Stocks’ Details

LiveTiles Limited

Strong Performance in Q2FY20:LiveTiles Limited (ASX: LVT) engages in the development and sale of digital workplace software through subscription agreements.

Q2FY20 Update: During the quarter ended 31^st December 2019, the company reported strong growth in annualised recurring revenue that stood at $52.7 million, as compared to $42.9 million reported as at 30^th September 2019. Customer cash receipts also went up substantially and stood at $10.4 million. As at 31^st December 2019, the company had 1,031 recurring revenue customers, as compared to 952 as at 30^th September 2019. Average revenue per customer witnessed growth of 33% on the previous year, representing LVT’s growing presence in the enterprise market.


ARR Growth (Source: Company Reports)

Outlook: In FY20, the company expects to witness further growth in customers and revenue as it invests in products, partners and sales and marketing. In the short term, the company is aiming to deliver an ARR of $100 million and is confident on its potential to drive ARR beyond this level in the times ahead.

Stock Recommendation: The stock of the company generated negative returns of 9.09% over a period of 1 month. Currently, the stock is trading close to its 52-week low level of $0.235. In Q2FY20, the business witnessed strong organic growth, with organic ARR amounting to $5.1 million, as compared to $2.8 million in Q1FY20. Although the company reported a higher than usual churn in Q2FY20, Q3FY20 is expected to see a reduction in churn, that is a key positive for the business. The company has an EV/Sales multiple of 4.9x, which is lower than the industry median of 5.1x. Considering the above factors, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.245, down 2% on 30^th January 2020

Nearmap Limited

Continued Growth in ACV: Nearmap Limited (ASX: NEA) engages in online aerial photomapping through its wholly owned subsidiaries.

Market Update for 1HFY20: The company recently provided a market update for the half year ended 31^st December 2019. Annualised Contract Value (ACV) was reported at $96.6 million, up 23% on prior corresponding period ACV of $78.3 million. The below figure depicts the growing ACV since FY17. North America core business displayed strong results on the company’s investment and is expected to bring in further scalability to the business. During the half, the company made its first acquisition of roof geometry technology and intellectual property from Pushpin.


ACV Growth (Source: Company Reports)

FY20 Guidance: FY20 ACV is expected to be in the range of $102 million - $110 million, as compared to the previous guidance of $116 million - $120 million.

Valuation Methodology:EV/Sales Multiple Approach

EV/Sales Based Valuation (Source: Thomson Reuters)

Stock Recommendation: The stock of the company gave negative returns of 7.60% over a period of 1 month. Despite the lower ACV guidance, the company is optimistic about the medium and long-term outlook, on the back of various positive factors including, positive momentum from the NA core business, product development, growth opportunity in the roof geometry technology, efficient business model, etc. We have valued the stock using EV/Sales based relative valuation method and arrived at a target price offering an upside of lower double digit in % terms. Hence, we give a “Buy” recommendation on the stock at the current market price of $1.705, down 29.835% on 30^th January 2020.
 

Xref Limited

XF1 Expects Increase in Cash Inflows:Xref Limited (ASX: XF1) is engaged in the development of human resources technology. As per the unaudited results for the half year ended 31^st December 2019, the company reported 12% growth in credit sales, up from $4.2 million in H1FY19 to $4.7 million in H1FY20. Credit Usage for the period went up by 31% on the prior corresponding period.

While the company saw lower than expected result in December, sales and usage witnessed a rebound in January 2020, bringing back the confidence in business growth. The company has seen strong growth on the back of its partner network, newly launched products and support from clients. In Q2FY20, the company reported cash outflows amounting to $5.3 million and expects Q3FY20 and Q4FY20 cash outflows to be ~$4.8 million and $4.6 million, respectively. The company’s reference checking solution, Xref Lite, reported the registration of 235 new customers since its launch in October 2019.


Performance Metrics (Source: Company Reports)

Stock Recommendation: The stock of the company gave negative returns of 2.86% over a period of 1 month. The company expects continued growth in cash flows over the remainder of FY20, through efficient cost management, and is approaching its target of becoming cash flow break even in Q4FY20. Moreover,strong sales performance in January 2020 indicates a better result for the second half of the year. Considering the performance in H1FY20, decent outlook for H2, and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.310, down 8.824% on 30^th January 2020, taking cues from recently announced financial results.
 

DigitalX Limited

Operating Expenses to Decrease as a result of Restructuring:DigitalX Limited (ASX: DCC) provides advisory services, blockchain consulting, funds management, media services, etc.

Q2FY20 Results: During the quarter ended 31^st December 2019, the company worked on establishing the client set for is Blockchain Consulting and Development Division. For the purpose, the company organised workshops and engaged in discussions with strategic technology providers and consulting partners, to identify potential opportunities in the space. The company was also focused on the launch of the DigitalX Bitcoin Fund in the Asset Management division, that will provide Bitcoin exposure to qualified investors. The company has recently restructured the division due to a shift in strategic inclination towards blockchain technology and digital assets. At the end of the quarter, cash, listed digital assets and liquid unlisted investments stood at $7,220,686.


Working Capital Position (Source: Company Reports)

Stock Recommendation: Over a period of 1 year, the stock gave negative returns of 34.09% and is currently trading very close to its 52-week low level of $0.025. As a result of restructure of the Asset Management division, the company expects an annual reduction of ~$1 million in operating expenses. With the above scenario in place, the company can now focus well on commercialising blockchain technology, which can prove to be great value driver for businesses. On the valuation front, the company has a price to book multiple of 1.1x, lower than the industry median of 3.6x. Considering the above factors, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.029, with no change as on 30^th January 2020.
 

LiveHire Limited

Management Confident on Future Growth:LiveHire Limited (ASX: LVH) is a talent acquisition & engagement platform that delivers a sourcing and talent mobility solution to businesses.

December Quarter Highlights: During the quarter ended 31^st December 2019, the company reported 42% QoQ growth in cash receipts, which stood at $1.4 million. Annualised recurring revenue increased by 47% on pcp to $3 million. During the quarter, the company added 15 new clients on its platform, increasing the client base to 99, up 55% on pcp. 


Growth Across Key Metrics (Source: Company Reports)

Outlook: As per the management, the company is closely monitoring the needs of existing and potential customers and is well positioned for growth in 2020 across Australasia and North America.
Stock Recommendation: The stock of the company gave negative returns of 6.52% over a period of 1 month. Q2FY20 was a period of continued growth across cash receipts and customer network. During the quarter, the company expanded its client base that will contribute additional revenues going forward. Moreover, the period saw continued investment in product development and technology, which will provide a better competitive stand to the company. The company has a price to book multiple of 1.8x, which is lower than the industry median of 3.6x. Considering the backdrop of the above factors, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.210, down 2.326% on 30^th January 2020.
 
 
Comparative Price Chart (Source: Thomson Reuters)

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