LiveTiles (ASX:LVT) share price plunges as EBITDA grows 91% in FY21

LiveTiles shares are falling this morning after the digital workplace software company reported its FY21 earnings.

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The LiveTiles Ltd (ASX: LVT) share price is down 12% on Thursday as the software and technology company reported its FY21 earnings.

Let's investigate further.

LiveTiles share price on watch after strong revenue and EBITDA growth

  • Total revenue growth of 5% year on year to $46.7 million.
  • Operating revenue increased by 19% to $45 million
  • Underlying EBITDA grew by $11.4 million, or 91%, to a loss of $1.1 million
  • Total contracted licenses growth of 48% year on year to 2.3 million
  • Mobile licences up 1,211% over the year prior
  • Cash receipts expanded by 26% to $51.8 million, with net operating outflows improving by 71%

What happened in FY21 for LiveTiles?

In a potential positive for the LiveTiles share price, the company grew total revenue and operating revenue by 5% and 19% respectively year on year.

LiveTiles explained this comes from growth "across both new and existing customers via upsell and product loss sells". Its software subscription business also saw 19% growth and software sales revenue was also up 20% on the year prior.

As such, gross profit climbed 16% to around $33 million in FY21 although the company's gross margin decreased by 16 basis points to 73%. LiveTiles said this was due to "platform maintenance resources and higher licensing costs", alongside increasing its customer support.

Underlying EBITDA saw an $11.4 million improvement and grew 91% year over year. This was coupled with operating expenditure of $41 million that was a saving of 22% or $11.4 million on FY22.

Consequently, the company's net profit after tax (NPAT) also improved by about $1.5 million to a statutory loss of $30.1 million.

LiveTiles also recorded its highest ever cash receipts of $51.8 million which is 26% higher year on year. The company explained the result means cash receipts have grown at a compound annual growth rate (CAGR) of 96% over the last 3 years.

Finally, the company left the year with $16.8 million in cash on its balance sheet, which it says is sufficient "to manage ongoing operations with growing cash receipts and disciplined cost management".

What did management say?

LiveTiles Co-Founder and CEO Karl Redenbach said:

We are pleased with LiveTiles FY21 results in a year that was not without its challenges; operationally, and on a global scale due to the ongoing uncertainty with COVID-19. Despite this, we have continued to make significant improvements across the business during the year, growing our contracted licence base +48% to 2.3m, delivering 19% growth in operating revenues to $45m, reducing our operating expenditures and have now put the company
on a path to profitability with Underlying EBITDA at $(1.1)m, a 91% improvement from 2020.

Regarding LiveTiles' strategic review, Redenbach added:

During FY21, the Company commissioned an independent Strategic Review, which was presented to the Board in Q4, and we are pleased to be able to share the review findings; as well as the new Company Strategy, the LiveTiles "Premiership Plan". A detailed outline of the review and the strategic plan is provided in the Director's Report of the Appendix 4E 2021 Financial Statement.

What's next for LiveTiles?

Due to uncertainties surrounding the COVID-19 pandemic, LiveTiles opted against providing guidance for FY22.

The company did "reiterate its continued focus on disciplined cost management strategies" amid other measures.

These measures include "reshaping the go-to-market model" whilst reviewing the company's product portfolio.

In addition, LiveTiles also expects "strong medium to long-term growth potential" which, it states, is driven by "increased remote working and the employee experience solutions" post-pandemic.

At the time of writing, the LiveTiles shares are trading at 15 cents, down 11.76%. The LiveTiles share price has faced challenges this year to date, posting a loss of 29% since January 1. This extends the previous 12 months' slip of 26%.

Both of these results are well behind the S&P/ASX 200 index (ASX: XJO)'s return of about 25% over the past year.

The author Zach Bristow has no positions in any of the stocks mentioned. Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended LIVETILES FPO. The Motley Fool Australia has recommended LIVETILES FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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