Diligent Boardbooks IPO

[TwinkleToes]

Is anyone familiar with this company which plans a $20m NZ issue for 20% of the stock capitalising it at $100m?

[light weight!]

Quite familiar with this IPO.

Assumes very high sales growth, and valuation based on high multiples which the company has yet to achieve.

Highly overvalued IMO.

[warthog]

They're thinking if Xero can do it, so can we.

[Dr_Who]

Spoke to a few friends of mine in the IT industry about this company and its products. The Dr will not participate in this IPO.

[zyreon]

http://www.mcdouallstuart.co.nz/Documents/ContentDocuments/diligent.pdf

7MB - hmm I may have to utilise the slightly faster internet connection at uni to download this (damn woosh!)

[soltrader]

was today.
Comments?

[Toddy]

was today.
Comments?


According to the newspapers the IPO was over-subscribed.......... twice. Then the SP drops to $.95 cents on day one.

There must be some kind of word on the street in Christchurch as I cannot think why investors would want to throw their money at a Dot Com start up company when there are blue chip stocks currently on the market at discount prices.


Dot Com.... been there and done that. Not for me.

Good luck to all involved.

[Lebowski]

http://www.sharechat.co.nz/news/scnews/article.php/53a97776


Had to laugh at Weldon flying to NY to "woo" this scamer ,funny how no one seemed to remember this guy and his antics with other peoples money:mad:

[bermuda]

Dont touch this one. For all the reasons listed above.

Buy some PRC or BOW or VPE.

[777]

Diligent Board Member Services, Inc.

Brian Henry wishes to state that, with the benefit of hindsight, he regrets not having disclosed his relationship with EnergyCorp, and its receivership in the 1980s, which resulted in his subsequent bankruptcy. Brian Henry has therefore offered to resign his role as CEO of Diligent Board Member Services, Inc., (DBMS), to the Board of Directors, which the Board has accepted.

The Board has appointed Alex Sodi, the current President, to take on the role of President & CEO, with immediate effect. Alex Sodi graduated as a Bachelor of Science in Management Science from the University of California at San Diego. Alex Sodi has been President of DBMS and its predecessor companies since 2002 and, since 2001 has led the development of Diligent Boardbooks.

The Board would like to thank Brian Henry for the considerable amount of hard work and enthusiasm that he has put in to founding, developing and selling Diligent Boardbooks. In view of this, and Brian's recognized sales skills, leadership qualities and experience, the Board invited Brian Henry to remain on the Board and to take on the role of Global Sales Director thereby concentrating his considerable sales skills and ability where they will have most benefit to the shareholders. Brian Henry has accepted the role.

The Board will announce the latest confirmed licence sales figures by Tuesday, 18th December, 2007.

Issued on behalf of the Board of Directors, Diligent Board Member Services, Inc.
For further information, please contact Mark Russell, Independent Director, at Buddle Findlay, PO Box 322, Christchurch, New Zealand, ph: 03 371 3505

[Misc]

Why the editing in this thread today?? Are we not allowed to express opinion anymore?? Everyone makes mistakes ...... and DIL is an eggface 101 for the NZX and all involved ... of that there can be no doubt... WTF ??

Misc

[dsurf]

The fact that there is no? legal requirement to disclose that a board member or executive is previously a discharged bankrupt speaks volumes about the NZ financial markets.

That is why they listed in NZ in the first place

[winner69]

Why the editing in this thread today?? Are we not allowed to express opinion anymore?? Everyone makes mistakes ...... and DIL is an eggface 101 for the NZX and all involved ... of that there can be no doubt... WTF ??

Misc

.... must have upset somebody big time eh mate .... not generally like you

[Misc]

Hmmmm , perhaps a certain broker sponsors this site??

DIL down 25% from listing in under a week. I am amazed there is not more comment here on this 'Mother of All IPO Debarcles' .

Misc

[winner69]

Hmmmm , perhaps a certain broker sponsors this site??

DIL down 25% from listing in under a week. I am amazed there is not more comment here on this 'Mother of All IPO Debarcles' .

Misc

You would think that quite a few punters are involved but yes very silent

Further downside i guess

[TwinkleToes]

Yes, this stock will fall to around 50 cents I think. It has a significant number of competitors and some of them have very deep pockets.

[dsurf]

I bought in & got out at open for $1.00 so think I am lucky - The real question around this IPO is the fact that it was never required for the previous bankruptcy which followed a large IPO and company failure to be released in the prospectus.

As I watch the finance companies fail, our absurd takeover rules which are meaningless if it is a "merger", and the head of the stock exchange chasing a failed company promoter I wonder why we even want to have an NZ sharemarket. All that seems to happen is the good assets get sold too cheaply and retail investors get burned since they can never get access to the good floats. Sooner we "merge" with the australian market the better, then we won't need to entice crooks over here to fleece the public.

Also nice work media - why didn't this get found out earlier and released earlier.

[Misc]

Something has to give , the losses are too great now . Perhaps the Directors/Promoters should return the capital to shareholders. Would be the honourable thing to do. Or face a class action for misrepresentation / non-disclosure?

Must be at least 90cps left in the kitty?

Misc

[AMR]

It's done worse than BFW. Enough said.

[winner69]

Do I read the prospectus right in that 2007 sales are expected to be $1.6M with this increasing to $5.8M in 2008? (Page 9)

And these sales support a current market cap of $70M (down from $104M a few weeks ago)

Am I missing something?

[Dr_Who]

Didnt anyone learn from 1997? Dont say I didnt warn ya.

[starpath]

There were always other suppliers of similar software on the market. To project that sales would be as they described was unrealistic. Especially in a fast-moving environment. The money raised was targeted for promotion of the product in Europe.......thank goodness for discussion forums. It is relief not to be involved, and I also believe they will drop further.

[Dr_Who]

I agree with you Starpath. You must have good knowledge of the IT industry.

[Toddy]

Do I read the prospectus right in that 2007 sales are expected to be $1.6M with this increasing to $5.8M in 2008? (Page 9)

And these sales support a current market cap of $70M (down from $104M a few weeks ago)

Am I missing something?

Are you missing something. For every $1 in sales, expenses will be $2. However, they have a smart accountant who will capitalise most of the expenditure. There is nothing like the good old balance sheet.

If you do not understand what I'm saying just have a read up about a little old American Company called Enron.

Infact, someone's brother my have met a few of the Enron guys when doing time in the States.

Note -The above posting is not factual and for entertainment purposes only.

[TwinkleToes]

Something has to give , the losses are too great now . Perhaps the Directors/Promoters should return the capital to shareholders. Would be the honourable thing to do. Or face a class action for misrepresentation / non-disclosure?

Must be at least 90cps left in the kitty?

Misc

Just a quick comment. There is not 90cps left because the remaining cash balance now belongs to the 75% of company investors as well who weren't part of the float. Will be more like 90cps*24/104 =23cps left. If they distributed now the figure would be higher because the cancellation of some shares under the agreement with pre-existing shareholders.

The result would be around 30 cps.

[Misc]

Im talking about the 'honourable' thing to do , not the 'technical' position Twinkle , there is clearly an issue of non-disclosure here , and I believe the sponsoring broker is largely to blame for this.

Misc

[starpath]

For those individuals who missed out on this heavily "over subscribed" offer, now is the time to jump in at very cheap prices....although not if you take the good advice above.

Making something sound scarce and desirable creates demand, so I suppose it it only marketing. Reality, value and potential have little to do with it. Throw in the non-disclosure and as well to add further flavour.

[Dr_Who]

Just a quick comment. There is not 90cps left because the remaining cash balance now belongs to the 75% of company investors as well who weren't part of the float. Will be more like 90cps*24/104 =23cps left. If they distributed now the figure would be higher because the cancellation of some shares under the agreement with pre-existing shareholders.

The result would be around 30 cps.

IT and Bio Tech companies burn throw capital like fire to dry leaves.

[TwinkleToes]

I'd get out now while there are still some bids if I owned this stock (never owned it!) - can't say anymore as legal action has been previously threatened and my earlier post(s) removed from Sharetrader.

[Steve]

Im talking about the 'honourable' thing to do , not the 'technical' position Twinkle , there is clearly an issue of non-disclosure here , and I believe the sponsoring broker is largely to blame for this.

Misc

Who was the sponsoring broker?

[AMR]

McD Stuart.

[TwinkleToes]

All buying interest now gone in this stock. No bids. Should be in free fall by this afternoon. I think American directors (the market) will be looking to trim costs right about now.

[Steve]

All buying interest now gone in this stock. No bids. Should be in free fall by this afternoon. I think American directors (the market) will be looking to trim costs right about now.

Yet the price ended up 3c in the downwards market...

[Radar]

For the past couple of years, there's been a whole pile of office web applications in production over at google. If this app performs well, or makes the mistake of showing up on G's radar, they'll assimilate it... if they haven't already.

You can only survive being "noticed" by G, if you've got technology they don't. But this looks like an ensemble of repository scripts, I can't believe people pay money for it, and paid money to buy into it.

I don't think it wouldn't swing in the states because they've already had their dot com fingers burnt, a web app these days, wouldn't be looked at unless it had wings and could fly to Mars.

Here's sum site info, not that it matters very much now. But, NZ tech investors need to start reading "the numbers", they tell a story, so it will be interesting to see how this evolves over time, and if these numbers tell a tale of things to come.

Alexa rank 3.7 million (means a 'handful' of people visit the site each day. If an owner of a site has an alexa tool bar installed, and visits his own site 5 times a day, an Alexa rank under 1 million can be expected - the lower the Alexa rank, the more visitors a site has. Visitors to a site, means there's something interesting at the site worth looking at, like youtube). Considering the amount of publicity, I would have expected to see something under 100k.

PR 4 (site needs more back links otherwise that'll be a 3 at the next update). So that's an area concerning how much external promotional activity is in play, the rank suggests, not very much. For a web application, it would be easier and costs less to bring prospective client's to the product via advertising at high ranking content relevant sites, than to send a rep out on the road knocking doors down. If there was a mix of media including web advertising, then the rank should increase significantly, since PR is weighted on the value of the inbound links, and a few other less significant algorithms.

