I've been running the ruler over IntelliHR the last couple of days after discovering Shaw and Partners EV to ARR growth metric and data on 26 SaaS companies. I shamelessly stole their data for my records and started adding some extra companies in. Originally I thought it suggested IHR is a bargain until I collated all intelliHR's quarterly results and discovered the growth is not as high as their headline figures would lead you to believe. I'll preface this by saying I did dig pretty deep and I uncovered a business with a great, very scalable product, it has exceptional customer reviews, a huge addressable market, and an aligned founder CEO with a deep understanding of HR and the HR software market. I haven't bought shares yet and am still considering doing so. However I also discovered inconsistent cherry picked financial figures selected for reports that I am left to assume the CEO is trying to use to justify their stretched valuation. 

In their most recent quarterly results they reported a string of convoluted headline figures including "YoY Record Q3 New Customer Rev$ Acquisition" ^111% (they have a habit of reporting on growth in growth), "YoY Record Q3 Invoiced Revenue" ^82% (doesn't coincide with any other reported figures), "YoY Contracted Subscriber Headcount Growth" ^242%, "YoY Increase in Q3 Cash Receipts, Annualised is now $2.9 Mil" ^132% (why annualise lumpy quarterly reciepts?)
All strange headline figures which might be ok if they were consistent, but these were seemingly selected based on which figures looked best with no aim of being consistent with previous quarters. You'd think some headline figures might have been revenue retention, ARR growth, receipt growth, customer retention, customer growth? For example you have to dig deeper to discover their revenue retention has steadily deteriorated since reaching a high of 128% in Q3FY20 (when they were very happy to include the figure in headlines) to 99.5% this quarter. They seemed to try to transition towards reporting customer retention instead the last 2 quarters which was an impressive 100% and 99% however this was not reported at all in the most recent quarter. 

They also released an update the day before their quarterly with a different set of headline figures including "Record New ARR Added H2 FY21 vs H2 FY20" ^304%. A very impressive number that is also very difficult to compare to anything or derive great meaning from. Finally even when you read on in the quarterly you will see "Annual Recurring Revenue increased $308k during the quarter being 111% higher than was achieved in Q3 FY20" this is just plain wrong, whether you look at it as 111% higher than Q3 FY20 ARR or 111% higher than the growth from Q2 to Q3 FY20, and you can see it's wrong by looking at the adjacent chart..

So here are the actual growth figures: 
ARR 82.4% YoY, 10% QoQ to $3,174k and ave. 15% over 8 Qs
Receipt from customer 132% YoY, 29% QoQ to $718k
Growth in customers 80% YoY, 12% QoQ to 169 customers

Another misleading figure in the pre-quarterly announcement headline figures was "H1 vs H2 average lead generation" ^100% which I have seen excitedly quoted over on hotcopper. Guess what? They have more than trippled their spend on advertising and marketing in the quarters preceding and during the respective halves..

The bottom line is IHR do have great growth figures, somewhere close to doubling ARR, customers and receipts on an annual basis. They are not growing at 200 or 300% per year as some of the headline figures may lead you to believe, so do they justify an EV/ARR multiple of 27.7? My favorite company dropsuite is growing ARR at a similar rate of 78% YoY and trades at EV/ARR of 11.9 and it doesn't lose $1.5m per quarter to achieve that growth. Perhaps it doesn't have as large of a market opportunity but it's also not competing with the likes of SAP and other huge well capitalised incumbents. What's more, compare the most recent quarterly results announcements of the two, scanning over dropsuite's headline figures is a breath of fresh air after the last 2 days researching IHR. See valuation for the EV/ARRG ;)