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ASX tech star ELMO Software delivers strong growth in FY 2020 despite the pandemic

The ELMO Software Ltd (ASX: ELO) share price will be one to watch on Wednesday.

This follows the release of the growing software company’s fourth quarter and full year update this morning.

How did ELMO perform in FY 2020?

During the fourth quarter, the cloud-based HR and payroll software provider continued its growth trajectory despite the challenges associated with COVID-19.

ELMO reported cash collections of $16.4 million during the three months, which represented a 26.2% increase on the previous quarter and 8.4% on the prior corresponding period.

The company’s growth during the quarter was supported by the launch of ELMO Connect. This is a new communications module allowing businesses to instant message and initiate Zoom Conference calls from within its cloud-based platform.

This ultimately led to the company reporting record cash receipts of $57.5 million during the financial year, up 27.4% on FY 2019’s cash receipts.

At the end the financial year ELMO had a cash balance of $139.9 million with no debt. This cash balance was boosted by its successful $70 million placement institutional placement and $2.8 million share purchase plan.

Pleasingly, this strong balance sheet means ELMO remains well capitalised to continue investing in organic growth and executing strategic acquisitions.

In respect to the latter, ELMO’s CEO, Danny Lessem, revealed that the company has “an active acquisition pipeline.”

FY 2021 outlook.

Mr Lessem appears optimistic on the company’s prospects in FY 2021.

The chief executive commented: “ELMO’s focus remains on delivering organic growth supplemented with strategic acquisitions, continuing our growth trajectory into FY21 and beyond. We are well placed to benefit from the acceleration in the adoption of cloud-based business tools, including HR technology.”

Further details in respect to its earnings and its expectations for FY 2021 will be released with its full year results on 6 August.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia has recommended Elmo Software. 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.

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