A "table coded web site" *cough* web 2.0 applications have "nothing" in common with tables, except to display tabulated data (the content pages have no tabulated data). Web 2.0 application "gurus" would rather risk the embarrassment of asking a 'real' girl out on a date, than use tables. And its a safe bet, whoever developed the application, had a hand in the website too. This only implies an oldish style of coding, not seen very often in today's competitive web applications market.

Besides, the best web applications, are privately funded, the public only get to hear about them when a "big fish" steps in to buy a slice ... everyone knows that, right?

[TwinkleToes]

Yet the price ended up 3c in the downwards market...

I suspect someone involved with the security is supporting it - this would not be very expensive to do.

[Radar]

I suspect someone involved with the security is supporting it - this would not be very expensive to do.

An interesting comment, its the same thought I had when I read the post, but I wasn't sure if it was ok to say that here though, plus, it seems like a bit of a waste considering the sentiment at this particular point in time.

[Radar]

If investors thought they were buying into a "unique" and "original" online business concept ... think again.

http://en.wikipedia.org/wiki/Board_portal

Here's a wiki on digital board books that "includes" Diligent. DiligentBoardBooks, sounds a lot like VisualBoardBooks, unsurprisingly, all of them advertise similar features, and none of them have publicly accessible online demos (you need to email and ask for one).

Virtual online board books is beginning to ring like a web portal (like the ones you buy off eBay for 500 bucks to sell chocolate bars online etc). So I'm going to ask around and see if there's a single publisher thats licensing this system. So far I haven't found a hard-core of geeks behind Diligent's application, only bankers, finance exec's, marketing and others who kinda don't fit into any specific profession. There would usually be a 'developer' with a considerable shareholding, and none of them appear to fit that description, unless they've been left out in the cold, and that would be bizarre.

And here's another portal for Diligent:-

http://tinyurl.com/26c5py

It's a "big" picture, nicely photo-shopped ... but, I thought that guy resigned? CEO's a "grand title" for a sales rep. Or, did he resign on paper as far as "New Zealand" is concerned.

Here's more on "Sharon Daniels" of "Manhattan Creative Strategies". She did very well from the IPO. (don't think that's her picture though)

http://tinyurl.com/25mrz9

And here's something else that appears to embody a collective.

http://tinyurl.com/34oadt

The trademark for EasyEdit, looks to be owned by a company in Dublin. I've contacted them seeking clarification. Why? because it's in the public domain and I can.

Extra stuff:

Kiri Borg is the the company secretary, and she's also listed as the registrant for 104 domains (including Diligent, and ny city).

I'll get around to those other domains, a bit later :)

I don't expect to find a smoking gun, what I am finding is a real clever pitch of a mediocre and 'done' product. There are thousands of more innovative web products and emerging technologies out there that could use a 24 million shot in the arm. So I'm hoping to find a sparkle of innovation that warranted a sell-out IPO, there must be one, it surely can't be allowed to be as easy as this looks on the surface.

[TerryA]

Radar,

A very informative post and you should be congratulated for your efforts.

I don't hold and think that the company's time is very limited.

Thanks and best wishes,

TerryA

[Radar]

Radar,

A very informative post and you should be congratulated for your efforts.

I don't hold and think that the company's time is very limited.

Thanks and best wishes,

TerryA

No effort at all. I'm inclined to agree, the product might have been a crop of onions and they still would have had a successful IPO. Besides, the public here are easy parted with their money, buns and patties, batteries that never go flat, so why not a donkey painted pink and called an elephant.

So they'll be around for a while, for sure.

[Dr_Who]

Didnt anyone learn from 1997? Dont say I didnt warn ya.

Company on shaky grounds. Profit downgrade?

Will this be the next BIO?

[Steve]

Company on shaky grounds. Profit downgrade?

Will this be the next BIO?

The announcement says that the warranty could be triggered. Does this mean that the promoters have to stump up some cash, or for-go some of their shares?

[Stranger_Danger]

Am I retarded, or is their website completely devoid of pricing information?

How does one buy the thing, I wonder?

[bermuda]

Am I retarded, or is their website completely devoid of pricing information?

How does one buy the thing, I wonder?

Surely, surely you wouldnt be thinking of buying. Goodness gracious me.

[Stranger_Danger]

Of course not, I was curious as to the product itself and if it could be truly as bad as some suggest. Went to the site to have a look. Couldn't see pricing or much at all really.

If i'd been in the market for their solution, I would not have made initial contact based on what I saw.

[bermuda]

Of course not, I was curious as to the product itself and if it could be truly as bad as some suggest. Went to the site to have a look. Couldn't see pricing or much at all really.

If i'd been in the market for their solution, I would not have made initial contact based on what I saw.

Thanks Stranger,
You had me worried for a while.

Avoid this stock like the plague

[Steve]

Lend Lease have signed up as a customer! Talk about name-dropping...why haven't they taken this approach previously and outed their signings?

[bermuda]

Lend Lease have signed up as a customer! Talk about name-dropping...why haven't they taken this approach previously and outed their signings?

Hi Steve,
I hope you are right.
It is just that some freinds of mine were taken in by this fella's brother and I have become a bit biased.No offense.

[Steve]

Hi Steve,
I hope you are right.
It is just that some freinds of mine were taken in by this fella's brother and I have become a bit biased.No offense.

Don't worry, my BARGE POLE is keeping some distance with this one... ;)

[Misc]

I hear DILs broker McDoall Stuart is being audited by the NZX . Would this be in connection to the DIL shambles or possibly the Rakon issue last year? Any thoughts? Misc

[TwinkleToes]

I made posts on this disaster before listing. They were pulled under threat of legal action. Of course, what has transpired is completely consistent with my analysis.

I can not mention the name of the organising broker for legal reasons but a second dodgy company they tried to list was Taupo Motorsport Park where they revalued the land and put it through the income statement above the line creating a completely false impression of the company itself. Luckily that listing didn't go ahead.

It is interesting now how the dodgy companies can blame the credit crunch for all their ills. Along the lines of "it was a great idea.........but unfortunately the credit crunch has affected our forecasts etc. etc." :mad:

I hope this post is read by a few people before it is removed. Have not posted for a long time because of previous legal threats. I do not blame Sharetrader for removing them incidentally.

[winner69]

Good to see that the last result (loss) was announced 'with pleasure'

[bermuda]

I made posts on this disaster before listing. They were pulled under threat of legal action. Of course, what has transpired is completely consistent with my analysis.

I can not mention the name of the organising broker for legal reasons but a second dodgy company they tried to list was Taupo Motorsport Park where they revalued the land and put it through the income statement above the line creating a completely false impression of the company itself. Luckily that listing didn't go ahead.

It is interesting now how the dodgy companies can blame the credit crunch for all their ills. Along the lines of "it was a great idea.........but unfortunately the credit crunch has affected our forecasts etc. etc." :mad:

I hope this post is read by a few people before it is removed. Have not posted for a long time because of previous legal threats. I do not blame Sharetrader for removing them incidentally.

Hi Twinkle Toes.

Totally consistent with my views. How Weldon allowed this to be listed is beyond me. Total disgrace.

[Dr_Who]

Hi Twinkle Toes.

Totally consistent with my views. How Weldon allowed this to be listed is beyond me. Total disgrace.

Have to agree with you. I did warn people from the beginning that these guys sound dodgy.

[Radar]

I put it as politely as possible back in January. TerryA even congratulated me for my efforts ;)

http://www.sharetrader.co.nz/showpost.php?p=181689&postcount=37

So I don't think "dodgy" is the right word. They painted an elephant pink, put it on ski's, but its still an elephant.

Its sad because there are sooo many legitimate startups and clever ideas out there that deserve that level of support from NZ investors, but they don't get it here, because they haven't the skills to window-dress their propositions, or aren't connected to the buddy-pal network.

I hope people aren't put off investment in web applications. There are some goodies around the corner so it would be a tragedy if these amateurs ruin it for others.

[Dr_Who]

Its sad because there are sooo many legitimate startups and clever ideas out there that deserve that level of support from NZ investors, but they don't get it here, because they haven't the skills to window-dress their propositions, or aren't connected to the buddy-pal network.

I hope people aren't put off investment in web applications. There are some goodies around the corner so it would be a tragedy if these amateurs ruin it for others.

Sounds like the Bio Tech industry in NZ. The likes of GEN, BIO etc have lost the NZ investors confidence in the industry. Good bio tech firms end up going to Aussie to raise funds.

[minimoke]

So I don't think "dodgy" is the right word. They painted an elephant pink, put it on ski's, but its still an elephant.


Oh yea of little faith: up 25% today on a nicely staged $250 trade. Imagine if the big spenders came out in support!

[Dr_Who]

Oh yea of little faith: up 25% today on a nicely staged $250 trade. Imagine if the big spenders came out in support!

You mean the big spenders that bought into Burgerfuel IPO?

[minimoke]

You mean the big spenders that bought into Burgerfuel IPO?
I was thinking more like CER and PLS type backers

[Justus]

See NBR, it goes from bad to worse for this outfit. The same lawyers that are suing the directors of Feltex are now planning to have a crack at the directors and promoters of DIL.
Must also be hugely embarrassing for Mark Weldon that he got the wool pulled over his eyes about this one too and rolled out the red carpet for them.

[winner69]

Reads like an early epitaph .... the only good thing is that US citizens will now be allowed to but NZX:DIL whatever that means

And many were so hopeful after the Burger King announcement

Wonder how many NZ investors actually got sucked in?

http://www.nzx.com/markets/NZSX/DIL/announcements/4745593

[Lizard]

NZX:DIL
Nice sense of irony there Winner ;). I guess you meant to write NZX:DIL!

[winner69]

Nice sense of irony there Winner ;). I guess you meant to write NZX:DIL!


Jeez ... always wondered how to put those funny faces in .... and still don't know how to

[winner69]

Good news just keeps coming ...MARKET LEADER or something like that now ..... Burger King and now leading energy companies .... must be some product

[winner69]

latest announcement from DIL clearly shows them to a 'growth' company when you look at their sales and license uptake ... what a series of charts

No wonder their share price is nearly 100% up on its recent lows (ref DB numbers)

[Dr_Who]

Holy shiat!

Who would want to invest in this dog?

