So let's talk about two All Ords shares that have just smashed new 52-week highs this session.

2 ASX All Ords shares that just hit a new 52-week high

Mesoblast Ltd (ASX: MSB)

Mesoblast shares have had a very interesting day. The All Ords healthcare share gave an important update to investors this morning just before market open.

As we covered earlier today, the United States Food and Drug Administration (FDA) has given a Regenerative Medicine Advanced Therapy designation to Mesoblast's rexlemestrocel-L. This treatment targets chronic back pain.

Mesoblast stated that it is now looking forward to marketing its product to US markets.

On this news, the Meobalast share price rocketed out of the gate this morning, climbing as high as $1.33 a share – the company's new 52-week high. However, investors seem to have gotten cold feet as the day has progressed, with Mesoblast shares now down by 2.93% at $1.16 each.

Elmo Software Ltd (ASX: ELO)

All Ords technology share Elmo is another interesting company to watch this Thursday. It's actually the company's last day of trading on the ASX after the Supreme Court of New South Wales gave the green light for Cookie Monster AcquireCo Pty Ltd, an entity of K1 Investment management, to acquire Elmo in full (there seems to be some Sesame Street fans involved here).

After today's session, Elmo shares will leave the ASX. All Ords investors are to receive $4.85 in cash for every Elmo share held. Otherwise, if investors elected to receive scrip instead of cash, they will be issued with shares in Cookie Monster Holdings.

It appears the markets are sending Elmo shares out with a bang, with the company hitting $4.85 per share just after market open this morning, which is Elmo's new 52-week high. The shares are hovering just below that at $4.84 at the time of writing, up by 0.21% so far today:

The post 2 ASX All Ords shares smashing new 52-week highs on Thursday appeared first on The Motley Fool Australia.

But we all know every portfolio has ASX shares that have broken the hearts of owners. It's just no one talks about them.

It is perfectly understandable to be reluctant to trust a business again after it has burnt you or other investors badly. It's just human nature.

However, investors need to remember that ASX shares have no memory. A stock doesn't care that it was once $10 but now $2. 

The only thing that matters when considering equities to buy is what the future prospect of the business is at that point in time. History means nothing.

So if you take on this rational mindset, there is one technology stock that's been an absolute dog the past couple of years that you may consider buying now:

'We expect the share price to improve'

Appen Ltd (ASX: APX) used to be a darling of growth investors but has caused nothing but grey hairs since the COVID-19 pandemic hit.

The stock has lost an eye-watering 93% of its value since August 2020, and 75% year to date.

"The share price of this artificial intelligence data provider has fallen from $40.08 on August 17, 2020 to trade at $2.65 on November 24, 2022," Red Leaf Securities chief John Athanasiou told The Bull.

However, Athanasiou feels like it's time to now forgive Appen for past sins.

"We expect the share price to improve as money flows back to the domestic technology sector," he said.

"The company expects fiscal year 2022 revenue to range between US$375 million and US$395 million."

Discounted for a takeover?

The really exciting prospect for Athanasiou, though, is seeing other listed Australian tech companies like ELMO Software Ltd (ASX: ELO) and Nitro Software Ltd (ASX: NTO) receive tempting takeover bids from private investors.

"There's been corporate activity in the domestic technology sector, as a weaker Australian dollar makes companies more attractive to international private equity firms," he said.

"Appen, at this price, could be a target."

Appen's major clients are big US tech firms and after a torrid year, they themselves could be looking forward to better conditions next year.

And this could also provide a tailwind for Appen, reported The Motley Fool's Bernd Struben last week.

The post It's about time you buy this ASX tech share that's beaten down 75% this year: expert appeared first on The Motley Fool Australia.

Four ASX shares that are climbing more than most today are listed below. Here's why they are rising:

Australian Strategic Matrls (Hldngs) Ltd (ASX: ASM)

The Australian Strategic Materials share price is up 16% to $2.41. This follows the release of the company's quarterly update this morning. That update reminded investors that commissioning for neodymium praseodymium (NdPr) metal and alloy products drew closer to completion this quarter, with positive results achieved. The company also successfully produced neodymium iron boron (NdFeB) strip metal alloy while commissioning the strip caster.

Bega Cheese Ltd (ASX: BGA)

The Bega Cheese share price is up 4.5% to $3.39. This is despite the diversified food company announcing the exit of its CEO Paul van Heerwaarden at its annual general meeting. He will step down in the coming months and be replaced by its COO, Pete Findlay. In addition, at the meeting, the company re-affirmed its FY 2023 guidance for EBITDA in the range of $160 million to $190 million.

Costa Group Holdings Ltd (ASX: CGC)

The Costa share price is up 11% to $2.48. Investors have been buying this horticulture company's shares after private equity firm Paine Schwartz Partners acquired a 13.78% stake. Paine, which used to own Costa, paid an average of approximately $2.51 per share, which is a 12.5% premium to the Costa share price at yesterday's close.

