The LiveTiles (ASX:LVT) share price is falling today. Here’s why.

The LiveTiles Ltd (ASX: LVT) share price has fallen 3.8% today despite the release of a positive first quarter update to the market.

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The Livetiles Ltd (ASX: LVT) share price is falling today despite the release of a positive first quarter update to the market.

Although, the ASX market is currently in retreat following heavy Wall Street losses overnight, the software company shares haven’t fared well. At the time of writing, the LiveTiles share price has fallen 3.8% to 25 cents.

Let’s take a look at the company’s performance for the last 3 months and what that means for the Livetiles share price.

Accelerated growth

For the quarter ending 30 September, LiveTiles reported a record result in cash receipts and accelerated growth.

Annualised recurring revenue (ARR) increased to $57.1 million, up 33% over the prior corresponding period (pcp). On a constant currency basis, ARR grew to $61.7 million, a jump of 44% over the pcp and 227% in the last 2 years.

Customer cash receipts also lifted to $12 million, up 41% over Q1 FY19. The strong result representing a fourth consecutive record quarter. This was underpinned by a surge in both direct and partner sales channels, despite the COVID-19 environment.

In addition, the compound annual growth rate (CAGR) of the average ARR per customer soared to $55,303. This reflected a 23% increase on the prior period and 9-fold jump in the last 5 years.

Net operating cash flow improved over 90% year-on-year, however a $800,000 loss was recorded.

LiveTiles said it was focusing on reducing its cash burn rate, and reconfirmed it would not seek to raise further capital.

The company noted it has a robust pipeline growth in the current quarter as it has refreshed its product portfolio. New contract wins include a high-profile global apparel retailer in the United States, and a consulting agency in France.

LiveTiles closed the quarter with a healthy cash balance of $34.6 million, enough to fund the business for the next 3 years.

COVID-19 response

As the COVID-19 impact is now better understood, the company is starting to see a return of confidence in buying levels.

Europe and the United States have rebounded, with its software relating to employee communications solutions, up 80% over the prior quarter.

In the last 6 months, investments have been made into product research and development to aim to capture new customers. Two new products are due to be released to the market, which will help executive teams in a post-COVID environment.

What did management say?

Commenting on the result, LiveTiles co-founder and CEO Karl Redenbach said:

We are pleased with our overall Q1 results, particularly when combined with our ongoing cost-discipline after reducing operating expenditures to preserve our balance sheet in Q4. Our annualised recurring revenue (ARR) has risen to $61.7 million on a constant currency basis, which is up 44% since last year and 227% in two years.

 As announced to the market on 23 October, Mr Redenbach said LiveTiles also secured its largest ever LiveTiles Intranet deal in Q1, a multi-year, multi-million-dollar deal with a major US apparel retailer:

The recognition from Gartner as one of the largest vendors by total deployments and revenue couldn’t underline LiveTiles’ position as an industry leader any more clearly.

Our sales pipeline continues to show accelerated growth from both direct and partner sales channels as companies around the world look to implement COVID-19 re-opening strategies by embracing digital workplace solutions.

We’re confident LiveTiles products will continue to gain traction and our growth will continue to accelerate with it.

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Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of LIVETILES FPO. The Motley Fool Australia has recommended LIVETILES FPO. 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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