Diligent operating loss

4:30AM Friday Feb 27, 2009

Software company Diligent Board Member Services yesterday announced a US$11.8 million operating loss for the 2008 financial year.

Diligent produces Diligent Boardbooks, a web-based system to simplify board meeting materials.

It moved its software division from New York to Christchurch in 2001.
The 2008 financial year was its first full year as a listed company on the NZ exchange.

Sales for the 2008 year of US$2.93 million were up on
US$1.73 million for the previous year. But operating expenses were US$12.87 million, including US$6.2 million for marketing and US$5.4 million in general expenses.

[Xerof]

Who would want to invest in this dog?


Well.....no-one?....I don't see any bids.....

Also, if you take the time to actually read the proposal on the new issue of Preferred Stock, in the event of a (likely IMO) liquidation, the Preferred Stock holders are in line for 150% of their capital.....i.e the "Commoners" get stuffed even more than usual :cool::cool:

The Directors unanimous recommendation reads like a Tui's ad

[Xeroxyz]

Any opinions on this after the latest Quarterly results. Can a pink dog with skis possibly fly? - newbie...

[Balance]

Looks like it is flying and directors and management have been buying.

Takeover to happen? The scenario at the IPO (which was a disaster) is that Bloomberg and Nasdaq were keen to buy the company but DIL held off to get more clients onboard and therefore a better price.

[jonu]

Had to trawl the archive to find this thread. After all the bile (justified) post the IPO it looks like this has really turned the corner. Would be interested to hear views of some of the earlier posters and how they see its future now.

[Anna Naum]

Had to trawl the archive to find this thread. After all the bile (justified) post the IPO it looks like this has really turned the corner. Would be interested to hear views of some of the earlier posters and how they see its future now.

Remember one of the founders/Directors/Major Shareholder had his stake promised to the bank and I think they sold stock to pay the interest bill.....if so then another interest bill may need to be paid soon.

[Balance]

Well.....no-one?....I don't see any bids.....

Also, if you take the time to actually read the proposal on the new issue of Preferred Stock, in the event of a (likely IMO) liquidation, the Preferred Stock holders are in line for 150% of their capital.....i.e the "Commoners" get stuffed even more than usual :cool::cool:

The Directors unanimous recommendation reads like a Tui's ad

Perfect timing by some of the directors and management. Buy when everyone is still aggro at the company.

[Anna Naum]

Looks like the new Chairman has some ideas why the shareprice has been going up.

www.stuff.co.nz/business/3416015/Diligent-bounce-due-to-earlier-loan-repayment-says-chairman

[Balance]

Always a good idea to watch carefully what directors and main shareholders are doing. Contrary to popular belief on this site, many insiders know exactly what they are doing.

RBD is the best example.

PPL is another.

[zigzag]

Holy shiat!

Who would want to invest in this dog?

Diligent operating loss

4:30AM Friday Feb 27, 2009

Software company Diligent Board Member Services yesterday announced a US$11.8 million operating loss for the 2008 financial year.

Diligent produces Diligent Boardbooks, a web-based system to simplify board meeting materials.

It moved its software division from New York to Christchurch in 2001.
The 2008 financial year was its first full year as a listed company on the NZ exchange.

Sales for the 2008 year of US$2.93 million were up on
US$1.73 million for the previous year. But operating expenses were US$12.87 million, including US$6.2 million for marketing and US$5.4 million in general expenses.
Up 400% in the last year. Do you know of any more dogs Doc. I think your negative attitude is clouding your judgement.

[Rif-Raf]

Up 400% in the last year. Do you know of any more dogs Doc. I think your negative attitude is clouding your judgement.
Get real! Anyone that invested in this is still down 55%. Ok so they were previously down 85%. Company value at $40m and revenue only US$3m and still making heavy losses. If this isn't a dog what is? This is very high risk.

[bermuda]

Get real! Anyone that invested in this is still down 55%. Ok so they were previously down 85%. Company value at $40m and revenue only US$3m and still making heavy losses. If this isn't a dog what is? This is very high risk.

Hi Rif Raf,
I have it on pretty good authority that this will be $1.00 by year end. I am tied up in Aussie CSG but I was tempted. This breaks even late this year. Stay onside.

[Balance]

Get real! Anyone that invested in this is still down 55%. Ok so they were previously down 85%. Company value at $40m and revenue only US$3m and still making heavy losses. If this isn't a dog what is? This is very high risk.

Depends on your entry point surely? Those who got in at 10c would disagree with you. Those who got in at $1.00 probably long gone.

[Lizard]

Been one of the best-performers on the NZX this year. Probably long past time to look at it...

Has to be one of life's little mysteries as to why they have a market cap of near $50m (plus 32.7m units of pref shares, worth at least $20.6m of market cap since they convert 1:1). From the annual report, looks barely solvent, has negative shareholders equity and would seem likely to post at least one further FY loss (barring any adjustments to the value of the SSH LLC Note). Has a very high ROE if you put the negative profit over negative equity...does that count? :D

At least that market cap will make it a lot easier to raise a bit more capital to get through to profitability without massive dilution. Still, at 63cps, it seems to me shareholders would need to believe they can hit at least $9m NPAT within 5 years to be worth the hold.

Anyway, well done to any holders that got in during the low patch.

[zigzag]

Lizard. Read the PDF version of the latest quarterly update. Especially check out the graphs at the bottom of page 2. Thats my favourite graph at the moment.

[Lizard]

Lizard. Read the PDF version of the latest quarterly update. Especially check out the graphs at the bottom of page 2. Thats my favourite graph at the moment.

That's nice, Zigzag. Nice little business. But is it enough to lead to the kind of profits that are required to justify current market cap (especially taking into account the prefs)? Quite frequently, reality sets in with tech stocks shortly after they start reporting profits and P/E ratios stand out in black and white.

[zigzag]

Lizard. You're wondering why DIL has a mkt cap. of 50 mill. Maybe you could ponder why XRO has a mkt cap. of 127 mill. At the moment Diligent is generating more revenue. Diligent was initially overpriced and got off to a bad start, but they are putting runs on the board now. XRO has all the rock stars, but is that really worth the extra value the market is giving it.

[Balance]

That's nice, Zigzag. Nice little business. But is it enough to lead to the kind of profits that are required to justify current market cap (especially taking into account the prefs)? Quite frequently, reality sets in with tech stocks shortly after they start reporting profits and P/E ratios stand out in black and white.

Not with Goggle.

[Lizard]

Not with Goggle.

Yeah, but can you remember LookSmart?

And look what NZ-listed software provider, FIN is worth now... ($2m market cap, $7.2m revenue, $270k NPAT)

[Silverlight]

Zigzag XRO has 23m in cash in the bank, DIL has 1m in cash, thats why it has a higher market cap. Until profits start coming in DIL is more overvalued on a price to NTA basis.

XRO price 5.76 higher than NTA
DIL price 25.6 higher than NTA

[Stranger_Danger]

Just because XRO is "more expensive", this doesn't mean DIL is undervalued!

If a can of coke costs $1.50, and I buy a can for $10, and you buy one for $5, then the fact I'm clearly an idiot doesn't change the data on you!

I'll never forget people comparing Yahoo vs IT Capital, eForce, Advantage etc (remember those?) at the peak of the dot com boom, to show how NZ tech stocks were waaaaay undervalued.

I too have been baffled by how Xero has been viewed a hero, and Diligent till recently a pariah, whereas by some measurements DIL has actually been a better performer at a business level.

My conclusion from this, however, is NOT that DIL is necessarily undervalued!

[Stranger_Danger]

Silverlight - Yes, but Xero had the valuation gap *before* it got all that cash, which is *how* it got all that cash.

Why the difference? Director/backer credibility.

Which is a "real" asset, for a fair while. Xero earnt that credibility, and it earnt the ability to get all that cash through it.

Eventually though, runs on the board (ie profits) will be what matters in both cases. I'm sure both teams know that, especially Xero who aren't stupid.

[Balance]

All credit to Xero.

Let's wish for both companies to perform - they are both good examples of software businesses built up in NZ and have created good jobs and good profile for NZers.

NZ needs more of them.

[Jaa]

The other point here, is the size of the market opportunity which is clearly bigger for Xero than DIL.

Both are very solid recurring income businesses with a high level of lock-in over their customers. In IT these are the good businesses as opposed to the charge by hour Advantage/Gen-i body shops.

[zigzag]

I compared DIL and XRO for obvious reasons. They both have this 'saas' model, and the media also do it.
But I do realize that the comparison only goes so far. XRO does have potentially more customers, and DIL's costs of maintaining each customer is much higher. But the fact still remains that DIL is generating more revenue, and XRO having 23 mill. in the bank only accounts for some of the gap in their respective mkt caps.
I'm not saying that DIL is undervalued, but I do think that some people have just dismissed it because of it's bad debut and subsequent price collapse. Maybe it's time to put DIL back on the radar screen and give it a bit more atte ntion. Remember, they have been increasing their revenues right through the GFC. This could bode well for more normal trading conditions.
By the way, I got in at 30c so I am feeling a bit more comfortable now.

[Balance]

Up 156% since beginning of the year.

Must be NZX's top performing stock this year so far?

Latest SSH has CFO & another director buying more shares and adding to their shareholdings at 64 cents.

Reminds me of RBD - management and directors keep buying while many in the market continued to focus on the past and the negatives.

Remember that KFC was too oily and that everyone would stop eating KFC?

[Roadrunner]

As a holder of a significant number of DIL shares I tend to read any items that seem relevant.I`ve got a couple of questions.........does any-one know exactly when the 3rd quarter results will be posted and presuming they finally go into profit will they be a possible takeover target by a cash-rich tech company?

[Xerof]

Latest SSH has CFO & another director buying more shares

And the other SSH's telling us that ex-staffer Henry is selling will be adding tremendous value too

[Roadrunner]

Good news today re Diligent's development of Apple I-pad compatible boardbooks:)

[Roadrunner]

Diligent posted excellent results today,the company is growing strongly and delivering on it`s promises.

[The Rocket]

Great results. I can see them with there record results in the third quarter a real take over stock by a cash rich tech company. Diligent is running well also are leaders in what they do. The stock is cheap (a steal) I think this will happen sooner rather than later.