Elmo Software Ltd (ASX: ELO)

The Elmo share price has surged 40% higher to $4.63. This follows news that the HR and payroll platform provider is recommending a takeover offer from K1 Investment Management. The Los Angeles-based investment firm has tabled a $4.85 cash per share offer, which represents a 100% premium to the Elmo share price prior to the company first revealing takeover interest earlier this month.

The post Why Australian Strategic Materials, Bega Cheese, Costa, and Elmo shares are racing higher appeared first on The Motley Fool Australia.

At the time of writing, the HR and payroll platform provider's shares are up 40% to $4.62.

Why is the Elmo share price rocketing higher?

Investors have been bidding the Elmo share price higher today after the company announced the receipt of a recommendable takeover offer.

According to the release, Elmo has entered in a scheme implementation deed (SID) with K1 Investment Management. This SID is proposing a scheme of arrangement that will see Elmo shareholders receive $4.85 cash per share.

Management notes that this represents an "attractive" premium of 100% to the last trading price of Elmo shares on 12 October. This is the final trading day prior to the company announcing that it had received approaches expressing takeover interest.

Based on this offer price, it values Elmo's equity at approximately $486 million, which is the equivalent of 4.5x annualised recurring revenue (ARR).

Shareholder recommendation

The Elmo independent board committee (IBC) unanimously recommends that shareholders vote in favour of the scheme. This is in the absence of a superior proposal and subject to the independent expert concluding that it is in the best interests of shareholders.

The company also advised that two of its largest shareholders, which hold or control 23.4% of its shares outstanding, have confirmed that they intend to vote in favour of the scheme, subject to the same conditions listed above.

The transaction will be subject to Foreign Investment Review Board (FIRB) approval and other customary conditions.

Elmo's chairman, Barry Lewin, commented:

The ELMO Independent Board Committee has carefully considered the proposal and believes the offer price of $4.85 cash per share represents compelling value for ELMO shareholders. Whilst ELMO has achieved considerable success to date in Australia/New Zealand and the United Kingdom, the IBC has balanced this against the macroeconomic and execution risks in achieving future plans and has unanimously concluded that the Scheme is a compelling option which realises attractive value for our shareholders.

This won't be K1 Investment Management's first Australian tech investment. The Los Angeles-based investment firm has previously invested in the likes of simPRO, Cyara, AroFlo, and RosterLive.

The post Why is the Elmo share price rocketing 40%? appeared first on The Motley Fool Australia.

The broader S&P/ASX All Ordinaries Index (ASX: XAO) finished 1.78% higher today and remains down 11% in 2022 so far.

So, you see the potential opportunity here.

ASX tech shares have been sold off much more than ASX shares overall in 2022. This is because rising inflation and interest rates have made technology investors nervous.

The Aussie tech market is pretty young compared to that of the United States. Young companies tend to be small-cap shares with market capitalisations of between a few hundred million and about $2 billion.

As they're in their growth phase, most of them carry a fair bit of debt (which gets much more expensive as rates rise, eating into profits). Many of them weren't profitable before interest rates rose, anyway.

So, not so attractive to investors when inflation is eating into their returns.

But that's short-term thinking. Here at the Fool, we advocate buying and holding for the long term.

Nick Sladen of LSN Capital Partners is thinking longer term, too.

Sladen writes on Livewire that "the current drawdown is presenting opportunities to invest in high-quality small cap businesses, with long runways for growth at valuations that are rarely seen".  

ASX small-caps 'strongest after major drawdowns'

Sladen says ASX small-cap shares are the go for better returns during the eventual recovery:

… while all cycles are not the same in terms of duration and performance, history tells us that small caps returns are the strongest after major drawdowns, with liquidity and valuations a major driver of this.

Valuations in small caps overall are now at levels only seen during previous periods of market turmoil (GFC, Euro Debt crisis) and for those companies that can deliver earnings growth, this will provide investors with a platform for strong returns over the medium to long term.

Obviously, the global economy has a way to go before inflation is under control and rate hikes stop. The share market is going to be volatile while this plays out.

But Sladen says analysts will eventually turn their attention to "which companies are successfully navigating the headwinds".

They'll also look at which ASX shares have been hammered most and now present attractive buying. In other words, ASX tech shares.

4 ASX tech shares to benefit

Sladen said the LSN Emerging Companies Fund has been taking advantage of the market sell-off.

There are four ASX tech shares that Sladen and his team like at the moment. They are Hub24 Ltd (ASX: HUB), Netwealth Group Ltd (ASX: NWL), ELMO Software Ltd (ASX: ELO), and Life360 Inc (ASX: 360).

He explained:

We consider the best return opportunities are in those companies that operate in structurally growing industries who can deliver earnings growth despite the difficult economic backdrop.

