Why the LiveTiles share price surged 16% higher today

The LiveTiles Ltd (ASX:LVT) share price surged 16% higher on Wednesday. Here's why…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The LiveTiles Ltd (ASX: LVT) share price has been amongst the biggest movers on the local market on Wednesday following the release of its half year results.

The intelligent workplace software company's shares were up as much as 16% to 39 cents in early trade. At the time of writing they are 10.5% higher at 37 cents.

What happened in the first half?

In the first half of FY 2019 the company delivered a 198% increase in total revenue and other income to $7.4 million.

This revenue included a $1.5 million government grant, down from $1.6 million in the prior correspond period. Importantly, subscription revenue rose 200% to $5.7 million.

At the end of the period the company had achieved annualised recurring revenue (ARR) of $22.9 million, which was an increase of 232% from a year earlier.

However, due largely to a large jump in operating expenses to $25 million, the company ultimately posted a loss after tax of $22.8 million. This left LiveTiles with a cash balance of $22.4 million.

The good news is that this cash balance appears to be more than sufficient to fund its working capital in the second half. This is because management expects operating expenses to be significantly lower due to the normalisation of expenses relating to sales and marketing services and cost savings from several non-customer facing staff reductions.

In addition to this, some of the funds raised for the acquisition of Denmark-based workplace software business Wizdom earlier this month are being allocated to working capital.

Whether that will be enough to see it through FY 2020 is hard to say at this stage, though.

But one thing that is clear is that management believes that LiveTiles is destined to deliver stellar sales growth over the next two and a half years.

Driven by its investment in sales and marketing, the recent launch of its AI products, co-marketing initiatives with Microsoft, and the increasing momentum of the N3 partnership, management aims to organically grow its ARR from $30.9 million as at December 31 to at least $100 million by June 30 2021. This is six months ahead of its original schedule.

Should you invest?

Whilst I do have concerns that LiveTiles may need another capital raising in FY 2020, I still feel it could be a good investment for investors looking for high risk/high reward options.

But if it's too risky for your tastes, then I would suggest you take a look at fellow tech shares Appen Ltd (ASX: APX) and Bravura Solutions Ltd (ASX: BVS).

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Appen Ltd and Bravura Solutions Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Share Gainers

3 ASX All Ords shares up 50%+ in March

These ASX shares have been on fire this month. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Share Gainers

Why Mesoblast, Patriot Battery Metals, Sigma, and Zip shares are pushing higher

These shares are having a good session on hump day. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Consumer Staples & Discretionary Shares

If you'd put $20,000 in this ASX retail stock at the start of 2023, you'd have $134,000 now

This online retailer has executed a remarkable turnaround for its investors.

Read more »

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

It was back to earth for ASX shares this Tuesday.

Read more »

Two happy scientists analysing test results.
Healthcare Shares

Mesoblast share price rockets 36% on breaking FDA news

ASX investors are sending the Mesoblast share price soaring following promising FDA news.

Read more »