Why CV Check could scale fast and big

CV Check (ASX:CV1) recently achieved a third straight profitable quarter based on $12.4M in revenue, of which $9.2 was in annualised recurring revenue.

In itself , this is a great result and another example of an Australian company making it on the global stage. I have posted the key financials from the announcement below my interview with CEO Rod Sherwood.

But what strikes me as even more exciting about CV Check's future, lies in their realisation of the power of the white label.

A Software as a Service business has two basic sales options.

First it can work on building its own brand. Second, and this is the option that CV Check has adopted, it is now providing it's technology platform as a blank - white label - to allow companies to call it their own. This provides white label clients a deeper level of service, without the costs of developing the tech themselves.

I think you'll see more companies with rich deep tech, like CV Check adopting this strategy.

Even some of the biggest players, in any given industry vertical can struggle with the time and costs associated with developing their own non-core technology.

Plus, as CV Check pointed out in its recent announcement, a large part of its success has been driven by new, large enterprise wins.

Once you get the right customers, you can then set about increasing average revenues by offering

deeper service options and improvements.

CV Check Q4FY19

•$27k positive cash flow - operating and investing cashflow up $701k pcp or +104%

• $3.1 million Q4 revenue, 71% B2B - $3.2 million cash receipts, minus 4% on pcp due to lower B2C volume

• Annualised Recurring Revenue (ARR) of $9.2 million driven by new large enterprise wins and rising average revenue per account

• Year-end cash balance $3.1 million

• Sales team strengthened in June to accelerate large enterprise and corporate sales

• Successful white-label solution launched to B2B customers

We do not recommend or advise to buy or sell shares in CV Check. The InsideMarket Private Fund does not own shares in CV Check at the time of publishing this post. We also 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.

Just how big can CV Check get?

Courtesy CV Check website

CV Check (ASX:CV1) runs a software service, targeting employers, industry associations and individuals via proprietary online platform CVCheck.

CVCheck says it allows users to order online, multiple checks covering police and traffic, employment and qualifications, finance and credit and has more than 1000 verification checks across 190 countries.

It recently announced it had cash receipts of $3.1 million in Q3 FY19, $2.1 million (17% growth on pcp) from B2B customers and is cash positive by $0.2 million on combined operating and investing activities - over 150% improvement on pcp.

It's share price has had a good run since the start of the year, beginning at five cents, and at the time of writing is 13 cents. But can it continue to grow and if so, how, why and where?

In this interview with CEO of CV Check Rod Sherwood, discusses:

• Why CV Check changed strategy from consumer oriented to B2B revenue.

• How their new strategy has grown the business in last two years.

• Why their experience in New Zealand, may hold the key to rolling out into larger overseas markets.

We do not recommend or advise to buy or sell shares in CV Check. The InsideMarket Private Fund does not own shares in CV Check at this time, nor have we have received any payment from the company for this coverage. Disruptive technology stocks should be considered very speculative, high-risk, and very 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.