The specialist platform providers (HUB24 (ASX: HUB)/Netwealth (ASX: NWL)) continue to grow as they benefit from market share gains, providing annuity-style revenue, high margins, and strong cash flow. The industry tailwinds support a clear trajectory for growth over the long term. 

Life360 (ASX: 360) is the global leader in family safety services with an addressable market of well over $12b. With a growing subscriber base and strong pricing power, the business is well-positioned to scale into profitability in the period ahead. 

Elmo Software (ASX: ELO) is the largest domestic HR tech company which has compounded four-year organic annualised recurring revenue [ARR] of +38%. The company is on the cusp of profitability and has now attracted takeover interest.

The post 4 ASX tech shares with 'long runways for growth at valuations rarely seen': expert appeared first on The Motley Fool Australia.

Some posted gains of as much as 11%.

So, which ASX All Ords shares outperformed and what drove them to defy the market's downturn? Keep reading to find out.

These ASX All Ords shares defied today's downturn

The first ASX All Ords share posting a notable gain on Monday was Electro Optic Systems Holdings Ltd (ASX: EOS). The company's stock soared 5.94% today to close at 53.5 cents.

Interestingly, there was no price-sensitive news from Electro Optic Systems on Monday. However, the market was informed of an S&P/ASX 200 Index (ASX: XJO) giant's move to up its stake in the tech company.

Washington H Soul Pattinson and Co Ltd (ASX: SOL) has increased its holding in the company to 9.95%, according to an ASX release. The ASX 200 giant previously boasted 6.21% of the company's voting power.

Fellow All Ords share Elmo Software Ltd (ASX: ELO) also posted a 1.67% gain on Monday. The cloud-based human resources and payroll software provider's stock closed the day at $3.05.

Once again, there was no news from the company on Monday. However, only last week, Elmo revealed it had been approached by a party interested in striking an acquisition deal.

Finally, shares in ASX All Ords memory technology developer Weebit Nano Ltd (ASX: WBT) soared 11.32% to close Monday at $2.36.

As seems to be the pattern, there's been no word to explain its upwards trajectory. Today's gain sees it trading at its highest point since mid-September.

The post It wasn't all bad news for ASX All Ords shares on Monday. Here are some big winners appeared first on The Motley Fool Australia.

Four ASX shares that have climbed more than most today are listed below. Here's why they are pushing higher:

Atlantic Lithium Ltd (ASX: A11)

The Atlantic Lithium share price is up 2.5% to 61.5 cents. Investors have been buying this lithium developer's shares after it announced the submission of the mining licence application for the Ewoyaa Lithium Mine in Ghana. If everything goes to plan, Ewoyaa will be the country's first lithium mine.

ELMO Software Ltd (ASX: ELO)

The ELMO share price is up 29% to $3.13. This follows confirmation that the human resources and payroll software company is in takeover talks. ELMO notes that it has received approaches expressing interest in acquiring the company from various parties, including Accel-KKR. However, no agreement has been reached in relation to any transaction.

Qantas Airways Limited (ASX: QAN)

The Qantas share price is up 10% to $5.68. The catalyst for this was the release of a market update this morning. That update reveals that Qantas expects to report an underlying profit before tax of $1.2 billion to $1.3 billion for the first half of FY 2023. Qantas also expects its net debt to fall to between $3.2 billion and $3.4 billion at 31 December, which is below the bottom of the target range of $3.9 billion.

Westpac Banking Corp (ASX: WBC)

The Westpac share price is up 3% to $23.08. This morning analysts at Goldman Sachs reiterated their bullish view on this banking giant following the release of a rival's full year results. It said: "We would particularly highlight our Buy recommendation (on CL) on WBC, whose year-to-date consensus NIM upgrades have significantly lagged peers."

The post Why Atlantic Lithium, Elmo, Qantas, and Westpac shares are pushing higher appeared first on The Motley Fool Australia.

Shares in the provider of cloud-based human resources and payroll software were halted for the first hour of trading today, but launched skyward when trading resumed just after 11am AEDT.

This follows on speculations surrounding a potential takeover offer of the ASX tech share.

What's all this about a potential acquisition?

The Elmo share price was frozen in early trade today at the company's request.

The company requested the pause due to recent media speculation regarding "possible corporate activity".

The ASX tech share hit the boards again after it released a statement regarding those speculations.

According to the release, Elmo "confirms that it has received approaches expressing interest in acquiring the company from various parties, including Accel-KKR".

Elmo said it's in discussions "with selected parties in the context of maximising shareholder value". Discussions which look to be driving the Elmo share price sharply higher today.

However, the company noted:

No agreement has been reached in relation to any transaction, and there is no certainty that any proposal received will result in a binding offer or that any such offer would be recommended to shareholders.

