LiveTiles Limited

Key Highlights of Q1FY20:LiveTiles Limited (ASX: LVT), a global software company, is engaged in the development and sale of business software in Australia and overseas. The market capitalisation of the company stood at $233.08 million as on 29^th October 2019.

The annualised recurring revenue (ARR) reached $42.9 million as at 30^th September 2019, up from $40.1 million as at 30^th June 2019. ARR has grown by 131% in the last year and is up to 8.6x in 2 years.The first quarter of FY20 saw a strong APAC region performance, offset by seasonal buying patterns in the US and European regions.

The company also stated that it is pleased with sales and marketing activity early in Q2, with a strengthening pipeline and more engaged partner channel. There were 952 paying customers as at 30 September 2019, which reflected ongoing customer base growth, and the customer cash receipts rose 252% on the prior corresponding period to $8.5m.


YoY ARR Growth (Source: Company Reports)

Outlook for FY20: With the continued investment into products, partners and sales, and marketing channels, the company expects to deliver another year of strong customer and revenue growth in FY20. In the last 12 months, ARR grew by 131%, and now the company’s objective is to organically grow ARR to at least $100 million by 30 June 2021.

LVT Raises $5 Million Through SPP: The company advised that it has raised $5.0 million from eligible existing shareholders under the Share Purchase Plan (SPP), which was announced on 19 September 2019. The SPP will result in the issue and allotment of 14,285,422 shares at an issue price of $0.35 per share.

On 19^th September 2019, the company noted that $50 million (before costs) had been raised via a placement of shares to sophisticated and professional investors. The funds raised under the Placement and SPP will be used to support the continued decent customer and revenue growth.

Stock Recommendation: The stock has given negative returns of 46.36% and 47.32% in the last three months and six months, respectively. Currently, the stock is trading close to its 52-weeks low of $0.290. The company has reported an outstanding CAGR growth of 197.8% in its revenue over the last five years, i.e., from FY15 to FY19. Thus, it can be said that the company is growing excellently, which is likely to support its long-term growth. LiveTiles Limited is a debt-free company with assets to equity ratio of 1.82x, higher than the industry median of 1.51x. Therefore, considering the above-stated facts, current trading levels, decent balance sheet, and growth outlook, etc., we give a “Speculative Buy” rating on the stock at the current market price of $0.290 per share, up 1.754% as on 29^th October 2019.
 

Splitit Payments Limited

Highlights for Q3 2019:Splitit Payments Limited (ASX: SPT) provides a credit card-based instalment solution to businesses and merchants. The market capitalisation of the company stood at $298.31 million as on 29^th October 2019. The company has reported strong growth across all its key metrics during Q3 2019 as compared to Q2 2019 and the prior corresponding quarter.

The total merchant reached 624, up 97% on pcp basis. Growth seen in merchant transaction volume was driven by both existing Splitit active merchants, and the addition of new large merchants around the world.Merchant Fee growth accelerated as the share of merchant funded plans increased along with the growth in merchant transaction volume.

The company continues to implement its growth strategy by acquiring new large merchants and building strong partnershipswith eCommerce platforms, payment processors, technology services, point of sale providers, banks and large multinational corporations to rapidly scale.

SPT is initially targeting eCommerce merchants, followed by retail merchants in geographies that have high credit card use, including the US, UK, Canada, Australia, France, and Southeast Asia.


Quarterly Performance Across Key Metrics (Source: Company Reports)

SPT Signs an Agreement with Shopify and Divido: The companyhas signed an agreement with eCommerce platform Shopify to make available SPT’s Buy Now Pay Later (BNPL) solution to Shopify’s network of more than 800,000 merchantsacross 20 countries. The company has also signed an agreement with Divido. Under this partnership, Divido's network of more than 1,000 merchants, banks and other partners will be offered SPT’s payment solution.

Stock Recommendation: As per the ASX,the stock is trading slightly below the average of its 52-week high and low of $2.00 - $0.305. The stock has given returns of 48.09% and -16.38% in the time period of three months and six months, respectively. The new tie-ups and agreements in North America are likely to support the company’s strategy to develop a base of active merchants across key verticals and achieve scale benefits through strategic partnerships. Hence, in view of aforesaid facts and current trading levels, we give a “Hold” recommendation on the stock at the current market price of $1.025 per share, up 5.67% as on 29^th October 2019, owing to the announced quarterly release, which stated decent growth across all key operational metrics.

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