In morning trade the LiveTiles Ltd (ASX: LVT) share price has edged lower following the release of the software company's full year results.
Here is a summary of how LiveTiles performed during the 12 months ended June 30 compared to a year earlier:
- Annualised recurring revenue (ARR) increased 275% to $15 million.
- ARR grew approximately 6 times the industry average.
- Customer numbers up 46% to 536 paying customers.
- Average ARR per customer increased 154%.
- Loss after tax of $22.1 million for FY 2018.
- Outlook: Expects to deliver another year of strong customer and revenue growth in FY 2019.
The majority of the details in today's announcement were known already following the release of the company's final quarter update. I suspect this is why there has been a reasonably subdued reaction to the release today.
While the net loss in FY 2018 was significant and reduced its cash balance to $17.8 million as of June 30, I believe it is well funded to support FY 2019 and hopefully carry it through to break even in FY 2020.
Especially given the fact it has raised $25 million via a share placement since the end of the financial year. The $25 million was raised at $0.59 per share and a further $2 million is expected to be raised through a share purchase plan shortly.
These funds will be used to continue driving customer and revenue growth through investment in its direct sales and customer success teams, further development of the Microsoft and partner channels, and marketing initiatives.
Should you invest?
Due to the company's partnership with Microsoft and its focus on the rapidly growth artificial intelligence market, I believe LiveTiles is one of the most promising small cap tech companies on the Australian share market along with ELMO Software Ltd (ASX: ELO) and Citadel Group Ltd (ASX: CGL).
FY 2019 looks set to be a big year for the company after it engaged a dedicated and highly experienced sales force to push its high quality products.
But the market does have high expectations and has priced in a lot of growth already. This does make it a reasonably high-risk investment and one which may be unsuitable for the average investor.