[Lizard]

At least that market cap will make it a lot easier to raise a bit more capital to get through to profitability without massive dilution.

When they announced break-even cashflow, I re-read my comments in July and considered that I may have been a bit harsh on them - perhaps they weren't going to need further capital... but further placement today of 3m shares to raise $1.86m. Still, that cash should improve the balance sheet and, as indicated, really didn't cost too much in dilution with issue of 3m at 62cps. Plus get coverage from FNZC, which will no doubt be positive for at least a few months...

I'm still not a fan at this level - but growth companies require shareholder support for the deal to work and it is nice to see a NZ listed company getting it. NZ capital markets don't always treat growth companies as kindly as they might and any scepticism soon becomes self-fulfilling.

[Balance]

All credit to Xero.

Let's wish for both companies to perform - they are both good examples of software businesses built up in NZ and have created good jobs and good profile for NZers.

NZ needs more of them.

And performed this year they did!

XRO - up 62% since 31 Dec 2009.

DIL - up 148%.

[Lizard]

Yes... although you did actually post that on 14 July when DIL was 65cps... and it is still 65cps.

XRO has done well since then though!

[percy]

Up 156% since beginning of the year.

Must be NZX's top performing stock this year so far?

Latest SSH has CFO & another director buying more shares and adding to their shareholdings at 64 cents.

Reminds me of RBD - management and directors keep buying while many in the market continued to focus on the past and the negatives.

Remember that KFC was too oily and that everyone would stop eating KFC?

Will be interesting to see if it can reach last year's high of 70cents on 3rd of May.I note last price 67cents.

[Roadrunner]

Yes Percy I`m guessing the results will be out this week too.I`m hoping these will be very positive and push the SP forward.Diligent`s profile could be better but if they keep delivering good results and growing their customer base then that will improve.The recent news regarding expansion into new markets sounds promising.

[Xerof]

Popped today, after looking likely with good bids trying to sneak a few in last week. Needs more volume to be convincing, but this should follow a similar pattern to XRO's stellar rerating now it's closed in on positive cashflow.

The model is a good one, and with the Henry's out of the picture, it can do well.

[Balance]

Will be interesting to see if it can reach last year's high of 70cents on 3rd of May.I note last price 67cents.

Note it's now 75c.

[Balance]

And now it's 80 cents.

[percy]

very positive announcement.

[Balance]

Expecting a retracement - too big a rise and still too many traders in there.

[Xerof]

Not much of a retrace, more a pause in proceedings. Should crack the $1.00 this quarter or next.

Huljich will be pleased - his funds large position must be closer to breakeven, if not in the money, once adjusted for his profit-smoothing cash top-up

[Balance]

Had a retracement back to 77 cents - now getting close to $1.00.

A real bonanza for those brave enough to go against the doomsday merchants (especially the ones on this site) - a 5 bagger!

Sale soon to a big player at $2.00?

[Xerof]

I think you will be right Balance - now ripe for a buy-out, having proven the model and the product, and now back on the radar with some credibility re-established

Exponential growth was always Brian's mantra for this product - pity he spoilt the party at the IPO stage

[Balance]

$1.05.

Now that's a stunner!

[percy]

$1.05.

Now that's a stunner!

Well done balance.

[CJ]

so Huljich has done a good job as director?

[Balance]

so Huljich has done a good job as director?

Well, he has certainly done a better job as part of a directors' team than all the directors of Provenco, SDL, WDT and all the dead-beat bankrupt listed IT companies NZSE used to have.

[zigzag]

Hi Rif Raf,
I have it on pretty good authority that this will be $1.00 by year end. I am tied up in Aussie CSG but I was tempted. This breaks even late this year. Stay onside.

Bermuda. Your "good authority" was nearly right. Hope your Aussie CSG's have kept up!

[bermuda]

Bermuda. Your "good authority" was nearly right. Hope your Aussie CSG's have kept up!

Thanks Zigzag. A bit late...as always. The guy who told me also put me onto Roma Petroleum RPM. Knows his stuff.

What a great day for the world. Al Qaeda is Dead.

[Catalyst]

Looks like the iPad has really done this company wonders. There can't be too many company's out there experiencing 326% growth!

Excerpt from attached Second Quarter Update:

We are pleased to announce Diligent’s outstanding, recordbreaking result for the Second Quarter of 2011: Net Annualized License Fees (ALF) increased by $US 2.9 million ($NZ 3.6 million)—a remarkable growth of 326% over the same quarter last year!

[Balance]

Looks like the iPad has really done this company wonders. There can't be too many company's out there experiencing 326% growth!

Excerpt from attached Second Quarter Update:

We are pleased to announce Diligent’s outstanding, recordbreaking result for the Second Quarter of 2011: Net Annualized License Fees (ALF) increased by $US 2.9 million ($NZ 3.6 million)—a remarkable growth of 326% over the same quarter last year!

http://file.nzx.com/000/848/5276848.pdf

Fascinating infor - 104 out of Fortune 1000 companies now use DIL's boardbook. Almost inevitable that most of the balance will now use it and almost inevitable DIL will be sold to one of the big boys in the future.

Good on the Americans for buying this 'dog' at 12 cents a few years ago.

[Blendy]

grrr, i only just missed out on buying these on monday, and now am totally kicking myself for trying to be too cheap!!!

[Catalyst]

Diligent vs Charlies

It seems to me DIL is currently being priced at takeover-like multiples...

DIL numbers
No. of shares = 82.0m + 30.0m convertible shares unlisted = 112.0m (the latest annual report states 119.0m fully diluted so must be some other unlisted options out there)

Current market cap = 119.0m shares x $1.36 = $161.8m (using fully diluted shares)

Net Cash = US$3.3m at 31 December 2010 (lets assume they have US$5.0m now = NZ$6.2m)

Some basic estimates for the year ending 31 December 2011:

Revenue = NZ$21.0m (extrapolating current 2 quarters vs NZ$11m last year)
EBITDA = NZ$4.0m (complete guess vs -$2m last year)
DA = NZ$0.5m (vs $0.5m last year)
I = NZ$0.2m (vs $0.2m last year)
T = NZ$0.7m (assuming 25% tax rate)
NPAT = NZ$3.0m

PE = $161.8m / $3.0m = 54x
EV/EBITDA = ($161.8m - $6.3m) / 4.0m = 39x

CHA numbers

Takover price = $129.3m (including $0.8m net debt)
30 June 2011 guidance : EBITDA = $4.8m, NPAT = $2.3m (using midpoints)
30 June 2012 guidance : EBITDA = $11.3m, NPAT = $7.1m

PE (based on 2011 earnings) = $129.3m / $2.3m = 56x
PE (based on 2012 earnings) = $129.3m / $7.1m = 18x

EV/EBITDA (based on 2011 earnings) = ($129.3m + $0.8m) / $4.8m = 27x
EV/EBITDA (based on 2012 earnings) = ($129.3m + $0.8m) / $11.3m = 12x

(Happy to have any numbers corrected as I've just put them together over lunch.)

[Footsie]

Catalyst. Its a bit of an apples and oranges comparison. No pun intended.

But they are completely different businesses so comparisons are irrelevant.
You need to compare DIL to other similar operators around the globe.

[Catalyst]

Apples and oranges....ha ha...I like it.

Yes, I'll try to find other software related companies. CHA came to mind because I thought they were both in the same growth phase.

[Halebop]

Diligent vs Charlies

It seems to me DIL is currently being priced at takeover-like multiples...

DIL numbers
No. of shares = 82.0m + 30.0m convertible shares unlisted = 112.0m (the latest annual report states 119.0m fully diluted so must be some other unlisted options out there)

Current market cap = 119.0m shares x $1.36 = $161.8m (using fully diluted shares)

Net Cash = US$3.3m at 31 December 2010 (lets assume they have US$5.0m now = NZ$6.2m)

Some basic estimates for the year ending 31 December 2011:

Revenue = NZ$21.0m (extrapolating current 2 quarters vs NZ$11m last year)
EBITDA = NZ$4.0m (complete guess vs -$2m last year)
DA = NZ$0.5m (vs $0.5m last year)
I = NZ$0.2m (vs $0.2m last year)
T = NZ$0.7m (assuming 25% tax rate)
NPAT = NZ$3.0m

PE = $161.8m / $3.0m = 54x
EV/EBITDA = ($161.8m - $6.3m) / 4.0m = 39x


$2-3m might not be too far off for this year.

But projecting at current rates of growth Q4 Annualised License Fees are looking somewhere north of US$20m.

To December 2010, Revenues were US$8.3m
Expenses Were:
Cost of Services (i.e Cost to Serve - Customer Support, Account Management Etc) $2.78m
Sales and Marketing $2.66m
Corporate / Admin $3.85m
R&D $0.96m
Depreciation & Amortization $0.47m

For a basic ebit of -$2.42m

I note they suggested operating expenses increased just 5.5% year on year but this might have been due more to financial necessity than good business judgement.

They suggest gross margin is now 72% - implying that economies of scale are being achieved on additional unit sales. Taking the additional revenue ($20m-$8.3m) and multiplying by the gross margin rate indicates +$8.42m in annualised ebit by year end for a net +US$6m pa annualised.

Plug in similar levels of growth in year 2 and the numbers start getting interesting and the share price not so expensive.

Cautions would be; adequate funding and expensing of R&D, size of opportunity, continued sales growth expectations, competitive pressures
Upside risk would be; economies of scale achieved, S curve only beginning, size of opportunity

I do like the extensible subscription revenue model. Not clear on the width of their moat although foreseeable legislative and legal risks for companies and boards are likely to continue to drive demand.

[Catalyst]

Yes, it's pretty tough trying to pinpoint a valuation on a stock which seems to be in the middle of a strong growth phase. You could justify a price anywhere between $1.00 and $1.60, depending on how steep the growth is over the next couple of years. I feel there's a fair bit of growth already factored in the current $1.37 share price though. But look at Xero, revenue $10m, net loss $7.5m, and a market cap of $192m.

I think First NZ do research on DIL, who I assume will do an updated research note today/tomorrow. I'd be interested to see what valuation/earnings forecast they have for DIL - if someone could share please.

[Xerof]

Prior to the IPO, I was involved in a presentation done by the irrepressible Brian Henry and was deeply impressed with the model and product.

