LiveTiles Limited

Partnership with Search365: LiveTiles Limited (ASX: LVT) had announced a strategic partnership with Search365, under which, LiveTiles would be combining its technology with Search365 Knowledge Miner in order to create most sophisticated information discovery tool, which is capable of real-time file search and response. The addressable market for the product that combines LVT’s intelligent workplace offering with Search365’s Knowledge Miner happens to be significantly large and it spans any industry that has a core focus towards the Compliance and Risk Management. As a result of the strategic partnership, both the parties could grow their existing global customer footprint as well as can pursue more commercially significant opportunities.

In another update, LiveTiles made an announcement about the appointment of Rowan Wilkie as the Chief Financial Officer. The current Chief Financial Officer, named Matt Brown, would continue to work with the co-founders and Board in an advisory capacity, and thus, there will be focus on strategic initiatives in order to ramp up LVT’s global growth.

Recently, the company released the quarterly report for the period ending March 2019. The company’s annualised recurring revenue (or ARR) witnessed a rise and stood at $34.5 million as at March 31, 2019 which represents an annual growth of 208%.The significant organic ARR growth of $3.6 million was achieved in the quarter ended March 2019 even though the quarter was less active for Microsoft-aligned enterprise software sales.

YoY ARR Growth (Source: Company Reports)

The company stated that customer numbers have grown strongly, and as at 31 March 2019, paying customers stood at 879 reflecting an increase from 472 as at 31 March 2018. LVT has been securing a growing proportion of enterprise customers, because of its sales and marketing investments, high impact co-marketing initiatives with Microsoft as well as strengthening brand awareness.

What To Expect From LVT: There are expectations that LVT would be able to deliver another year of robust revenue growth in FY 2019 on the back of its deployment towards sales and marketing, the 2018 launch of its AI products, high-impact co-marketing initiatives with Microsoft, and a strong organic growth contribution from Wizdom. The company’s primary objective is to organically grow the annualised recurring revenueto a minimum $100 million by June 30, 2021.

Stock Recommendation: LVT’s net cash outflow from operating activities amounted to $7.8 million in the March 2019 quarter which reflects a substantial improvement on December 2018 quarter’s net operating cash outflow which was $9.6 million. As at 31 March 2019, the company had a cash balance of $21.1 million.

However, the company’s stock had delivered the return of 24.05% in the span of previous three months, while in the time frame of past one month, it posted the return of -2.97% which reflects that the stock is quite volatile. Given the backdrop of aforesaid parameters and current trading level, we maintain our “Speculative Buy” recommendation on LVT at the current market price of A$0.450 per share (down 8.163% on 3 May 2019).

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