How CV Check is preparing for post virus environment.

In just three days, global employment screening and verification services company CV Check [ASX:CV1] shifted its entire business to become a 100% remote workforce operation.

This major change to the business is not the only effect of the pandemic.

"We've seen a dramatic shift in the mix of sectors that CV Checks revenue is coming from with a huge surge in government and Human Resources recruitment of health care workers" CEO Rod Sherwood told me from his WA home.

"We're in front of this [pandemic], we have plenty of cash and we are comfortable" he said.

In its third quarter results posted today the company reported $3.3M revenue in Q3FY20, an increase on PCP despite Australian natural disasters and COVID-19 and has $4.9 million in the bank.

The company also recently announced an integration of its reference checking platform with LinkedIn, making it the first background screening company in the APAC region to integrate with LinkedIn Talent Hub.

Just how big the effect from the integration will be is not yet clear.

However Sherwood told me that as a result of the radical shift to government and health, there will be a "one off" effect on cash flow.

This is due to the increase of 30 day plus accounts for government and healthcare as distinct from small business, which traditionally pays virtually immediately using credit cards. The headline items from CV Checks Q3 results [0604/2020] are listed below.

$3.3M revenue in Q3FY20, an increase on PCP despite Australian natural disasters and COVID-19 • First revenues booked from Northern Star Resources, the AICD and 427 clients new to CV1 • First revenues booked through integration with strategic alliance partner Xref • $0.9M cash burn, performance affected by COVID-19 and $560K of carried over creditors from Q2FY20 paid later than normal • COVID-19 status – worker safety prioritised, cash savings already made provide revenue buffer • Director fees cut by 50% with Board to reduce to statutory compliance of three members • Cash at bank $4.9M as at 31 March 2020 and no debt leaves the Company in a strong financial position

DISCLAIMER AND IMPORTANT INFORMATION I do not own shares in CV Check at the time of writing this post. Nor do I accept any payment from this or any other companies I cover. Nor is my interview or blog in any way a recommendation and should not be seen as a form of financial advice. Disruptive technology stocks should be considered very speculative, high-risk, and extremely volatile. There are significant risks inherent in developing new technologies that are not discussed here. You should always seek professional advice before considering any share purchase or sale. Please read our full disclaimer.

CVCheck looks to double turnover in short term through Xref partnership.

My InsideMarket Private Fund owns shares in CVCheck and Xref at the time of publishing this post, however, we accept no payment from any of the companies we cover. More on disclosure at end of post.

Rod Sherwood, CEO of CVCheck says there are many hundreds of potential new clients in front of CVCheck as a result of the Xref strategic alliance announced yesterday.

CV Check Limited [ASX:CV1] is an online screening and verification company, and Xref [ASX:XF1] is a human resources technology company which provides automated reference checking software.

Both companies are in the expansion phase of their journey and are increasingly looking overseas for growth.

However, this latest deal will see them initially offer a joint candidate verification solution across Australia and New Zealand.

Yesterdays announcements:

CVCheck

Xref

According to the announcements, the alliance will create reciprocal opportunities for both CVCheck through other in-house integrations and and see a joint go-to-market strategy to ensure an aligned sales approach to existing customers of both companies. This process will begin as soon as next week.

I caught up with Rod Sherwood a short time ago.

Disruptive technology stocks should be considered very speculative, high-risk, and extremely volatile. There are significant risks inherent in developing new technologies that are not discussed here. You should always seek professional advice before considering any share purchase or sale. Please read our full disclaimer.

CV Check predicts strong second half FY.

Rod Sherwood CEO of CV Check [ASX:CV1], told callers to the companies investor teleconference today that the business now has a good momentum.

He told callers " The market position (CV Check) has compelling value and we are looking for really good second half."

He tempered this with a reminder that the coming holiday season may impact on the current quarter.

New enterprise wins and rising average revenue per account were discussed, along with the establishment of a Customer Value Hub in Melbourne.

Sales staff numbers are up from six to eight and the company is in the process of hiring a Chief Revenue Officer to run operations out of the hub.

"We needed to open up customer dialogue in a more structured way with channel partners." said Sherwood, explaining this a key driver behind the CRO decision.

During the quarter the company became integrated into the global enterprise recruiting software provider, SmartRecruiters.

Through these types of relationships Sherwood explained, "We can embed ourselves into the back end of large enterprise teams via HR recruitment information systems."

Using Bank of New Zealand as an example, he explained how enterprise recruitment software like SmartRecruiters, meant the bank's HR staff can screen a person from inside their workplaces, (including using CV Check)thus creating a defensive moat for CV Check.

Toward the end of the call Sherwood mentioned reviewing their cash strategy "when they are double the size they are now." He refused to comment on when that might happen.

As a refresher on CV Check, you may like to watch my interview with Rod Sherwood from a few months ago.

The InsideMarket Private Fund owns shares in CV Check at the time of publishing this post. We have not received any payment from the company for this coverage. Disruptive technology stocks should be considered very speculative, high-risk, and extremely volatile. There are significant risks inherent in developing new technologies that are not discussed here. You should always seek professional advice before considering any share purchase or sale. Please read our full disclaimer.