GetSwift hit by slower revenue growth and rising legal bills
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GetSwift hit by slower revenue growth and rising legal bills

GetSwift shares dropped as much as 16 per cent on Thursday after the logistics solutions group revealed a slowdown in revenue growth for the December quarter and reported rising costs from its legal battles and increased corporate governance requirements.

On Wednesday evening GetSwift reported that total revenue and other income for the December quarter was $710,854. It represented an increase of 121 per cent on the prior December quarter but was up just 9.4 per cent on the previous quarter.

"Growth for the quarter moderated slightly as enterprise clients are still completing product testing and onboarding," the company said in its quarterly report to the ASX.

Shares dropped 16 per cent to a low of 45¢ before closing at 47.5¢ on Thursday.

In February last year, the stock crashed from $2.92 to a low of 98¢ after the company - founded by former AFL player, Joel Macdonald - revealed that fewer than half the contracts it had been publicising were actually generating any revenue.

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GetSwift CEO and founder Joel Macdonald.

GetSwift CEO and founder Joel Macdonald.

The former sharemarket darling, which listed in December 2016 at 20¢, had raised $75 million from investors at $4 a share just months prior to the shock announcement.

The announcement triggered three separate class action lawsuits alleging GetSwift made deceptive disclosures about some of these customer contracts. GetSwift has been fighting in the courts to ensure it faces just one of the three class actions.

Multiple court proceedings will significantly increase the company's legal defence costs.

In November the Full Court upheld the judgment handed down by the Federal Court to permanently stay two of the three three class actions being prepared by law firms Squire Patton Boggs, Corrs Chambers Westgarth, and Phi Finney McDonald.

GetSwift said the decision is now being appealed to the High Court of Australia. This will add to its legal expenses which were already dragging on its financial performance in the December quarter.

"Administration and corporate costs continued to be significant cash expenditures due to legal defence costs and increased governance expenses. These expenses include the aforementioned costs for defending proceedings before the Federal Court of Australia," it said.

The company said it will resist the application for an appeal and reiterated that it will vigorously defend these proceedings.

GetSwift burnt through $5.77 million in operating cash flow for the quarter as it continued its overseas expansion and technology investment.

"The company plans to continue its multi-geographic staff expansion due to client requirements," it said.

GetSwift said it retains cash, cash equivalents and bank deposits totalling $87.6 million.

Its total market valuation is now $89 million which means the company is not worth much more than its cash assets.

Despite the dismal share price performance over the last year, GetSwift has retained high profile investors like billionaire Alex Waislitz and Regal Funds Management.

Colin Kruger is a business reporter. He joined the Sydney Morning Herald in 1999 as its technology editor. Other roles have included the Herald's deputy business editor and online business editor.

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