Diligent's stock up 15% this year as good news keeps coming

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 had expected.

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 201 customers.

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 activity.

''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 NZX50 Index.

The company was rated an average of ''buy'', according to four analysts surveyed by Reuters, with a median price target of $4.72.

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 three months.

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.

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