Diligent Board Member Services stock has risen this year
after the governance app developer posted quarterly figures
showing sales growth had not slowed as much as some investors
The New York-based, New Zealand-listed company added a net
113 new client agreements in the three months ended March 31,
taking its total number of customers to 2563.
That was up 28% from the same quarter of 2013, when it added
The stock sank in the second half of 2013 as sales missed
targets and the company was distracted by administrative
errors that forced it to restate revenue for the 2010 through
2013 financial years.
It had previously been forced to revise executive options
that exceeded company guidelines.
Craigs Investment Partners broker Chris Timms said Diligent
had delivered a stronger-than-expected result but added user
growth was likely to slow in the second quarter to June.
First-quarter growth was boosted by unusually high upgrade
''Looking into the second half, top-line growth should
benefit from Diligent's current push into continental Europe
and, potentially, a new product. With a strong balance sheet,
we maintain our buy with a $6.35 per share target price.''
The share's 15% gain this year was twice the pace of the
The company was rated an average of ''buy'', according to
four analysts surveyed by Reuters, with a median price target
Diligent said it incurred costs of about $US5.1 million
($NZ5.9 million) for the restatement and re-auditing of its
accounts, including $US1.8 million incurred in the latest
It also spent $US1.6 million of the estimated $US2.3 million
earmarked for building a European data centre.
Mr Timms said Diligent was among New Zealand tech stocks
caught up in a global sell-off over the past month as
investors questioned the ability of companies to deliver the
profits implied in their high valuations.
Big movements in the technology-rich Nasdaq Composite Index
on Wall Street had flowed through to the local stock market.
However, Diligent's sell-off was mostly been related to its
own woes rather than that of the market.