The IPO got derailed by the revelations of past activities, and alleged connections to his brother which weren't disclosed until 2 days prior to the float

My view is this can achieve exponential growth, and is beginning to prove the potential Henry was so enthusiastic about.

I think it is more likely to be a takeover target than survive as a stand-alone for very long, and that should drive the shareprice higher irrespective of performance, which in any event should continue to blow us out of the water.

There's a nice trading pattern on this one - just buy it 3 weeks prior to the quarterly announcement and sell into the inevitable rally on the day, like all the insiders do ;);)

[Xerof]

Well here we are three months later.....looks like the insider press release has just gone out.....share price up 12% on a generally down day

I guess its good news again, but we ordinary shareholders will simply have to wait until the release in a couple of weeks time

How about a speeding ticket for a change NZX....the quarterly pattern is fairly plain to see........

[Xerof]

Seems I'm talking to myself here, but this continues to impress, and the insiders keep making a nice tidy return every three months from the suckers, for almost no risk

Good work DIL, it's on a real momentum roll now, and I await the T/O at $2.00 before year end

[bermuda]

Seems I'm talking to myself here, but this continues to impress, and the insiders keep making a nice tidy return every three months from the suckers, for almost no risk

Good work DIL, it's on a real momentum roll now, and I await the T/O at $2.00 before year end

Xerof,
Well done. My mate gave me this one. $2 plus.

[Blendy]

i've been happily going along on this ride too - seems to be a winner at the moment!

[Halebop]

Seems I'm talking to myself here, but this continues to impress, and the insiders keep making a nice tidy return every three months from the suckers, for almost no risk

Good work DIL, it's on a real momentum roll now, and I await the T/O at $2.00 before year end

This is currently my only "hold". If the sales momentum is maintained for the next 12 months they will be worth well north of $2. Looking at the numbers of public companies in developed markets and extrapolating across substantial private companies and non profits DIL have captured 1% of the addressable market.

Their profit and +$1m cashflow for the quarter was essentially acheived on 25% of last quarter's annualised revenue plus maybe another $600k from this quarter effort (around 1.5 months worth of the $5m new annual license fees). With an additional $1.6m-2m 'ish flowing to the top line next quarter its conceivable they could earn $2m to $2.5m EBIT next quarter alone. This bodes very well for the next full year...

[Xerof]

Agree with the sentiment halebop, I didn't mean to say I'd accept $2

I see the CEO has aired the same view in an interview with NBR - fears they are prone to T/O just as this is about to go exponential

There's an accumulator at $1.45 in 100k lots, who is soaking up the profit-takers, and comes back for more once filled. If selling dries up, they might begin to chase it higher again - time will tell.

[Halebop]

Don't sweat it Xerof, I wasn't questioning the $2 statement - very realistic (and opportunistic) if the parabolic sales performance can be maintained. Just suggesting it would be cheap but the big assumption is size of market and their ability to translate that into revenues. I'm basing assumptions on size of opportunity off 45,000 listed companies in key developed markets and an unknown number of private or public sector organisations.

Although the announcement today about buying the Hubbard Churcher shareholding is a relative non event in the scheme of things the sentiment that (a) they have enough cash and (b) enough confidence to pay $1.45 was nice. Let's just hope the sentiment of value creation is cultural (rather than a PR project).

[J_Gold]

Nobody seems to be wanting to get rid of this stock. Hot property apparently.

Xerof the accumulator you mention. There hasn't been any disclosure of changes in top shareholders recently has there? (I know that's a lazy question as I could go get that info but thought you might know off the top of your head). Cheers, J

[Xerof]

nobody has declared yet. The last one was Milford if I recall correctly, at around the 1.10/20 level a good few months back

good volume (for DIL) again today and running up the mast nicely still

[J_Gold]

Alright I am in. Haven't invested outside of the Australian market for a while but this is looking good and has caught my attention as a six-monther and then re-assessing after that. Lets see what it can do.

[J_Gold]

Xerof...

A disclosure of an increase in holdings just announced. Milford moved up to holding over 5mil. (edit: 5mil shares)

[Xerof]

Yes, there's the accumulator .......You're in good company then JG :t_up:

[J_Gold]

Would love to know what the vwap has been recently for their accumulating... always interesting stuff.

[J_Gold]

Thought the increased price would have brought more sellers out...
I guess the positive is how often can you say something like that in this market under current conditions.

[Halebop]

Thought the increased price would have brought more sellers out...
I guess the positive is how often can you say something like that in this market under current conditions.

I personally think the share price is barely into double figures on forward price earnings. The market is just re-rating and I suspect most holders sniff more profit yet.

[J_Gold]

I agree, looking good.

[Xerof]

very few sellers now - looks like everyone who holds wants to continue to hold - loverley......

[J_Gold]

loverly for the people who want to hold...
how about for the people who want to double their holdings... should have liquidated some other positions and doubled down days ago. Oh well.... she's still going places obviously.

[winner69]

loverly for the people who want to hold...
how about for the people who want to double their holdings... should have liquidated some other positions and doubled down days ago. Oh well.... she's still going places obviously.

Seems to be quite a few available today ... and a bit cheaper

[percy]

Seems to be quite a few available today ... and a bit cheaper
May be because Chris Lee recommended them last night in his weekly taking stock article.

[Xerof]

Oh God he hasn't has he? ......I'm out :p

[percy]

Oh God he hasn't has he? ......I'm out :p

BUT WAIT !,THERE'S MORE;
He had a fair bit to say about PGC.

[PlatnuM195]

Can't hold off any longer, finally going to buy in.

[bermuda]

Can't hold off any longer, finally going to buy in.

Platnum,
DIL will probably have a wee rest before climbing again just before their next quarterly. I would recommend delaying until then.

[Xerof]

There seems to be decent buyer lurking around at $1.90, but they are getting Filled via off-market crossings in reasonable licks. So on balance, still bid, but now finding more willing sellers, in volume.

As stated before, DIL is news driven, so does tend to pull back soon after the quarterly announcements, then rallies in anticipation of another exponential growth spurt, quarter after quarter.

Appears bid to me (and you can't have mine :p )

[PlatnuM195]

Platnum,
DIL will probably have a wee rest before climbing again just before their next quarterly. I would recommend delaying until then.

Hmm I have been holding off for about a week now but the price is remaining relatively stable. May actually hold off a little longer then to assess the trend.

[J_Gold]

Hmm I have been holding off for about a week now but the price is remaining relatively stable. May actually hold off a little longer then to assess the trend.

Is the trend not obvious? If you are wanting to buy. The good news, well someone(s) were loving it at 1.50 and then again it seemed at 1.70 and also continuing at 1.80 and even 1.90 as Xerof mentioned above. And just look at its exponential performance recently.
My advice (if you want it), if you are purely interested in it for its continued growth then the obvious answer is get in before the next earnings announcement (ie. you can wait, but make sure to beat the rush), as long as you believe the announcement will be positive. This is just like you would do for any other stock.
If you think its undervalued at the current price, or want to get in now just to be exposed to any out-of-the-blue events then obviously you get in now.
Two different styles, two different answers.

So what I am trying to say is on the very ST ie.days or weeks, well it may be stagnant. Medium term ie.3 or 6 months, well I bought it to see what it could do within this time frame.

[J_Gold]

Milford definitely likes it. Up to 7.4% holdings.

[J_Gold]

Or maybe now is the time... who knows what's on the cards next eh

[Balance]

;) Go back some of the postings here and many lessons to be learnt.

[J_Gold]

Balance... Such as?

[Balance]

Balance... Such as?

How about this posting when the stock was starting to run and the insiders were piling in?

"Get real! Anyone that invested in this is still down 55%. Ok so they were previously down 85%. Company value at $40m and revenue only US$3m and still making heavy losses. If this isn't a dog what is? This is very high risk."

Lesson learnt? Never invest via the rear-windscreen mirror.

[J_Gold]

So I take it you're not into this stock then?

[Lizard]

So I take it you're not into this stock then?

Balance was quoting another poster.

I was a sceptic then too. Not so much of late, though still not a holder.

[Xerof]

After a period of shallow retracement on very light volume, DIL has gone bid again on better volume.

must be another exponential quarter in the pipeline - well over $2 by the end of January IMO

[Halebop]

I don't expect to see a lot of action until January/the next quarterly announcement and wouldn't be surprised if they retraced a bit in between. Perversely I think DIL have benefitted from weak markets, 'cheap' companies are dime a dozen right now but buying growth is a little bit tougher.

Would like to see >US$5m in new annualised business next quarter as evidence that the S curve is only beginning. However will cheerfully accept that quarter by quarter analysis is asking to be bloodied at some point. Quarterly execution risk aside, I'd expect DIL to be a much larger and more profitable business year on year for the next few years.

[PlatnuM195]

Any news on when the FY result is due?

[Xerof]

As can be seen by the price action ....... Any time now........ It usually leaks about 3 days ahead of release..... Excuse my cynicism, but it is so blatant.....NZX Discipline still at the beach

[Halebop]

As can be seen by the price action ....... Any time now........ It usually leaks about 3 days ahead of release..... Excuse my cynicism, but it is so blatant.....NZX Discipline still at the beach

I've added more in the last few days in expectation of a suitable quarterly result, having waited through the expected flat patch. I think the modest rise today is others doing the same and nothing more sinister. This is a company enjoying a mid term uptrend and a short term ascending triangle. Unless they announce a sales implosion probability was always for a price rise, pre and post announcement.

They added new sales capacity through the quarter so this may have hurt profitability and not particuarly helped sales if the new sales people needed to build momentum. So will be interesting to see what sales and profits have done across the Christmas quarter...

[zigzag]

As can be seen by the price action ....... Any time now........ It usually leaks about 3 days ahead of release..... Excuse my cynicism, but it is so blatant.....NZX Discipline still at the beach

That's not cynicism. It's what is known as an over active immagination. I bought a few more just before xmas, and I'm about as outside as you can get. This stock is growing strongly, and punters are buying in the lead up to the quarterly results. It's not "rocket science" and it's not inside knowledge either. Eventually someone's going to get egg on their face, but not just yet I hope.

