The LiveTiles (ASX: LVT) share price is up around 6% after providing investors with an update about its first quarter of FY20.
LiveTiles is Australian but New York-based technology business which provides an ‘all-in-one’ cloud-based software management system and intranet for corporate clients with, typically, more than 100 employees. Through its integrations, Livetiles can offer clients the ability to use popular online software tools like Microsoft 365, Google Drive, communications through Slack, financial reporting with Expensify, security by Okta, customer management through Salesforce and lots more.
The LiveTiles Share Price Is Up On Its September Quarter
The LiveTiles share price has risen over 6% after the company reported that its annualised recurring revenue (ARR) reached $42.9 million at September 2019. This is an increase of 131% over the past year and up 7% over the past quarter.
LiveTiles said that the first quarter saw a strong performance from the APAC region, but was offset by “seasonal buying patterns” in the US and European regions. However, management are pleased with sales and marketing activity early in the second quarter.
Customer numbers continue to increase. It had 952 paying customers at 30 September 2019, up from 566 customers at 30 September 2018. Some of the clients it won during the quarter were: a European based international healthcare manufacturer, a European financial services business, a large Australian infrastructure services provider and an American global construction engineering company.
Perhaps more importantly, the average ARR per customer rose in the September 2019 quarter – it’s up 37% over the past 12 month to over $45,000. It has increased thanks to ongoing growth in the company’s enterprise customer base, product cross-selling & bundling and more employees of customers are using the software.
This could be an important development for LiveTiles’ long term retention rate because the more it is integrated in an entity’s operations, the harder it will be for an entity to shift to another provider.
Customer cash receipts rose 252% compared to the September 2018 quarter to $8.5 million. However, net operating cash outflow was $5.3 million, although management pointed out this was the fifth consecutive quarter of net operating cash flow improvement.
Is The LiveTiles Share Price A Buy?
LiveTiles had cash of $56.9 million at the end of the quarter, with $8.2 million of cash to be received in the second quarter relating to the share purchase plan and R&D tax refunds.
The company is steadily getting towards a cash flow neutral position, which could be an inflection point for the company. Over the past year the company has gone from a quarterly cash burn of $11 million to $5.3 million. So I hope in a year, or less, it is starting to make cash.
I’d be willing to make a small investment at the current price, it’s targeting organic ARR growth to at least $100 million by the end of FY21, but I hope to see the average ARR continue to rise with the cash flow improving each quarter. The growth shares in the free report below could be even better buys.
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