UBS and Arnold Bloch Leibler are advising the company regarding any proposals it receives.

Elmo share price snapshot

Despite today's surge, the Elmo share price has underperformed this year, down 32.7% since the opening bell on 4 January. That compares to a year-to-date loss of 13.6% posted by the All Ordinaries Index (ASX: XAO).

October, however, has presented a markedly different picture.

While the All Ordinaries is up 3% since the first day of trading this month, the Elmo share price has gained a whopping 41%.

In its 2022 financial year results, the company reported a 32% year-on-year increase in revenue. Though it still notched up a steep $79 million net loss for the year.

The post Elmo share price explodes 29% on possible takeover appeared first on The Motley Fool Australia.

The 25 basis point hike was smaller than many experts expected, so growth and technology stocks have made hay the last couple of days.

But it's still a volatile world. It's important to buy growth shares with suitable attributes.

To assist, one Wilson Asset Management expert recently named a pair of tech stocks he would pounce on right now:

'A much higher quality business' than we thought

Wilson equities dealer Will Thompson was "surprised" by ELMO Software Ltd (ASX: ELO) over reporting season.

"They're proving that they're able to increase that ARR [annual recurring revenue] over the past year," he said in a Wilson video.

"Costs [are] now at a level where they don't need to… raise money anymore. It's starting to look like a much higher quality business than we previously thought."

Elmo is a buy for Thompson.

According to CMC Markets, five out of seven analysts currently agree with him that it's a buy.

Despite a strong rally since Tuesday, the Elmo share price has nevertheless halved since the start of 2022.

Ready to pick up some bargains

Thompson is a fan of the people who run billing software maker Hansen Technologies Limited (ASX: HSN).

"It's got one of the best management teams — high quality. They've been there for 30 years," he said.

"Balance sheet's really strong. They've reported good earnings."

Despite this, the Hansen share price has plunged more than 23% since 5 August.

"It's been a frustrating period," said Thompson.

"They're looking to do a bit of M and A [mergers and acquisitions] but just the vendors [are keeping] valuations still probably at the end of 2020 and 2021 levels where they were eye-wateringly high."

But this stalemate seems to be resolving.

"Hopefully they'll be able to make… a few transactions in the second half of the year and into 2023."

Elvest Co portfolio manager Adrian Ezquerro told The Motley Fool last month that Hansen's a buy for an investor willing to be patient.

"We remain pretty optimistic on Hansen's prospects," he said.

"We think in this market maybe vendor expectations might be becoming a little more realistic and the business is on a circa 7% free cash flow."

The post 'High quality': Analyst names 2 ASX tech shares to buy right now appeared first on The Motley Fool Australia.

Not every technology business is automatically worth owning just because it operates in a certain sector.

However, I do think there are some attractive opportunities in that sector because of how quickly tech businesses can grow thanks to the intangible nature of what they offer customers or clients. ASX tech shares also have the potential to achieve good profit margins because of how cheaply software can be provided.

With that in mind, after seeing their reports, I really like the look of these two names:

Elmo Software Ltd (ASX: ELO)

This business provides cloud-based solutions for small businesses and mid-market organisations that help them manage people, processes, pay and expenses. It operates in Australia, New Zealand and the UK.

One of the attractive features of its business model is that it operates as a software as a service (SaaS) company, it receives recurring subscription revenue. This is helpful in several ways, including the visibility of cash flow and keeping clients onto its systems.

The FY22 result included plenty of growth. Revenue rose 32% to $91.4 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) went up from $6.5 million to $7.1 million. Annualised recurring revenue (ARR) rose 29% to $108.2 million. ELMO is expecting ARR to grow organically between 24% to 29% to a range of $134 million to $140 million.

It has a high gross profit margin of around 90% and the business seems like it's scalable, meaning that its other profit margins can rise as it gets larger. The ASX tech share is expecting to be cash flow breakeven in FY23.

I think the business has a good opportunity of profitable growth in the coming years, particularly as it grows geographically, adds new modules and improves its margins.

Bailador Technology Investments Ltd (ASX: BTI)

In my opinion, this is one of the most interesting ASX tech shares on the stock exchange.

Bailador describes itself as a growth capital fund focused on the information technology sector. It invests in private tech companies at the 'expansion stage'.

There are a number of characteristics that the Bailador investment team looks for: run by the founders, two to six years in operation, international revenue generation, "huge" market opportunity and the ability to generate repeat revenue.

It wants to have eight to twelve positions in its portfolio. Bailador currently has eight names in the portfolio, those are: Siteminder Ltd (ASX: SDR), Straker Translations Ltd (ASX: STG), InstantScripts, Rezdy, Access Telehealth, Nosto, Mosh and Brosa.

Three of those positions are worth $10 million in the ASX tech share's portfolio.

