Auckland-based software developer Datasquirt is burning through cash at over $1 million a quarter as its share price plummets.
Datasquirt has reported a net decrease of $1.27 million in cash held, leaving the cash balance at $4.23 million, for the quarter ended 30 June, 2008.
Receipts from customers for the quarter amounted to $429,000, according to the consolidated statement of cash flows lodged with the Australian Securities Exchange (ASX). For the previous quarter, ended 31 March 2008, the decrease in cash held was $1.1 million.
But, according to director Mark Loveys, the company remains on track. He says the company has always planned and budgeted for a significant investment in establishing international channels.
He says there has been an adjustment to staff levels, but this is simply reflecting the stage the business is at.
“There’s nothing unexpected as far as we’re concerned,” he says.
Datasquirt develops non-voice channel contact management software, adding, for example, text messaging, email and web chat to existing call centre environments.
When the company listed on the Australian stock exchange in September 2007, the offer price was A$0.90, but the share price has taken a dive since the end of May this year, according to the ASX. After a dip in March, shares were back at around A$0.85 in May. The price then started its descent. From the end of June until the end of July, the share price plummeted from A$0.30 to A$0.12. The closing price on 5 August was A$0.12.
Loveys says the company is focused on achieving its goals and has, for that reason, kept a low profile. Datasquirt, he adds, has a base of loyal shareholders “in there for the long term”, therefore nobody is selling.
He says Datasquirt is already factoring in some significant deals. For that reason, he doesn’t expect the cash burn to run at current levels much longer.
In May, Datasquirt reported strong revenue growth from its CONTACT software in its first full-year report since listing.
For the year ending 31 March, revenues from Datasquirt’s core business of CONTACT licence and hosting fees grew 109% to $1.48 million. But the company posted a net loss for the year of $3.85 million.
This loss was according to plan and “reflects the substantial investment in market development and product development”, says the company’s annual report.
An investor newsletter, issued at the end of May and signed by chief executive Aaron Ridgway, says there are “strong pipelines heading into the 2008/09 year and continued growth expected”.
Datasquirt signed a strategic partner agreement with Singapore-based Consillium Software, a provider of unified communications software services, in July, according to a report from CRN Australia.