This ASX tech share withstood Thursday's selloff to leap 11%. Here's why

This tech share sailed above a sea of red yesterday.

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Key points

  • The LiveTiles share price surged 11% yesterday as the tech sector – and the broader market – tumbled 
  • The tech stock's gains followed the release of its earnings for the first half of financial year 2022 
  • In its earnings, LiveTiles announced it's recorded its first ever positive EBITDA  and NPAT result 

The LiveTiles Ltd (ASX: LVT) share price launched 10.96% yesterday despite the ASX tech sector's disastrous tumble.

The S&P/ASX All Technology Index (ASX: XTX) plunged 5.3% on Thursday while the S&P/ASX 200 Information Technology Index (ASX: XIJ) fell 6.4%. For context, the S&P/ASX 200 Index (ASX: XJO) fell 2.9% yesterday.

They're both recovering today, gaining 3.7% and 7.2% respectively, while the ASX 200 is down 0.01%.

Meanwhile, the LiveTiles share price is trading at 8.8 cents – 8.64% higher than it was at yesterday's close.

That brings its gains for the past 2 sessions to an impressive 20.54%.

Let's take a look at what's been driving the tech company's stock higher lately.

What's been boosting this ASX tech company's share price?

The LiveTiles share price took off yesterday on the back of the company's earnings for the first half of financial year 2022.

For those not familiar with LiveTiles, it provides software for workplaces, allowing employee collaborations and communications.

LiveTiles' stock surges on maiden profit

Over the first half, LiveTiles grew its contracted licence base by 59% to $2.7 million.

That saw it boosting its revenue while maintaining costs at $26.4 million – a 3% increase.

Additionally, its customer receipts improved 18% to $30.1 million. Its subscription revenues also surged 45% through upselling and cross-selling.

Though, LiveTiles' software related services revenue fell 5% due to fewer complex custom intranet deployments.

At the end of the half, the ASX tech company had $17.6 million of cash and $4 million of undrawn debt facilities.

What else happened in the half?

The first half was a busy period for LiveTiles and its share price.

The company took a 19.9% interest in Australian cognitive artificial intelligence (AI) development company, BrainPac for $900,000.

It also announced an agreement to acquire Portuguese digital workplace software company, BindTurning over a 24-month period. An initial purchase of a 19.99% stake in the company will cost LiveTiles US$540,000.

LiveTiles will fork out another US$9.46 million for the remaining 80.01% of BindTurning if the Portuguese company reaches an annual reoccurring revenue milestone in the 24-month period.

Additionally, a partnership that will see LiveTiles purchasing a 19.97% stake in My Net Zero, was agreed to in December. The stake will cost the company $985,000.

The partnership will see LiveTiles' customers able to build a scope 4 emissions net-zero pledge, capture data about net zero plans, and communicate and collaborate with others undergoing a net-zero journey.

Finally, the company has recently purchased a 10% stake in Canberra's Hide & Seek – a digital design and UX consulting business.

The stake cost LiveTiles $250,000 and will see it increasing its footprint in the capital alongside an advisor to many government departments.

Despite a busy period for the ASX tech company, the LiveTiles share price fell 28% between the final close of financial year 2021 and 31 December 2021.

What did management say?

LiveTiles co-founder and CEO Karl Redenbach commented on the company's half year results, saying:

LiveTiles is pleased to have produced a strong half of revenue growth … The company's performance and results for this half are a credit to the focus and dedication of the entire LiveTiles team given the uncertain environment we have been operating in.

We have full confidence in our product and believe that the relaunch to our brand in 2021 and a renewed focus in sales and marketing will drive continued growth.

We have maintained a disciplined approach with expenses and will continue to look at strategic ways to enhance and innovate our product offering and access to new customer bases in prudent fashion.

What's next for the ASX tech share?

Livetiles hasn't given guidance for financial year 2022.

However, it did reiterate that it's focusing on cost management strategies and work towards breaking even and looking for more investment opportunities to further its growth.

The company expects the second half to bring strong revenue growth as employers look to improve workplaces post-pandemic.

LiveTiles share price snapshot

The last 2 sessions' gains haven't been enough to boost the LiveTiles share price into the year-to-date green.

The ASX tech share is still trading 12% lower than it was at the start of 2022. It has also fallen 64% since this time last year.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns 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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