Siteminder, the biggest investment position in the portfolio, is a "world leader in hotel channel management and distribution solutions for online bookings."

InstantScripts is a "digital platform enabling convenient access to high-quality doctor care and routine prescription medication."

Rezdy is an online channel manager and booking software platform for tours and activities.

After selling its whole stakes in Instaclustr and SMI for around $140 million, it now has a large cash pile. I'm excited by what Bailador might do with this cash, aside from simply paying dividends.

Paul Wilson, the co-founder and managing partner of Bailador, said:

There remain a significant number of very high-quality expansion stage technology companies in Australia. Capital market movements don't change that. The difference is that there is currently less capital chasing those companies, and valuations are more reasonable. This environment gives us the opportunity to get access to those quality companies at reasonable valuations, and we are well positioned to do so.

At 31 July 2022, the Bailador net tangible assets (NTA) per share was $1.94. The Bailador share price is at a 20% discount to this, but share prices are changing all the time.

The post 2 ASX tech shares I think are top buys after reporting appeared first on The Motley Fool Australia.

The ASX technology stock surged 5.6% to a $3 high in early trade on Wednesday and has since retreated to now trade at $2.95, up 3.8%.

What did the company report?

• Revenue was up 32% to hit $91.4 million
• Annualised recurring revenue was up 29% compared to 30 June 2021
• Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) hit $7.1 million, up from $600,000
• Net loss after tax attributable to equity owners was up 110% at $79 million

What else happened in FY22?

Aside from the launch of new modules for its software suite, the major corporate event for the human resources software provider was speculation that it was to be acquired.

In June, Elmo Software confirmed that it "conducted exploratory discussions" about a non-binding takeover proposal priced at $6.10 per share.

Those negotiations concluded without action, according to the Elmo board.

What did management say?

Elmo Software chief executive Danny Lessem said:

I'm extremely pleased with ELMO's FY22 results. Our group organic growth accelerated as small and medium sized businesses continue to adopt cloud-based solutions to manage an increasingly flexible or hybrid workforce.

We have seen an improvement in our operating metrics across both mid-market and small business segments. A reduction in churn and an improved GP margin resulted in a substantial increase in the lifetime value of our customer base to $1.1 billion. This is a 75% increase on FY21.

What's next?

Unlike many ASX companies this reporting season, Elmo Software has provided some guidance for the 2023 financial year:

• Annualised recurring revenue to grow 24% to 29% ($134 million to $140 million)
• Revenue to grow 25% to 31% ($114 million to $120 million)
• EBITDA to approximately triple to a range of $20 million to $25 million
• Operating cash flow to end up between negative $2 million and positive $2 million

According to Lessem, "increased operational efficiencies" from scale would see the business reach breakeven for operational cash flow during the current financial year.

"Our strong brand in the markets we operate, our many years of investment into our product and the increased adoption of people management software, have ensured that we have strong momentum going into FY23," he said.

"Despite the broader macroeconomic environment, this momentum is supported by our sales pipeline which underpins our FY23 guidance."

Elmo share price snapshot

Like most technology stocks, the Elmo share price has been on a wild ride in 2022.

From November to July, it lost more than 60%. It has since rallied to be 34.7% down year-to-date.

The market capitalisation sits at around $263 million.

The post Elmo share price surges after 32% revenue boost appeared first on The Motley Fool Australia.

The S&P/ASX All Technology Index (ASX: XTX) has plunged 28% year-to-date, but the smaller companies have seen their valuations shrink even more.

One such business is human resources and payroll software provider Elmo Software Ltd (ASX: ELO).

The stock has lost almost 40% so far this year, and it has halved in value if you go back to November.

In fact, it has never been able to touch its pre-COVID high.

"Software service provider Elmo Software is a $244 million software service provider whose numbers look to be improving," said Shaw and Partners portfolio manager James Gerrish in a Market Matters Q&A.

"But the market's clearly not convinced as the stock [is] struggling to regain half of this year's losses, let [alone] the drop since early 2020."

Investment phase over, break-even coming soon

Gerrish is right in that Elmo's finances are on the way up.

Just last week, the software company provided an update that saw revenue up 30% for the 2022 financial year and positive guidance for 2023.

And importantly during this climate of rising interest rates, Elmo management declared it would reach break-even for its operational cash flow during the current financial year.

"The investment phase has been materially completed and the existing cost base will be leveraged through FY23," said chief executive Danny Lessem.

"We are now experiencing the benefits of scale as a result of the many years of growth and investment into the product and team."

The stock price did enjoy a nice burst upwards of 17% that morning.

Going for cheap compared to rivals

However, in the current volatile climate, it's difficult working out how much further the market would punish growth and tech stocks.

"As we've seen over the last week with the buy now, pay later space, when these out[-of-]favour stocks bounce it can be hard and sharp," said Gerrish.