[CJ]

I've added more in the last few days in expectation of a suitable quarterly result, having waited through the expected flat patch. I think the modest rise today is others doing the same and nothing more sinister. Sounds like we all have the same idea. I sold out of Trademe and bought into DIL as I think it has the better long term prospects, especially since TME put on reasonable post IPO growth. Xero was the other option for my NZ tech pick but in my view it is overvalued despite the fact that it is a great product that I use everyday.

[Xerof]

ZZ - partly a fair call, I'll concede that I might be jumping at some shadows, but it's not all imagination. And great to see new blood entering/current holders topping up on DIL.

There seems even more 'urgency' to get aboard today, with buyers reaching for the offers.......

Discl: inherent distrust of brokers/directors in general, with some well known specifics.........

[PlatnuM195]

Quite a bit of movement today since the 4Q result is out although the FY result won't be out for another month or so by the looks of it.

[CJ]

Most importantly, Diligent has not sacrificed profitability for growth

This quote from the announcement seems to be the difference between them and Xero. Interested in the views on the results of others who have been following for some time.

[Halebop]

...Interested in the views on the results of others who have been following for some time.

It's pretty easy to extrapolate some big margins and numbers flowing to their bottom line now. US$25m'ish in annualised revenue, growing by US$6m+ per quarter. While they generated modest profits in the previous quarter, at a 70% gross margin it won't take long for the gains to stack up.

Sales gains were very strong for the quarter (Up 287% year on year), the upgrade gain was also strong (+218%). However, by deducting the upgrade revenues, the New Business only element was up 303%. I'm liking the S Curve.

[CJ]

The growth does seem great and getting better. My question is when do they reach saturation. I noted they already serve 20% of the FTSE100 so at some stage the growth has to taper off.

[Xerof]

Unfortunately, they'll get taken out long before sales taper off - now they have gained credibility, the potential is massive and won't be escaping the attention of the next larger fish

[Halebop]

The growth does seem great and getting better. My question is when do they reach saturation. I noted they already serve 20% of the FTSE100 so at some stage the growth has to taper off.

I've spent a bit of time considering the size of the opportunity. If you assume sharemarket listed companies in developed nations the size of opportunity is around 45,000 customers (not sure how many users). This doesn't include major subsidiaries (I wouldn't be able to count them) and joint ventures. This is listed companies only. Then there are substantial private companies, non profit organsiations, government organisations, local government etc. I think the size of opportunity at least doubles the listed company count to 90,000 but can't guess how big it could go - maybe even to a couple of hundred thousand.

DIL currently have 1,026 client agreements and appear to be the largest player in their niche. At arguably less than 1% of the market there is plenty of room to grow.

Many corporates have mandates around supplier agreements that specify the supplier must be profitable (in order to manage continuity risk). So some clients can only now deal with Diligent (and probably still can't deal with competitors).

I note that Diligent's cash increased by US$4m in the quarter. While cashflow may be better than profitability, it gives a hint as to how fast the bottom line is growing quarter on quarter.

[mamos]

What does everyone think Diligent is worth?

[winner69]

What does everyone think Diligent is worth?

hopefully north of 4 bucks by the end of the year

[CJ]

Saturation? I've seen the board books in operation. Once they've soaked up publicly listed companies, expect:

Govt authorities - like state owned enterprises, govt departments with directors and boards like district health boards, councils, community boards, charitable trusts, tertiary organizations and even high school management boards. I've served on a not-for-profit organization in Auckland with a sizable headcount, and have lugged around up to 500 pages in a briefcase. Who wants that when you can carry an iPad?

Then, watch as they evolve the software to make it easy for tertiary students to read notes or textbooks on iPads at Universities and polytechnics.They are already targeting Government sector. I guess my concern was with cost. They seem to target larger companies (or maybe that just looks good on the press releases) so I assumed it was an expensive product that only larger companies could afford. However, if it is comparable to the admin and printing costs of gong down the paper route, with the benefit of being portable and accessible anywhere, then agree the scope is very wide.

Re text books, I am not sure. Apple will be getting into this space soon (this month even??) as would Amazon etc. HOwever, with their product being secure, it would be one way for universities to protect their IP.


The NBR is saying they are starting to consider a dividend though they will probably try to get cash above 15% of market value first (an amount comparable to other similar companies). That suggests that a return of cash is still a few years away at least, especially with their MV increasing the way it is, the cash balance may take a while to catch up to 15%.

[Halebop]

What does everyone think Diligent is worth?

My view is that these are worth well north of $2.40 and at their current sales trajectory this is still cheap. While the share price momentum has been gratifying, I think the serious rewards will go to the patient. As profits build, their capex numbers will prove equally attractive. I appreciate the lure of taking fast gains and maybe today's sellers were hoping to take advantage of a retracement? But I struggle to see this coming back far or for long.

[CJ]

With Directors, especially of big companies, being an old boys network and holding multiple directorships, I wonder how much of DIL sales are word of mouth/referals from Directors. If the product is as good as it sounds, once a director has it for one Board they sit on, they are going to want it for all the others. Then the directors on that Board will want it for all their other boards.

Comparing to Xero who are trying to build a big network of Accountants to provide referals, DIL goes one further and builds the referral network with the actual users, and even better, with the people with the power to make decisions.

[Blendy]

maybe today's sellers were hoping to take advantage of a retracement? But I struggle to see this coming back far or for long.

yes, that was my action today - fingers crossed for a bit of a dip and i'll jump back in...

[mamos]

I am doubtful. What drives the numbers is quarterly sales. You already have a good idea about what the annual result will be from management commentary in the 4Q.

[Xerof]

The Annual Accounts will only move the price significantly if there is a material change to the underlying situation vs what investors have assumed from quarterly reports. There is of course a lot more detail to go through as well, which could provide more insight, and they will be audited (if thats any real comfort these days)

BTW, I've had it suggested from a couple of sources that DIL might be a candidate for going into the NZX50. Does anyone have an idea which co is at #50 at the moment, for a rough comparison. I would suggest DIL is virtually 100% free-float, so that packs a bit of punch

Look out if that's the case, as the lemmings will be all over it to reset with the benchmarks

[PlatnuM195]

Does the NZX50 have any index tracker type funds? So that if DIL were to make it into the NZX50 it would result in some purchase by the index tracker?

[CJ]

Does the NZX50 have any index tracker type funds? So that if DIL were to make it into the NZX50 it would result in some purchase by the index tracker?http://www.smartshares.nzx.com/products/fonz market cap of $80m

There would be a few managed funds that are index as well plus most 'active' funds would stay pretty close to the index for fear of performing to much worse than the index. Being on the index would also attract attention of more investors.

I note that ASB does not allow margin lending on it but shares allows upto 70% for shares like FBU and CEN which have been in freefall the last year - go figure!

The issue maybe liquidity?? https://www.nzx.com/markets/NZSX/indices/NZ50 They are planning on reseting the rules to remove any subjectivity.

Pumpkin Patch, Rakon, Restaurant Brands, Cavalier and Methven all have lower market caps

[Halebop]

The four SOEs slated for partial float will probably have higher market caps than DIL, so it could also find itself included then bumped off again. Probably easier to just let it grow.

[PlatnuM195]

Is there any information that may be surprising in the FY result? (Given we already know the results for each quarter).

May increase my holding a little but from the looks of last year there wasn't much movement after the FY announcement.

[Halebop]

I don't think we will learn much new about current performance. I'd be more interested to see if they are brave enough to comment on future sales or profitability? As long as they report quarterly we can anticipate the market will respond to these rather than annual results for no better reason than the shorter and more timely cycle.

[CJ]

Sparky - I think they were asked that after the last customers announcement and they said that they would like a buffer in the bank account before they start paying a dividend. I'd say that was at least a year off yet.

[Halebop]

Sparky - I think they were asked that after the last customers announcement and they said that they would like a buffer in the bank account before they start paying a dividend. I'd say that was at least a year off yet.

Think you're right CJ. They had a near death experience due to diminished reserves not so long ago and that sort of stuff tends to shape management culture.

[Xerof]

Travelling nicely indeed. I wouldn't expect to see dividends until they can utilise imputation credits......we'll see tomorrow's detail, but I think they have significant tax losses to use before they are payers

BTW, taking your word for it Sparky re announcement tomorrow....

[Xerof]

No mate, I got in ages ago. I meant I'm taking your word that they announce TOMORROW

[Xerof]

Yup, more than happy with progress - now all we need is the Billion dollar T/O offer and it'll be all hunky dory :t_up:

[Xerof]

Sungard - $5 - 2013, March 17th 5.17pm NZDST :D:D

[Balance]

Well.....no-one?....I don't see any bids.....

Also, if you take the time to actually read the proposal on the new issue of Preferred Stock, in the event of a (likely IMO) liquidation, the Preferred Stock holders are in line for 150% of their capital.....i.e the "Commoners" get stuffed even more than usual :cool::cool:

The Directors unanimous recommendation reads like a Tui's ad

26 Feb 2009

Sp then was 10 cents.

So just 2700% return!

Good one huh?

[Xerof]

LOL, ahh welcome back Balance, but I see you haven't changed your spots - still attacking the man, not the ball, with 3 year old comments that suit your style of attempting to undermine and ridicule. You haven't highlighted any of the numerous positive comments I have made over the past year or so, but thats your style I guess

I see you have also attacked Enumerate, and the NZO contributors in general and have yet to add anything positive or worthy of taking any notice of, since returning from the sinbin.

Anyway, I've put you on ignore - bye bye

[J_Gold]

Xerof - let's start a sweepstake - Bloomberg, Thomson Reuters, Oracle, SAS or maybe even Microsoft - hell, they could use a killer iPad app in their lineup :-)

Jeez, not even I value DIL at $10 a share..... I'd be happy with a $5 or $6 offer..... :-)

I like your thinking Sparky.
Although I wouldn't be 100% sure what I'd do if $5 or $6 was offered to me right now. I think I'd rather hang on and see what happens over the next 6-12 months.
Terrific company

Hopefully the bump over $3 doesn't take too long

Holding and have been for a while (ie. long enough to have a smile on my face)

[Halebop]

I don't think they'll need a takeover offer to see $5 or $6. Would expect to see this range by the end of the year - subject to present sales momentum.

Top line growth has been great and still looks to be gaining momentum.

