Boardbooks app maker Diligent targets SaaS extensions

Diligent Board Member Services, the maker of Boardbooks company director software, appears to be putting its governance and accounting troubles behind it.
Written by Rob O'Neill, Contributor

Diligent Board Member Services, developer of the Boardbooks application for company directors, is targeting software-as-a-service (SaaS) extensions and new uses for its technology to drive growth beyond 2015.

Reporting a 28 percent year-on-year lift in sales on Monday, Diligent president and chief executive Alessandro Sodi said the company was preparing a SaaS-based collaboration product called Diligent Teams for release in the third quarter.

Sodi said the launch would increase sales to existing customers and open opportunities for new customer wins. He said the product is "really different" from Boardbooks, and could be used by any team within a company, not just the board.

"The launch of Diligent Teams will be an important milestone in the evolution of the company, as we look to extend our best-of-breed technology beyond the boardroom and deliver even greater value to our customers," Sodi said.

Diligent will also work on new and complimentary uses and expand its global sales and marketing platforms, he said.

R&D headcount doubled in the fourth quarter to support the development of Diligent Teams. A further 30 percent increase is planned for 2015.

Diligent reported sales of $83.1 million for the year to December 31, up 28 percent year on year. Net income was $8.9 million, an increase of 43 percent compared with $6.3 million the year before.

However, adjusted net income for the year was $12.9 million, an increase of just 1 percent.

In the fourth quarter, the number of Boardbooks users increased by approximately 5,100 to over 92,000, the company said. Total client licences were over 3,000.

Sodi said the results demonstrate strong demand for Diligent Boardbooks and the continued execution of the company's growth strategy.

In September, Diligent was publicly censured by the New Zealand Stock Exchange's (NZX) market regulator. The company agreed to pay NZ$100,000 to the NZX's discipline fund, plus the regulator's costs.

In 2013, the company was forced to restate its financial statements for the years ending December 31 in 2010, 2011, and 2012, and the fiscal quarter ended March 31, 2013, after it discovered an error in the way it was recognising revenue.

The NZX's regulatory tribunal said it considered Diligent's failure to meet three successive reporting requirements to be "very serious".

In a US SEC filing (PDF) last week, Diligent said risks continue to flow from those failures.

"While we have implemented certain remedial measures during the 2014 fiscal year, material weaknesses in our internal control over financial reporting and our disclosure controls persist as of December 31, 2014," it said. "We must address the material weaknesses in our internal control over financial reporting and our disclosure controls, which otherwise may impede our ability to produce timely and accurate financial statements and periodic reports."

Diligent also noted the "risk of litigation or governmental investigations" relating to the restatements.

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