LiveTiles Ltd (ASX: LVT) has just reported another big quarter of growth, is the share price a buy?
LiveTiles is a software business which is headquartered in New York with operations in the US, Europe and Australia. LiveTiles provides workplace software for the commercial, government and education markets, and is an award-winning Microsoft partner.
LiveTiles’ Rapid Growth Quarter
The software business reported that its annualised recurring revenue (ARR) increased to $40.1 million at 30 June 2019, which was growth of 167% over the past year.
LiveTiles also revealed that it now has 919 paying customers at June 2019, which the company said reflected ongoing substantial enterprise customer base growth. This was up from 536 customers at 30 June 2018.
In terms of cashflow, customer cash receipts rose by 52% to $7.9 million over the quarter and went up 130% compared to a year ago.
Net operating cash was an outflow of $6.2 million in the June 2019 quarter, which was the fourth consecutive quarter of net operating cash flow improvement.
Management boasted that increasing brand and product awareness and conversion of a strong sales pipeline is expected to result in continuing strong customer and revenue growth in FY20 and beyond.
That’s why LiveTiles has a key objective to organically grow ARR to at least $100 million by June 2021.
I think one of the most interesting stats out of the update was that the average ARR per customer is growing, it has increased by 56% over the past 12 months. This was driven by product cross-selling & bundling and increased penetration of the employee base of existing customers.
Some of the customers won during the quarter include a major UK university, an American national fast food chain, a national Australian medical professional body and an Australian state government department.
Is The LiveTiles Share Price A Buy?
Investors are clearly pleased with the share price up around 4% in early trade. If LiveTiles goes on to achieve $100 million of ARR organically then it could be a compelling choice today as it wins more customers because most of the new customer revenue is flowing to the bottom line now.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.