"But picking exactly how far they will ultimately fall is more guesswork than science — but it does look like ELO is looking for a low."

His analyst Jules Cooper reiterated the buy recommendation from the Market Matters team. He put a price target of around $7.60, which is a juicy 171% gain from the current level.

"Elmo continues to represent good value trading on an FY22 EV/revenue multiple of 2.8x vs US peers such as Paycom Software Inc (NYSE: PAYC) and Paycor HCM Inc (NASDAQ: PYCR) trading on multiples of 14.6x (Dec 2022) and 10.1x (Jun 2022) respectively."

Cooper's peers broadly agree. Five out of six analysts surveyed on CMC Markets currently rate the stock as a buy.

The post Buy this ASX tech share with 170% upside: expert appeared first on The Motley Fool Australia.

This follows the software‐as‐a‐service (SaaS) company releasing its preliminary unaudited results for FY22 and positive guidance for FY23.

The Elmo share price opened at $2.63 and is now $2.68, up 10.29%. In earlier trading, it reached $2.85.

Elmo share price up 17% on 'strong' ARR growth

The highlights are as follows:

• Revenue of $91.4 million, up 32% on the previous corresponding period (pcp)
• Annual recurring revenue (ARR) of $108.2 million, up 29% compared to 30 June 2021
• Cash receipts of $116.9 million, up 46% pcp
• Underlying EBITDA of $7.1 million, up $6.5 million pcp and above the top of the upgraded guidance range
• $47.9 million cash balance
• Total operating cash outflow of ($17.4 million), a 34% improvement pcp.

What else happened in FY22?

Elmo offers cloud‐based services to small and medium-sized businesses on an SaaS model to help them manage staff, processes, wages, and expenses.

In its statement, Elmo said the business was starting to 'reap the benefits of scale'.

This follows many years of investment and development not only in the product but also in the team. Elmo was established in 2022.

More small and medium-sized businesses are adopting cloud‐based technology to manage themselves. Platforms like Elmo are particularly relevant in today's age of more people working from home or on a contract basis. This is reflected in Elmo's ARR, which went above the $100 million milestone in FY22.

What did management say?

Commenting on the results, CEO Danny Lessem said:

We are now experiencing the benefits of scale as a result of the many years of growth and investment into the product and team.

The investment phase has been materially completed and the existing cost base will be leveraged through FY23. As a result, underlying EBITDA came in at positive $7.1 million, up $6.5 million pcp.

Our strong brand in the markets we operate, our many years of investment into our product and the increased adoption of people management software, have ensured that we have strong momentum going into FY23.

Despite the broader macroeconomic environment, this momentum is supported by our sales pipeline which underpins our FY23 guidance.

What's next?

Increased operational efficiencies mean Elmo now expects to reach operational cash flow breakeven in FY23.

Elmo's guidance for FY23 is:

• ARR of $134 million to $140 million with organic growth of 24% to 29%
• Operating cash flow breakeven
• EBITDA of $20 million to $25 million.

Elmo also released a business update today. In it, Elmo reports a compound annual growth rate (CAGR) for its ARR of 37% since FY18.

Elmo share price snapshot

The Elmo share price has fallen by 42% in the year-to-date. It hit a 52-week low in late June.

As an ASX tech share, Elmo has been hit hard by the market sell-off in 2022.

The S&P/ASX All Technology Index (ASX: XTX) is down 29% in the year to date.

The post Elmo share price soars on 30% revenue boost and optimistic FY23 guidance appeared first on The Motley Fool Australia.

In 2022, the ASX share market has been roughed up by worries about inflation, interest rate changes, supply chains, energy prices, and so on.

ASX growth shares have been particularly hit hard. However, there has been something of a recovery in recent days. For example, since 22 June, the Xero Limited (ASX: XRO) share price is up more than 9% and the Block Inc (ASX: SQ2) share price has risen 18%.

It's impossible to say whether we've seen the lowest point of these companies' falls, or if there are more declines to come.

But other tech businesses are hitting new lows, like these two:

ELMO Software Ltd (ASX: ELO)

The ELMO Software share price has fallen around 50% in 2022. It's down 7.38% late today, hitting a 52-week low.

ELMO provides cloud-based software for small and medium businesses to manage their people, processes, and pay. It's currently operating in Australia, the UK, and New Zealand.

It was only a couple of weeks ago that the company confirmed that it had conducted "exploratory discussions" regarding to a confidential, non-binding, indicative takeover proposal priced at $6.10 a share. However, those discussions have since concluded.

At the start of May 2022, the company gave an update for the third quarter of FY22, which showed revenue rose by 37% to $67.4 million. Annualised recurring revenue (ARR) increased 33% to $101.2 million and it generated $2 million of positive earnings before interest, tax, depreciation and amortisation (EBITDA), an increase of $3.2 million.

