LiveHire Limited
 

LVH Details
 
ARR Grew 20%:LiveHire Limited (ASX: LVH) is a talent technology company, operates in two segments namely business intelligence and data services. Through recruitment process outsourcing (RPO), it initiates sale of the talent community product to distribution channels.
 
Partnership with Rizing Holding:Recently, the company announced to have signed a Solution Provider Agreement with Rizing Holdings to introduce LiveHire’s innovative talent management platform to Rizing’s clients. Rizing is the second largest implementor of SAP Success Factors globally. It has 850 industry experts who serve ~40% of SAP Success Factors with more than 6,700 customers.
 
As per the Partnership Agreement, the platform of LiveHire will be introduced by Rizing Holdingsto its clients.Rizing Holdings will be eligible for earning commissions if the opportunity can be converted into a signed and paid client contract for LiveHire.
 
LiveHire and Rizing will jointly work to undertake staff training, joint public relations & marketing activitiesto increase the local joint brand awareness and enhance demand generation as well. Rizing will promote LiveHire to employees and existing and potential clients as their preferred recruitment and talent pooling platform. Rizing will also distribute promotional materials of LiveHire for the advertisement of new products, promotions & initiatives launched by LiveHire, with the view to secure a commitment from potential clients to adopt LiveHire.The term of the agreement will continue until terminated.   
 

Key Business Metrics (Source: Company Reports)
 
Strong Commercial Metrics Growth Q-o-Q: The company ended the March quarter with 69 clients, growing Annualised Recurring Revenue (ARR) by $418k or 20% to $2.47 million. ARR Per Client (ARRPC) increased by 12% to $35,752, highlighting the continued increase in average customer size, and the growth in Channel Partners who typically serve larger enterprises.
 
LVH recorded cash receipts for the quarter of a record amount of $933,000. As occurred previously, moving clients to annual subscriptions caused some Q-o-Q cash receipt fluctuations. The cash balance at the end of the quarter was $37.8 million, with no debt.
 
The revenue from contracts with customers during 1HFY19 stood at $1,187,645. Recurring revenue for the period increased by 72%to $838,895 as compared to the same period in FY18. The Annualized Recurring Revenue increased by 52% for the 6-month period, driven by 18 new clients including Jemena, Dulux Group, Xero, Calibre Group, Komatsu Australia, Nissan Australia, iSelect, and several via the RPO Channel via Korn Ferry and Manpower Services (Aust) Pty Ltd.However, the company had increased its losses due to continued investment in Product Development, and other associated costs. Losses were partially offset by increased revenue, which grew proportionately more than expenditure (compared to FY18 H2, 47% revenue growth, 17% expenditure growth). Annualised Recurring Revenue Per Client (ARRPC) grew 38% to $32,007 at 31 December 2018as compared to $23,128 at 31 December 2017, 26% growth compared to $25,407 at 30 June 2018.
 
Stock Recommendation: The company yielded negative YTD return of 31.86%along with a negative return of 42.54% over the past three months. The stock is currently trading towards its 52-week low, giving the investors an opportunity to enter at a lower range. Although the company has generated strong revenue growth along with robust balance sheet and cash balance, however, it was not able to convert the higher revenues to generate profits driven by higher operating and employee benefit expenses. Considering the performance in the quarter in terms of growth in Annualised revenue, liquidity position, and other factors, we are optimistic about the future growth of LVH. Hence, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.390 (up 1.299% on 11 June 2019).
 
 
  
LVH Daily Chart (Source: Thomson Reuters)

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