIND Employ platform to push relevant job vacancies to candidates spanning Australia, New Zealand, Singapore, Malaysia and Hong Kong.
In September, the company added four new multinational clients, who began using REFFIND Employ within Australia. It named Dutch global electronic markets trader Optiver as one, with the other three described as an industry leader in printing and imaging with approximately 100,000 employees worldwide; a renowned law firm practising across 14 countries with revenue of more than US$1 billion; and a British fashion retailer spanning 40 countries, with more than 500 stores.
In the same month, energy management specialist Schneider Electric and Australia’s largest privately owned IT services provider, Interactive, signed on as first customers for REFFIND Engage, opening up a second revenue stream for REFFIND. Also in September, Randstad Asia-Pacific decided to roll-out REFFIND Employ across nine more of its divisions, adding more than 700,000 potential users to the platform.
Completing a big month, September also saw REFFIND buy global employee recognition platform WooBoard, a global market leader in employee peer recognition and rewards. This potentially transformational acquisition gave REFFIND immediate entry into the North American market, and 46 new customers including MetLife, Ultra Mobile. Uber, Blackmores and The Iconic. WooBoard’s product was rebranded as REFFIND Embrace.
The deal flow continued in October, with REFFIND signing five new clients, who began using the Employ platform within Australia: these were health and pharmaceuticals giant Johnson & Johnson; IAG (Insurance Australia Group), the parent company of insurance brands including NRMA, CGU and SGIO; ResMed, the world-leading producer of devices and treatments for sleep-disordered breathing; global insurance heavyweight Allianz; and what was described as a “prominent retail group with various brands, including one of Australia’s best known food franchises.”
In November, REFFIND signed a channel partner agreement with cloud-based recruitment platform specialist TurboRecruit, which agreed to link its technology with REFFIND. This brought REFFIND its first new client coming from channel partnership, in the form of salary packaging and novated leasing group Smartsalary. In addition, Australia’s largest McDonald’s franchisee, HDF Holdings Pty. Ltd., signed on to deploy REFFIND’s Employ, Engage and Embrace products across its stores in Victoria.
These deals were followed by the signing of Echo Entertainment, which will roll-out REFFIND Employ across more than 6,000 staff within its venues throughout New South Wales and Queensland including The Star, Treasury Casino and Hotel and Jupiters Hotel and Casino, and media group Southern Cross Austereo, which will also deploy REFFIND Employ to its more than 2,000 staff nationally. REFFIND was particularly excited with the Echo deal, which gives it its first client in the hospitality industry, a sector the company says is as particularly important, given the number of workers that are not desk bound.
It has been a very impressive performance by REFFIND in extending the client base, to more than 80: now it has to turn that into dollars. For FY15, REFFIND reported $20,941 in revenue – based on four months of sales – and a net profit of $509,614, all of which and more came from the forgiving of a $1.2 million loan by major shareholder Digital4ge (owned by Pride and McGrath.) The company expects to break even towards the end of FY16.
Clearly, the rise to $1.93 was too far, too fast, for a company that effectively floated on the ASX as an early-stage start-up; and given that the broader share market slumped in the August-September correction, REFFIND had to come back to earth – or more in the direction of earth. Investors who were not subscribers to the IPO would be thankful for that. Where the stock goes from here depends on a continued flow of client acquisition, and turning the ones it has into revenue from its eventual four streams, and then profit. House broker Foster Stockbroking is expecting revenue of about $25 million by late 2016, but makes no profit forecasts: nor did the company in its prospectus. REFFIND has to be considered a speculative investment candidate – Foster has a price target on it of $1.70 – but one thing investors do know is that some very big corporate names have looked at its products, and liked what they have seen.
James was founding editor of Shares magazine, and oversaw one of the most successful magazine launches in Australia. He has also written for BRW, Personal Investor, The Age and Management Today, and was subsequently personal investment editor at The Australian and editor of financial website, investorweb.com.au