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Diligent sales growth slows in fourth quarter, accelerates European expansion

By Paul McBeth

Diligent Board Member Services, the governance software developer, said sales growth slowed in the last three months of 2013, and it has decided to speed up its expansion plans in Europe.

The New York-based company added 145 net new clients in the three months ended Dec. 31, compared to 193 a year earlier. It lifted its cash balance US$8.7 million to US$56.1 million in the quarter, for an annual increase of US$22.8 million. As at Dec. 31 it had 2450 companies and 3,405 boards as clients, with a customer retention rate of 97 percent.

The company released a truncated quarterly update as it continues to work on restating its books for the past three financial years after a series of administrative failings led to the firm recognising revenue too early.

Diligent plans to accelerate its plans to expand more widely across Europe, with operations and a data centre in Germany, which it estimates will cost US$2 million.

"We have had good success in the UK so far, and we believe that there is a large opportunity for us in the continental European countries," chief executive Alex Sodi said in a statement. "Having operations and a data centre in Europe should allow us to establish a leadership position more quickly."

The company said it is still working towards providing its restated accounts by Feb. 28, which it has to meet if it wants to avoid having trading in its NZX-listed shares suspended by the stock market operator.

Diligent incurred costs of US$5.1 million relating to the restatement and re-audit of its statements, of which US$3.3million was paid in 2013.

The shares fell 3.9 percent to $4.38 yesterday, and are down 21 percent over the past 12 months.

(BusinessDesk)

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Comments and questions
2

DIL shares are up 9% today. The worst is over with uncertainty over Diligent, and they are pumping out huge amounts of cash. The company is looking good.

Cash is king - forget customer numbers or arguments over arbitrary accounts methodologies.

Still - about bloody time! I feel bad for the new CFO - who is just clearing deck and doing a proper job, but these clean-ups and upgrades of accounting systems can take a year after an issue is discovered.