The ELMO Software Ltd (ASX: ELO) share price is on watch after the HR software company released an updated set of FY21 guidance numbers.
ELMO’s FY21 guidance
The ASX tech share said that it has seen continued momentum with growth across the business.
COVID-19 has changed the way that the workforce operates. ELMO said that an increasingly remote-based workforce has highlighted the mission critical nature of having cloud-based business solutions that ELMO can deliver.
Its annual recurring revenue (ARR) guidance has been narrowed. It used to be in a range of $81.5 million to $88.5 million, the guidance is now $83 million to $85 million.
ELMO’s revenue previous guidance was a range of between $65 million to $71 million, it’s now $68 million to $70 million.
The EBITDA loss guidance range used to be in a range of between negative $2.4 million to negative $7.4 million. The EBITDA loss range is now negative $2.5 million to negative $3.5 million.
Management comments
CEO and co-founder Danny Lessem said: “I am encouraged by the strong we’ve seen so far in the second half. There is positive sentiment in the market, and it is pleasing to see procurement starting to return to pre-COVID levels.
“Our growth strategy remains on track. ELMO’s customers are able to effectively manage increasingly dispersed workforces with our broad, integrated and convergent solution. Our value-proposition is stronger than ever, and ELMO remains well placed to benefit from tailwinds in the adoption of cloud-based technology.”
Is this a good share price to buy ELMO shares?
At the pre-open ELMO share price of $4.91, it’s almost the lowest it has been over the last six months. Since 22 January 2021, the ELMO share price has fallen by over 30%.
If you’ve been waiting to buy shares for a while then this could be an opportunistic time to jump on the ASX tech share. However, wider share market volatility could continue and send the business even lower in the shorter term.
However, if ELMO keeps growing in size then the ELMO share price should steadily recover back to former heights over time.
But there are other ASX growth shares that might be able to offer even greater profit growth over the next few years.
