The ELMO Software Ltd (ASX: ELO) share price surged on open after the company announced an upbeat first-quarter trading update.
At the time of writing, the cloud-based human resources and payroll software company's shares are up 8.49% to $5.11.
ELMO share price jumps on well-grounded growth in Q1 FY22
ELMO reported strong growth across key financial metrics for the first quarter of FY22. Some highlights include:
- Annualised recurring revenue (ARR) up 61% against the prior corresponding period (pcp) to $88.5 million;
- Revenue rose 52% to $20.7 million;
- Cash receipts increased 78% to $27.7 million; and
- Cash balance of $75.7 million.
ELMO's mid-market business, which focuses on organisations with 50 to 2,000 employees, was the main driver of growth in the quarter.
Mid-market ARR rose 43% to $78.4 million via a combination of organic and acquisition-based growth. Organic growth for mid-market across the last 12 months was 28%, demonstrating an acceleration in ARR growth and the return towards pre-COVID growth rates.
Elsewhere, ELMO's small business segment 'Breathe' enjoyed 55% growth over the past 12 months. The company said this was driven by the onboarding of new customers and cross-selling of new modules.
In the first quarter of FY22, ELMO released two new modules, Experiences and COVIDsecure. Experiences enables employers to manage the employee lifecycle using an easy-to-use journey builder to increase engagement and reduce manual overheads. COVIDsecure enables businesses to record, monitor and report on their employees' COVID vaccination and test statuses.
Management commentary
CEO and co-founder Danny Lessem was pleased with the performance driving the ELMO share price today, saying "the majority of the growth [was] organic".
The mid‐market business performance continues to return towards pre‐COVID levels with growth accelerating. The Breathe small business segment continues to generate high levels of growth as small businesses rapidly automate people processes.
Lessem provided some encouraging comments on the company's outlook, saying:
Finally, we have strong momentum coming into Q2 with a positive macroeconomic backdrop and with small and medium-sized businesses continuing to adopt cloud‐based solutions to manage a flexible workforce
ELMO share price still down 20% year-to-date
Despite the strong move up this morning, the ELMO share price remains well in negative territory, down around 20% in 2021. It is also down more than 8% over the last 12 months.
