Applyflow list’s itself as the platform that recruiters deserve! Apply flow is the new platform that combines your recruitment website, job board, automation, and applicant tracking. We take a look to see Should I Buy ApplyFlow ASX 2022?
About AFW ASX
Applyflow is an online SaaS service that provides a white-label solution for recruiters to advertise jobs and manage the recruitment process. The company is also looking to release an updated feature “ApplyPay” which essentially allows an ’employer’ to pay the ‘recruiter’ over a set of instalments.
The fee for a recruitment agency is typically large at around 5% – 30% of the yearly fee. So for a candidate on 100k, a recruiter may typically charge between 5k – 30k, however, talking to some recruiters this fee is typically towards the higher end.
The product seems to solve a number of common pain points for recruiters and employers. Particularly around allow providing an SEO optimised approach to online marketing of positions. The group also provides a solution to a typical pain point for new companies trying to find talent.
ApplyFlow ASX Share Price
Over the past twelve months, AFW ASX has underperformed the broader ASX200 benchmark with a return of -3.51% against ~24% from the market.
AFW Share Price at Writing: 0.008, Market Cap: 23.7M
ApplyFlow ASX Fundamentals
|NTA per share||$0.00|
Applyflow has a debt to equity ratio of 0% meaning that the company does not currently hold any debt. The company also have $2.33 million of equity.
Due to the small-cap nature of the company it is especially important to review the companies cash flow to ensure they will not consistently need to tap the markets or raise debt to fund operations.
ApplyFlow ASX Latest Update
AFW ASX released their last set of financial updates to the market on 29th October 2021, with the release of their 1Q22 quarterly report.
1Q22 – Cash Flow Statement
From the group 1Q22 quarterly report to the market, the group has receipts from customers of $688 thousand. Annualised this equates to $2.752million, this is slightly higher than the $627 thousand reported in June 2021.
This represents approx 9% growth per quarter. Forecasting out with a 9% growth in revenue per quarter leaves $3.144million for the year or about 12% top-line revenue growth.
The cash flow for the quarter was negative $429k with a large amount of these expenses going towards staff costs. Management expenses seem excessive for the amount of revenue that is currently being generated.
FY21 Annual Report Breakdown
The group in their FY21 report to the market had a headline revenue growth of 842% to 2.55million.
In the group FY2018 report, AFW mention that receipts from customers were around $1.3million for the year. This dropped significantly in the proceeding FY19 annual report where the receipts from customers were only $549k.
We will be looking to future half-yearly and full yearly reports to see if the growth in top-line revenue can be sustained at a decently high rate.
ApplyFlow ASX Ownership and Insiders
ApplyFlow ASX Ownership Breakdown
ApplyFlow Shares are owned primarily by the General public with a 67.5% holding. Individual insiders and private companies hold 22% and 10% respectively.
Interestingly there does not seem to be any institutional ownership in the company. This means if insto’s want to buy in they will either need to participate through potential company equity raisings, placements, etc. or buy on market from existing holders.
This may present a decent opportunity for an uplift in share price if institutions want to purchase a stake in the company.
ApplyFlow ASX Top 5 Shareholders
Current CEO Steve Butler only holds about 0.18% of the company or less than $50k worth of shares. This is a little low, however, Chairman Philip Crutchfield and John Winters from the board of directors hold a decent amount of shares.
CEO of Zip Co Larry Diamond has a substantial stake in the company with a 2.7% ownership stake. However, compared to his approx $354million holding in Z1P this seems to only be a drop in the ocean. Although it's always exciting to have these types of investors onboard.
|4.56%||Altor Capital Management||135,000,000||A$1.1m|
|1.93%||Domain Investment H||57,000,000||A$456.0k|
ApplyFlow ASX Recent Insider Transactions
|30 Jul 21||+$115,930||Steven Papadopoulos||I||23,187,498||AU$0.005|
|30 Jul 21||+$247,485||Philip Crutchfield||I||49,500,000||AU$0.005|
|30 Jul 21||+$268,376||John Winters||I||53,678,644||AU$0.005|
Should I Buy ApplyFlow ASX - Prophets Take
The company mentioned in their 1Q22 release to the market that The scalability of the Applyflow Platform means there are minimal incremental COGS and limited friction for new sales and the subsequent onboarding process.
Whilst top-line growth for the FY21 was up over a staggering 800%, it is hard to expect that same amount of growth over the next financial year. The company is still cash flow negative and it seems it may be some time until they will report a positive cash flow.
We struggle to get excited about the TAM of the platform especially with well-renowned players such as U.S listed workday as a competitor. The ApplyPay feature from the company seems to offer some additional cross-sell features to the platform, however, the company give little details around the future potential profitability that may be derived from this feature.
If the group can continue to grow, they may be able to be valued alongside other peers such as XF1 (XRef) or CVCheck (CV1), which are trading on approx 10x and 4x revenue respectively. Currently based on a hypothetical FC22 revenue of $3.1million this would mean shares would be trading on a P/S ratio of 10x at the current market cap.
Prophet will be watching AFW ASX from the sidelines for the time being! Happy to hear everyone's thoughts in the comments.