Brisbane SaaS firm Tanda invests in ASX-listed HR tech company Xref, appoints co-founder to board

Less than two months after shareholders in company Xref knocked back a $41.2 million takeover offer from SEEK (ASX: SEK), its Brisbane-based peer in the HR technology space, Tanda, has done a reference check and decided to invest.

Alongside a management restructure aimed at saving $0.9 million annually, involving the resignation of its longstanding chief financial officer (CFO) James Solomons whose responsibilities will be filled by finance director Avi Lewis, Xref has received a commitment from fellow HR tech company Tanda to raise $3.6 million.

Xref will issue almost 28 million shares - or 14.5 per cent of current shares on issue - to Tanda for the placement at $0.13 per unit, representing a 4 per cent premium to the last trading price but 40 per cent less than SEEK's previous takeover offer.

Tanda's co-founder and CEO Jake Phillpot will join the Xref board a non-executive director as part of the deal.

"We are excited about Xref because it is a strong business in a growing category. There are a lot of parallels between Tanda and Xref, including similar contract sizes, similar sales cycles and similar buyers," Phillpot says.

"The experience we have gained in scaling Tanda is directly applicable to Xref, and I look forward to adding value at the board level, particularly in product development and go-to-market strategy."

Sydney-based Xref is known for its reference check software that allows users to request, collect, and review candidate references, conduct background checks, administer employee pulse and engagement surveys, and manage exit surveys for departing employees.

Founded in 2012, just two years after Xref was established, independently-owned Tanda provides an all all-in-one payroll, HR and workforce management system.

"The demand for high-quality HR SaaS (Software as a Service) solutions is strong and growing both in Australia and globally," Phillpot adds.

"Xref is well positioned to expand its ARR with a strong product in an expanding market. I look forward to serving Xref shareholders."

The company also proposes to raise an additional $1 million through a share purchase plan at 13 cents per share, with net proceeds to be used to reduce debt and give Xref the flexibility to restructure the business to provide more efficient operations and improve operational cash flow.

"We are very pleased to have formed a new partnership with Tanda and to be able to add another shareholder to our register who shares our enthusiasm for the exciting growth opportunity Xref has," says Xref CEO and founder Lee-Martin Seymour.

"This raise also strengthens our balance sheet and allows us to restructure the business to deliver our growth strategy in a sustainable and profitable way."

The company's restructure also involves shifting commercial manager Tobi Ajibola's role to revenue officer with an increased emphasis on revenue growth. In the December half Xref's revenue rose 9 per cent to $10.9 million and it recorded a net loss of $436,000.

PharmX Technologies executive director and former Downer head of corporate finance and projects, Jon Newberry, has also been appointed to the Xref board.