Software company LiveTiles (ASX:LVT), a developer of “intelligent workplace solutions”, has seen shares climb further away from a recent 14-month lows as the market welcomed the group’s latest quarterly report.
As previously announced, the company’s annual recurring revenue (ARR) climbed to $42.9 million in the September quarter, a modest 7% improvement from the preceeding quarter, but a full 131% over the year and an 8.6x lift from two years ago. Given LiveTiles has seen a near 70% lift in customer numbers, this shows that the average spend per customer is also growing well.
Importantly, customer cash receipts grew 252% from the previous corresponding quarter, coming in at $8.5 million. This is the 4th consecutive quarter of record customer cash received. Still, the business remains cash flow negative overall, with operating cash outflows of $5.3 million for the quarter (including a $3.8 million tax incentive). Nevertheless, this is an improvement on the $6.2 million cash burn from the June quarter.
Underlying operating expenses came in above previous guidance, at $16.4 million for the quarter, as the company made additional investments to support growth.
With LiveTiles sitting on around $56.9 million in cash, it has enough reserves to fund operations for a good while yet. Hopefully, enough to see the business transition to a cash flow positive position.
LiveTiles said that it expected “another strong year of customer and revenue growth in FY20” and has previously outlined an aspirational target of $100 million in ARR by FY2021.
With shares trading on an ARR multiple of 5.8x, or ~13x last year’s sales, the market is certainly factoring in a good deal of growth. But if LiveTiles can get close to its ARR target, the current market valuation would not seem unreasonable.
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