Was a little surprised that fixed expenses had expanded by 50%. Am assuming this will paid back via continued sales momentum? Would like to see this confirmed in the next quarter's New Business tally.

Would like a better understanding of why cash flow is so much better than profitability? Appears to be tied in with customer pre-payments. There is a substantial deferred revenue liability in the balance sheet and a $5m+ adjustment for the same in the cash flow statement. This appears to be a substantial positive for the business, generating cash in flows before out flows (many business models do the opposite - rapidly increasing revenues often make cash flow worse). However am surprised the pre-payment level is so high. In aggregate it points to customers paying around 4 months in advance. Perhaps this reflects Boards making the purchase decision rather than supply chain managers?

In their growth days Dell found themselves in a similar position, where they had screwed their supply chain, manufacturing cycle times and credit terms so tight that increased sales actually boosted working capital, allowing the company to rapidly expand "for free", using customer money instead of calling on shareholders or retained earnings.

[Xerof]

Halebop, you have it nailed - they do get a good proportion of cash income ahead of the recognition periods - the customers just pay in a lump apparently

[Halebop]

$2.99 - boo yah!

As of a moment or two ago... Last Sale $3.10 - total sell depth 2 seller, 10,000 shares @ $3.15.

I much preferred the push through $3.00 from a technical perspective.

Have been improving my sales and profitability model using results from the preliminary announcement. If we can assume 2 years of climbing the S curve (continued sales momentum) this company is still cheap on a 2 year horizon. At some point the market may want confirmation and/or to take a breather but I think it still has plenty of legs.

[ob1kinobi]

Be interested to hear others thoughts on strategy.

I traded DIL several times around the .60-.80 cent mark , before buying and holding halfway through last year as sales gained greater momentum.

My intention at the time was to hold LT as a take over play and that's still my current strategy. I'd also like to increase my position once funds become available. A bit late to the party for another stake but it seems like there's still more growth to come.

This stock must have made some of the LT holders out there pretty happy.

[PlatnuM195]

Ended up actually reducing my position in DIL around the $2.50 mark and moving the funds to my E*Trade account. May increase my position in DIL in the near future too if funds become available. If only asb securities provided some margin lending towards it.

[J_Gold]

I would say most (if not all) mid-term holders are happy.
As a LT holder my facial muscles are getting warmed up for a smile, but like every man and his dog has said already, plenty of growing yet to do.
I have a feeling the smile will come out one day.


Be interested to hear others thoughts on strategy.

I traded DIL several times around the .60-.80 cent mark , before buying and holding halfway through last year as sales gained greater momentum.

My intention at the time was to hold LT as a take over play and that's still my current strategy. I'd also like to increase my position once funds become available. A bit late to the party for another stake but it seems like there's still more growth to come.

This stock must have made some of the LT holders out there pretty happy.

[Xerof]

I have to confess to letting a few go yesterday at $3.10. I will probably live to regret it but I like to remove a few chips off the table for other adventures.

Still hold

[Blendy]

I have to confess to letting a few go yesterday at $3.10. I will probably live to regret it but I like to remove a few chips off the table for other adventures.

Still hold
Hey there's nothing wrong with taking some profits for other adventures! Must say I'm tempted too...

[CJ]

I have to confess to letting a few go yesterday at $3.10. I will probably live to regret it but I like to remove a few chips off the table for other adventures.

Still holdWith a 50% return since the start of the year, it would be very easy to get overweight in what is really still a small high risk stock.

[Halebop]

Subject to the imponderables of predicting the performance of a fast growing company, I think the current share price is fair value on this year's earnings - my mid point estimates have them at roughly 20 times earnings. However, looking forward to 2013 and 2014 my worst case and right case valuations range between $6 and $16 (with much sensitivity due to various factors; Fixed Costs, Rate of decline on cost of sales, New Business, Renewal Rate - historically 97.4%, Exchange Rate). However given this company is growing fast and has somewhere less than 2% of the addressable market (maybe less than 1%), there is much progress yet to be made, the market size is growing rapidly and it appears DIL would need to make a bad mistake like missing a product cycle change to mess this up.

Anecdotal evidence suggests DIL has the easiest to use product (Consider the board member demographics), the best customer service, the highest pricing (What triggers a decision to purchase the highest priced product?) and it appears they probably have the highest market share although some competitors may arguably have dominance in certain niches (Health care?).

The business model is clearly cash generative; high levels of pre payments, low levels of capex, improving operating leverage. The "owner earnings" fundamental appears very positive.

S curves tend to surprise on the upside - it's easy to become a contrarian in the face of several years growth and have the S curve prove you wrong. Attempting to anticipate the size of opportunity is important. I think DIL has a very small share of the addressable market and will capture an outsized portion of new sales via networks and references ("Oh we use Diligent, you should have a look at it") and supply chain mandates (We manage risk by only using profitable suppliers)

With the uptrend intact and the current price a modest fraction of likely future valuations I'm not intending selling any time soon. Have purchased at relatively low prices and my most recent purchase was above $3.00; despite the aggressive recent share price performance and high current price earnings I believe DIL presents a substantial discount to intrinsic valuation and an equally attractive business model.

[CJ]

I have to confess to letting a few go yesterday at $3.10. I will probably live to regret it but I like to remove a few chips off the table for other adventures.

Still holdI'd say you timed your profit taking perfectly. A few others seem to have borrowed your idea dropping it down to $3

[J_Gold]

I'd say you timed your profit taking perfectly. A few others seem to have borrowed your idea dropping it down to $3

And I'd say you timed your profit taking too early. Would love to know what you are going to put your profits into now... hah
Everyone has there opinion, but come back to this post when the next earnings announcement happens and we will see who is happy they stayed in or who is happy they jumped ship.

[Xerof]

I still hold the vast majority JGold, I have only taken my original capital out. I bought most of them as penny dreadfuls, so I didn't have to sell many to do that.

It will most likely end up in Oz juniors, where most of my high risk capital is. I am very happy to leave the gains in DIL, which I now consider derisked.

I am also on record as saying i'll probably regret it :)

[Halebop]

I still hold the vast majority JGold, I have only taken my original capital out. I bought most of them as penny dreadfuls, so I didn't have to sell many to do that.

It will most likely end up in Oz juniors, where most of my high risk capital is. I am very happy to leave the gains in DIL, which I now consider derisked.

I am also on record as saying i'll probably regret it :)

People buy and sell for different reasons and maximising profit doesn't have to be one of them. I guess we also know that the share price performance and the operational performance don't have to walk in lockstep in the short term so a >$3 exit may later appear prescient. However I suspect we won't have to wait too many weeks for a confirmation of operational momentum.

[CJ]

GAAP and Deferred tax are pure accounting fictions and I wouldn't expect the announcement to effect the price much.

[CJ]

Perhaps not in itself, but the stock has done well over the last two days anyway.
Maybe it is just investors getting in ahead of the quarterly jump. They must announce customers mid April?

[J_Gold]

Quarterly announcement should be released in the next week or two? This time of year always is very exciting for shareholders in DIL like myself.

[Balance]

Quarterly announcement should be released in the next week or two? This time of year always is very exciting for shareholders in DIL like myself.

You might be lucky and someone announces a takeover for $1 billion next week?

[Halebop]

You might be lucky and someone announces a takeover for $1 billion next week?

Too cheap! :p

[PlatnuM195]

The 1Q quarterly update is looking good. Slightly higher revenues than 4Q 2011 and significantly higher vs. 1Q 2011.

[Everwood]

The 1Q quarterly update is looking good. Slightly higher revenues than 4Q 2011 and significantly higher vs. 1Q 2011.


Client upgrades is becoming a nice revenue stream.

[Jay]

Market likes it so far up 30c this morning as at time of writing
Luckily I jumped aboard when I did a few months ago for my long term portfolio- (would have been better late last year)

[J_Gold]

[QUOTE=Jay;372426]Luckily I jumped aboard when I did a few months ago for my long term portfolio...

Mate... In 3 months time an investor picking up shares today could look back and say the exact same thing... in fact I think this quote could sum up Dil's stock performance of late very nicely. Good work.

[Jay]

Agree, looks good from a long term perspective and not so long term perhaps as well!

[elZorro]

What a winner this is! Agree that today's buyers will still do well.

Looks like DIL is a 'no-brainer' at the moment. Should have looked harder at this thread..

http://www.nbr.co.nz/article/diligent-talks-cash-reserve-boost-dw-117009

[J_Gold]

A fair bit of profit taking at the moment. Reminds me of the profit taking that occurred around the $3 mark.
Still holding, still smiling.

[Blendy]

A fair bit of profit taking at the moment. Reminds me of the profit taking that occurred around the $3 mark.


Yes I decided to take some profit on about half of my holding - it has been looking too tempting for some time now :)

[J_Gold]

Love the rationale ;) Didn't see any signs of a slowdown in the earnings release. To the people who took profits at $3, thanks for selling me your shares :) To Blendy in and the people currently jumping ship at $3.50, in 6 months time, thanks for selling me your shares... I couldn't make money without ya. Note: This message is all in good fun.

840402





840402





) I couldn't make mone

y without ya.

[CJ]

Yes I decided to take some profit on about half of my holding - it has been looking too tempting for some time now :)


Love the rationale ;) Didn't see any signs of a slowdown in the earnings release. To the people who took profits at $3, thanks for selling me your shares :) To Blendy in and the people currently jumping ship at $3.50, in 6 months time, thanks for selling me your shares... I couldn't make money without ya. Note: This message is all in good fun.

840402





840402





) I couldn't make mone

y without ya. Even though I only purchased at the start of the year, due to the dismal performance of the rest of my portfolio, DIL is overweight. But why take profits when there is nothing to suggest it will drop - or do you think it has got ahead of itself.

[Xerof]

I think the profit-taking from $3.80 down was 'generated' by a broker report suggesting $3.46 as fair value, with a 12 month target of $4.00. This is the same outfit that had an initial target of $2.85, so what do they know....

It's also a common and natural human response to take profits, when the golden rule is 'run your profits/cut your losses'

[Balance]

I think the profit-taking from $3.80 down was 'generated' by a broker report suggesting $3.46 as fair value, with a 12 month target of $4.00. This is the same outfit that had an initial target of $2.85, so what do they know....

