Personnel background checks specialist ClearStar Inc (LON:CLSU) achieved record half-year revenues in the first six months of 2017.
In its interim results, Clearstar highlighted sustained momentum in growing the customer base.
WATCH: ClearStar starting to see very aggressive traction in the direct market
It said it is experiencing growing demand for its technologically-differentiated solutions, particularly for medical information services. Additionally, in the direct services market, the company is receiving increased business from large corporates due to greater brand awareness resulting from investment in its sales & marketing efforts.
Revenues rose by 12% to US$8.9mln from US$8.0mln in the same period of last year, feeding through to a narrowing of adjusted underlying losses (LBITDA) to US$165,000 from a loss of US$208,000 in the first half of last year.
Sales from direct channels rose to US$2.3mln from US$1.9mln, driven by strong demand from the transportation industry as well as home healthcare.
Medical information services continued to be the largest single contributor to revenues by product offering, accounting for 35% of total revenues at US$3.1mln - of which 87% were channel partner sales and 13% were direct sales.
READ: ClearStar says it expects to report the highest level of revenue growth it has generated in a six-month reporting period
At the end of June, the company had net cash of US$1.6mln, compared to cash of US$2.4mln at the end of 2016.
"During the first half of 2017 we generated our highest ever revenue for a six-month reporting period, driven by increasing direct sales and demand for our medical information services. We were successful in upscaling our direct client base, winning contracts with large, well-established businesses such as IntelliCentrics - and we made substantial progress with the on-boarding of those customers,” said Robert Vale, the chief executive officer of ClearStar.
"We now have a stronger client base and are positioned to increase revenue generation under our recently-won larger contracts. We continue to receive increasing demand for our technologically-differentiated solutions, particularly for medical information services and directly from large corporates as a result of sustained investment in sales & marketing efforts to raise ClearStar's brand awareness. Consequently, the board remains confident of delivering good revenue growth for full year 2017 in line with market expectations," he added.
The company, which has its headquarters in Georgia, USA, reassured investors its operations in the south of the USA had not been materially affected by recent hurricane activity in the area.
READ: ClearStar Inc ties-up with leading Latin American background checker MultiLatin
House broker finnCap said it was a strong trading performance that gave it increased confidence in its full-year expectations.
“We have considered a slight upgrade to expectations; however, uncertainty over the impact of the recent high profile storms in the company’s South-Western US region leads us to be prudent at this stage,” the broker said.
The broker is currently forecasting full-year sales of US$17.8mln, up from US$16mln in 2016, and adjusted LBITDA of US$0.2mln, versus a loss in 2016 of US$0.5mln.
“Overall, ClearStar continues to trade just below break-even at an EBITDA level, while steadily building revenue from a move to direct sales, particularly in the medical market,” analyst Lorne Daniel noted.
“Future growth will be assisted by the on-boarding of major new clients such as IntelliCentrics and MultiLatin, as well as the new global employment screening solution built around the Sphere platform and the new biometric services,” he added.
Shares in ClearStar remained unchanged in early afternoon trading.
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