So, the All Ords ASX tech share is still generating growth, even if the ELMO share price is falling.

Atomos Ltd (ASX: AMS)

The Atomos share price is down around 3.72% in late trading. However, since the start of 2022, it has dropped around 80%, hitting a 52-week low today.

It describes itself as a global video technology company delivering "award-winning, simple to use monitor-recorder content creation products".

The company's products take images directly from the sensor of all major camera manufacturers, then enhances, records, and distributes them in high-quality formats for content creation via major video editing software programs. Atomos said its products provide a faster, higher-quality, and more affordable production system for content creators.

The All Ords ASX tech share gave a trading update at the start of May 2022 which said sales were slower than expected in the first four months of the 2022 calendar year because of a change in the company's marketing approach and lower promotional activity.

This approach was reportedly corrected in the middle of April 2022 and promotional activity was reinstated.

FY22 revenue is now expected to be between $80 million to $90 million, with the EBITDA margin expected to be between 6% to 8%. However, renewed and accelerated promotional activities may see FY22 guidance beaten.

The post These 2 ASX tech All Ords shares are hitting new 52-week lows today appeared first on The Motley Fool Australia.

I like a number of businesses in the sector. ASX tech shares often have the capability to achieve attractive profit margins because of the intangible nature of what they provide. It's easier and cheaper to digitally send software to a new client than to make a new car or a table.

The concerns about inflation and interest rates have given the market jitters. But I think these lower prices now mean investors can buy some really good investments at much more attractive prices. So, here are two of my ASX tech share ideas as potential bargains.

VanEck Video Gaming and Esports ETF (ASX: ESPO)

This is an exchange-traded fund (ETF) that gives investors access to a group of global video gaming businesses.

Gaming readers may recognise some of the names in the portfolio including: Tencent, Nvidia, Activision Blizzard, Netease, Nintendo, Advanced Micro Devices, Electronic Arts, Nexon, Bandai Namco, and Ubisoft.

This ETF is invested in businesses that are seeing pleasing growth. VanEck said that video gaming revenue had risen by an average of 12% per annum since 2015. E-sports revenue grew by an average of 28% per annum since 2015.

VanEck points out that e-sports has created new potential revenue streams from game publisher fees, media rights, merchandise, ticket sales, and advertising. The competitive video gaming audience is expected to reach 646 million people worldwide in 2023, driven partly by an increasing number of people on the internet.

I think the ESPO ETF is attractive for its revenue growth and the fact that it has fallen by 20% since the start of the year.

ELMO Software Ltd (ASX: ELO)

ELMO provides human resources and payroll software for small and medium businesses in Australia and the UK.

The business is rapidly scaling as shown by its latest quarterly update for the three months to 31 March 2022. This showed revenue rising by 37% to $67.4 million. Annualised recurring revenue (ARR) rose 33% to $101.2 million.

While the ELMO Software share price has dropped by more than 30% in 2022 to date, I think it has demonstrated a couple of positives recently. The FY22 third quarter showed that the business had swung to profit at the earnings before interest, tax, depreciation and amortisation (EBITDA) level. EBITDA rose $3.2 million year on year to $2 million.

The company also confirmed that it's expecting to cross the cash flow breakeven point in the second half of FY23. It also said that its ARR is expected to rise to between $107 million to $113 million by the end of FY22, representing growth of between 28% to 35% year on year.

The company continues to grow its client base and it's adding more modules for clients to use. This makes customers more valuable to ELMO Software and makes the software more useful to clients.

The post I think these 2 ASX tech shares are buys in May appeared first on The Motley Fool Australia.

Businesses that are growing but have been sold off could now be much more attractive in the long term.

These two ASX shares could be good value ideas:

Elmo Software Ltd (ASX: ELO)

Elmo describes itself as a cloud-based software provider for small businesses and mid-market organisations to manage people, processes, pay, and expenses. It operates in Australia and the UK.

How much cheaper is the business if you were to buy is now? It has dropped 28% over the past month and 32% in the 2022 calendar year to date.

However, the company continues to grow at a fast rate. In the third quarter of FY22, it revealed it made $67.4 million of revenue, which was up 37% to $67.4 million. Its annualised recurring revenue (ARR) growth implies more reported revenue in the next 12 months. Its ARR rose 33% to close at a record of $101.2 million.

Despite the business's heavy investment for growth, it is now generating a positive earnings before interest, tax, depreciation and amortisation (EBITDA). The third quarter EBITDA was $2 million, up $3.2 million year on year.

Management says the ASX share is focused on reaching its operating cash flow breakeven point and it's well-funded to achieve this goal. Cash receipts are growing quickly, but cash expenses are largely flat. Cash flow breakeven is expected to occur in the second half of FY23.

The broker Morgan Stanley currently rates the business as a buy, with a price target of $6.70. That implies that the Elmo share price could more than double over the next year.

