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ClearStar expects to turn an underlying profit this year after laying foundations for growth in 2017

Published: 07:45 17 Apr 2018 BST

Man looking at employee through magnifying glass
ClearStar is benefitting from the rise of the ‘gig economy’ and the subsequent need for more background checks

Background check services and technology provider ClearStar Inc (LON:CLSU) is set for a “pivotal” 2018 after reporting solid results for the year just gone.

The flexibility of the labour market continues to expand and that is increasing the demand for ClearStar’s direct services and is providing new opportunities for revenue generation.

WATCH: Clearstar enjoys strong year as touchless application builds momentum

Strong demand for job and employee screening from transport firms, contractors and in education lifted direct services revenue by 24% year-on-year in 2017, while the number of active clients here rose by 18%.

Overall, ClearStar saw revenues rise 11% to US$17.8mln (2016: US$16.0mln) in the 12 months ended December 31 2017, while the adjusted underlying loss (EBITDA) narrowed to US$391,000 (2016: US$542,000).

Sales of medical information services increased 19% year-on-year, with that arm of the business the biggest revenue generator, accounting for just over a third of total sales.

IN-DEPTH: ClearStar thriving in the gig economy

Operational cash flow improved to US$184,000 outflow (2016: US$460,000 outflow), while the company had net cash of US$1.3mln (Dec 31 2016: US$2.4mln) as of the end of December.

“In 2017 we delivered another year of growth as we experienced increased demand for our products and solutions from both direct service and channel partner clients,” said chief executive Robert Vale.

“This was driven by an upscaling in the direct client base and strong uptake of our technologically-differentiated medical information services, where our mobile apps, paperless drug screening and customised web portals are expediting the screening process for the benefit of both the employer and the candidate.”

EBITDA-positive in 2018

Vale added that ClearStar also “laid the foundations” for future growth in the year as the firm significantly enhanced its sales and marketing efforts and added a new route to market for direct services following its integration with SAP SuccessFactors Recruiting.

“Consequently, we believe 2018 is poised to be a pivotal year for ClearStar. We entered the year with a stronger client base and infrastructure as well as increasing sales momentum.

“As a result, combined with maintaining tight cost control, the board remains confident of delivering revenue growth and becoming EBITDA-positive for full-year 2018, in line with market expectations.”

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