LiveTiles Limited

LVT Details

Q2FY21 Financial Update: LiveTiles Limited (ASX: LVT) is a provider of internet and workplace technology software with operations in North America, Asia, Europe, and Australia. It has LiveTiles Intranet, LiveTiles Reach, LiveTiles Everywhere and LiveTiles Quantum under its product portfolio and caters to over 1k Enterprise customers in more than 30 countries. As on 4^th February 2021, the market capitalisation of the company stood at ~$207.58 million. The company recently responded to the media speculation regarding LVT being approached by overseas buyout funds for a potential control transaction. LVT confirmed that it is currently not in formal talks regarding a control transaction with any third party. The company has Gilbert & Tobin and Credit Suisse as its advisors for any potential control transaction.

December 2020 Quarter Highlights: For Q2FY21 (December 2020 quarter), the company reported growth in average recurring revenue (ARR) to $64.7 million, up by 23% on QoQ basis. LVT registered the cash receipts of $13 million, up by 25% YoY for the quarter. Its net operating cash flows went up by 56% on pcp basis to $2.7 million at the end of 31 December 2020. During the recent quarters, the company has grown its pipeline and sealed new customer deals. Given this, LVT has strategically funded and expanded its sales and customer workforce by 43% to monetise these opportunities. It held cash reserves of $19.2 million at the close of December 2020 quarter.   

Growth of Average ARR per customer, YoY (Source: Company Reports)

Outlook: For FY21, the company aims to generate key opportunities in the remote workplace digital software space given COVID-19 recovery. LVT plans investment into product R&D and roll-out of 2 new products, LiveTiles Vibe and LiveTiles Smart Video, fuelled by demand for intelligent workplace solutions for FY21.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The stock of LVT gave a negative return of 2.08% in the past three months and a negative return of 2.08% in the past six months. The stock is currently trading lower than its 52-weeks’ average price band of $0.11-$0.385. The stock of LVT has a support level of ~$0.213 and a resistance level of ~$0.252. We have valued the stock using Enterprise Value to Sales multiple based illustrative relative valuation method and have arrived at a target price of low double-digit upside (in % terms). For the purpose, we have taken peers like Class Limited (ASX: CL1), Vista Group International Limited (ASX: VGL), Catapult Group International Limited (ASX: CAT) to name a few. Considering the current trading levels, decent Q2FY21 results, string of new contracts and pipeline for FY21, decent outlook for FY21, and valuation, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.235, down by 2.173% on 4^th February 2021.

LVT Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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