It's also a common and natural human response to take profits, when the golden rule is 'run your profits/cut your losses'

Question is where the index and tracker funds (not in DIL now) are going to find several million dollars worth of DIL shares to buy come index time?

Idea of where DIL fits in :

Market cap now $300m (about 60% free float).

Other NZX50 companies - Cavalier $129m, HLG $234m, HNZ $221m, RBD $195m and Rakon $95m.

Looks like to me it's sell Cav and Rak.

[Xerof]

Also, on a technical basis, a gap was created following the last announcement, which has been closed today.

In theory at least, that should create the start of the next rally.

DYOR

[kizame]

Also, on a technical basis, a gap was created following the last announcement, which has been closed today.

In theory at least, that should create the start of the next rally.

DYOR Too early for the start of any rally.
If you look at the shareprice history,there is usually a 2 month consolidation period after a pre announcement rally,the last rally happened after only a month,but happened in 2 stages over 2 months so,I have dipped my toes after all this time at 3.69,now it's watch and wait,I think i may have got a wee bit ahead of myself haha. A picture tells a thousand stories.

[ob1kinobi]

Following yesterdays SSH anns Milford Assets Mgmt seem to be reducing there exposure and taking some profits.

They have obviously been contributing to the supply seen around these levels.

Hopefully now MAM will continue to hold and there won't be so much supply.

Its been a healthy price pullback so far

[CJ]

Milford Asset's selldown needs to be seen in context. That canny, likable Irishman Mr Gaynor was picking up DIL at the bargain basement 16-20c range. He got his ten bagger some time ago, and he would have various rules and thresholds that are telling him as a fund manager to lessen his exposure so one stock doesn't dominate his portfolio. Fund managers have to play it safe, and have all sorts of portfolio compliance rules. He's not like a private equity firm that can hold and accumulate.

A better example that indicates where this stock is going is the accumulation by Huljich family interests six weeks back. They clearly see value in this company, and were buying at around the $2.80-$300 level.

I personally see this company going to $6 on its current growth trajectory.Agree, as a fund manager, we would clearly have been well overweight in DIL given his early entry.

[J_Gold]

Agree, as a fund manager, we would clearly have been well overweight in DIL given his early entry.

Love a good temporary downward trend to re-stock the portfolio :)

[CJ]

Love a good temporary downward trend to re-stock the portfolio :)unfortunately I am over weight as well

I had a look at the SSH - he sold down the holdings by his funds but the fund he manages for the Cullen fund maintained its holding. He went from a total 10.95% to 8.95% so still holds a substantial amount.

[ob1kinobi]

Still plenty of supply at these levels, & not enough buying interest to keep the sp from weakening.

Maybe MAM still have a bit more to off-load?

I thought the bottom may have been 3.45 but buyers aren't interested just yet.

[Halebop]

$3.40 is looking like the current support / resistence level, maybe $3.00 below that or $3.70 above. I'd be more inclined to see if $3.40 respected - the next crop of news is 1 quarter away so there is plenty of time for the price to drift. To me DIL is looking a bit fatigued right now albeit the accelerated trend line is still intact...

3968

My valuation is well above current pricing. +$6.5m ALF in the "quiet quarter" was everything it could be (was hopefully anticipating $6m). Relative to current market value wouldn't expect amazing earnings this year - maybe US$12-14m EBIT, the subscription revenue they are pre-loading for next year (@ 97% renewal rate) should ensure that earnings explode. The next couple of quarters will do a better job at firming expectations but US$40-$50m EBIT would be my ballpark estimate for next year.

[CJ]

Weldon appointed to the board.

Surprised there are no comments here yet but there are a few confused people commenting at NBR:
http://www.nbr.co.nz/article/diligent-nabs-weldon-board-role-wb-118726#comments

Personally, I am not sure what he can add as a non executive director.

[kizame]

Yep bought a few thousand more yesterday,I am very mindful of keeping you guys deep in the money.

[bottlerboy]

According to an article in the NZ Herald in April, Diligent already serves 1231 companies (33,000 indvidual users) worldwide including 65 companies listed on the New York Stock Exchange and 32 Nasdaq companies.
Given that Diligent want to expand further into the US (and Europe and Asia Pacific of course) wouldnt Weldon be at least very useful to them for networking at a high level there, particulaly New York ?
Plus his obvious corporate and legal skills which he brings to the table.

From Wikipedia:
Weldon has BCom, BA, and MCom (Hons) degrees from the University of Auckland, and a Juris Doctor degree and a diploma in International Law (Hons) from Columbia University (http://en.wikipedia.org/wiki/Columbia_University) in New York.
Weldon previously worked at Skadden, Arps (http://en.wikipedia.org/wiki/Skadden,_Arps) in New York, and also at McKinsey & Company (http://en.wikipedia.org/wiki/McKinsey_%26_Company), also in New York.

How many of you knew he holds a Doctorate in Jurisprudence?

My point is that I thinks he brings great value to the Diligent board.

[CJ]

Plus his obvious corporate and legal skills which he brings to the table.

My point is that I thinks he brings great value to the Diligent board.But he is an independent, non executive Director. Is his role to drum up sales (which his network would be good for), or to be involved in corporate governance and strategy?

[bottlerboy]

CJ surely those are not mutually exclusive?

[CJ]

CJ surely those are not mutually exclusive?They are not but I dont think it is the job of an independent Director to fly around the US drumming up business.

Time will tell. In the mean time, I am a happy holder of DIL.

[CJ]

Couple of bits of news in the past few days.

Pie managed funds announced it had reduced its holdings at it thinks they are fully valued

It gets added to the NZX50: https://www.nzx.com/companies/NZX/announcements/223621

Should expect a bit of buying over the next few weeks.

[J_Gold]

Is it that time already? ie. pre-earnings announcement drift upwards
Thoughts?

[Halebop]

Is it that time already? ie. pre-earnings announcement drift upwards
Thoughts?

Maybe a bit of that and a bit of index buying.

Last quarter EBIT was around US$1.5m or an annualised US$6m. This quarter I think we should see US$2.5m or an annualised $10m (i.e +66% growth quarter on quarter!). Aside from revenue growth will be very interested to see where the various expense categories lie relative to revenues once the SEC 10-Q filing is lodged.

[CJ]

Diligent hit a new high yesterday ($3.70)

From the Hearld, the recent selling pressure has been from Milford who reduced their holding by over 1%. Interesting the reduction is all in the fund they hold for the Cullen fund, their own high growth fund actually increased slightly. A bit of insider trading maybe knowing there was a big seller in the market (themselves on behalf of the cullen fund) so they purchased more expecting the price to rebound after.

[Xerof]

It got to $3.80 intraday after the last Q announcement. Might the selling for Cullen be to help cover losses on o'seas bloodbath?

[CJ]

It got to $3.80 intraday after the last Q announcement. I stand corrected. I use Google finance for quick reviews so when reviewing long term graphs, it used closing. THe previous closing high was 3.69 pee Google.

Reasonable volume through today already as well

[J_Gold]

Back to 3.80
Come on Mid-July already!

[J_Gold]

Lovin' record breaking quarters after record breaking quarters.

[Halebop]

The number of new clients versus the new business revenue is interesting reading - this implies they are getting lower down the food chain in terms of size of company. This will prove important as mid cap companies are a far bigger opportunity than very large cap companies (where the pickings are easiest). This also implies Diligent are leveraging their economies of scale to begin addressing and dominating a larger market segment and is difficult to emulate if you are a competitor with a small market share.

Looking forward to the Q10 filing in about 3 weeks which will demonstrate how much of that cash flow was profit...

[J_Gold]

Now sit back, watch the price stagnate for the next 4 weeks, then watch it increase over the subsequent 8 weeks in anticipation of the next record-breaking quarterly announcement. Maintenance costs of holding this stock in my portfolio = zero. Love it!

[CJ]

With it being in the NZX50, being profitable and with reasonable liquidity (isn't subject to the same volitility as XRO is), it should have margin lending, even if it just starts out low. Even XRO should have 30% margin lending avaliable.

The irony with such a well perfoming stock is I am wonder if I should be selling down as I am over weight in what is a high risk/high return stock.

[Roadrunner]

CJ - I am in the same position, in that what started off as a 4% position is now an 11% position in my overall equity portfolio.

However, I have high conviction in this stock. The following factors all point to reasons why I should still hold:

- unique position in the market place
- excellent cashflow
- impressive growth continuing for the forseeable future (75% to 100% growth y.o.y)
- likelihood of a dividend now there is better cashflow ($USD8.9m on hand at 31 Dec 2011)
- NZX50 membership and fund awareness.
- Broker coverage improving (I expect Forsyth Barr, the broker house I use, to commence coverage in the next three months)
- a damn fine product that Microsoft, Sungard, Oracle or Reuters would pay a premium to own in their lineup. Why else would they get someone who knows lots about mergers and acquisitions on the NZX like Weldon to join the board?

I see $7 on the share. I have that high a conviction for DIL. I have met with senior officers of Diligent Boardbooks at AGMs and in personal meetings. I am happy with the information they have provided me about their global sales and the challenges they face. This is precisely the sort of stock that is immune to Euro wobbles and the difficult economic environment.

Congrats to those who do sell out at or near $4 and who have made good money. I can understand the need for caution for some. This is why I have spent a lot of time learning about this company, so I can work out whether I also need to take some off the table.

There is nothing that I see that makes me want to take anything off the table yet.



Yes, Sparky I couldn`t agree more with the points you have made.I have been involved with Diligent from around the 65c mark having bought and sold along the way and getting back in about 6 months ago for around $2.40.I`ve been very impressed with the way the company has been run.The strategy of concentrating on top companies in each country has worked well and the word has spread fast as others have seen the benefits of the boardbook system.As I see it the potential for continued growth is huge,the competition at this stage is not an issue and the risk factors have been significantly reduced.Todays prelim results were as always excellent and as Sparky touched upon I expect broker coverage to improve and be very positive.I don`t believe $7 a share is a pie in the sky figure,it`s not if but when.Personally, within 6 months of today I would be confident of above $5.With the possible exception of Xero,which I`ve already had some fun with, I think that DIL have got to be one of the most exciting stocks on the NZX.