Corporate Travel Management Ltd (ASX: CTD)

Corporate Travel Management is a company that helps businesses with their travel needs. It says its service and up to the minute information is a premium asset for its clients. The ASX share also says that its technology platform is critical to success with a global strategy and system architecture.

Despite the company regularly referring to recovery, the Corporate Travel share price is down by 14% in the last month.

Earlier in May, it gave an update with a presentation.

Corporate Travel Management said that it expects to be at least 75% larger than it was in the 2019 calendar year at full recovery. The company said that it has made some transformational acquisitions through COVID-19. Monthly revenue is expected to surpass 2019 levels in the fourth quarter of FY22.

The ASX share is targeting $265 million of EBITDA when it has 100% recovered.

Corporate Travel notes that it is recovering faster than the wider corporate travel sector in its largest regions. It puts this down to "strong" market share gains in all regions, its value proposition, and global scale.

Management notes that the business has zero debt with sufficient cash to support a full recovery. It has been making underlying EBITDA since March 2021.

The company says that the FY22 fourth quarter will provide strong momentum into FY23.

Morgan Stanley also rates Corporate Travel as a buy, with a price target of $30. The broker thought the FY22 third quarter was good and points to a further potential recovery for the sector and the business.

The post Are investors missing out on these ASX share opportunities? appeared first on The Motley Fool Australia.

This follows the company's latest business update to the ASX.

At the time of writing, the cloud-based human resources and software solution provider's shares are up 7.95% to $3.26.

ELMO shares accelerate on positive trading update

Investors are driving the ELMO share price higher after digesting the company's robust performance for the third quarter of FY22.

For the three months ending 31 March 2022, ELMO reported annualised recurring revenue (ARR) of a record $101.2 million. This reflects a 33% increase on the prior corresponding period ($76.2 million).

ELMO highlighted that its mid-market segment reached $89.9 million, a 31% improvement on Q3 FY21. The growth is being driven through securing new customers and the cross sell of modules to existing customers.

Furthermore, the small business market continued to expand, achieving $11.3 million in ARR. This represents a lift of 47% through the past 12 months. The result is being underpinned by the onboarding of new customers and the cross sell of new modules introduced since the acquisition.

In addition, revenue for the most recent quarter surged to $67.4 million, up 37% compared to Q3 FY21 ($49.3 million).

EBITDA made a turnaround of positive $2 million, a swing of $3.2 million from the negative $1.2 million declared in the prior comparable period.

Year to date cash receipts stood at $84.3 million, which is 53% higher since this time last year. It also matches the quarterly record set in Q2 FY22.

Management noted it had $51.4 million in cash at the end of the March 2022 quarter.

The group reaffirmed its FY22 upgraded guidance listed below:

• ARR – $107 million to $113 million (28% to 35% year-on-year growth)
• Revenue – $91 million to $96 million (32% to 39% year-on-year growth)
• EBITDA – $1.5 million to $6.5 million

What did management say?

ELMO CEO and co-founder, Danny Lessem hailed the result, saying:

ELMO continues to experience strong growth as small and medium sized businesses adopt cloud-based solutions to manage an increasingly flexible or hybrid workforce. ARR grew 33% in Q3 and I am pleased we are tracking toward the top end of our guidance range which is also translating to the pleasing level of EBITDA.

…Finally, we have strong momentum coming into Q4, which is historically our strongest quarter. We expect ARR growth to continue at the high levels we are experiencing. We also continue to leverage our cost base as we expect to cross the cash flow breakeven point in the second half of FY23.

ELMO share price snapshot

The ELMO share price has lost almost 42% over the past year and is down more than 27% year to date. The company's shares hit a 52-week low of $3 yesterday, before rebounding on today's positive update.

On valuation metrics, ELMO presides a market capitalisation of about $293.78 million.

The post Elmo Software share price leaps 8% following quarter of 'strong growth' appeared first on The Motley Fool Australia.

This article is about two smaller businesses that could be opportunities for investors to consider.

Here are two buy-rated stocks:

Elmo Software Ltd (ASX: ELO)

Elmo Software is an ASX tech share that provides HR and payroll software to small and medium businesses in Australia and the UK.

The Elmo Software share price has fallen 32% since the start of the 2022 calendar year.

Broker Morgan Stanley currently rates the ASX share as a buy with a price target of $7.80. That implies a possible rise of around 150% over the next year.

The company's FY22 first half result included growth in a number of areas for the business. Annualised recurring revenue (ARR) rose by 35% to $98.3 million, while reported revenue rose 41% to $43.1 million.

In that result, Elmo was able to report a positive earnings before interest, tax, depreciation and amortisation (EBITDA) after it rose by $0.9 million to $0.3 million.

Due to "strong trading conditions" and increased adoption of cloud-software solutions by businesses to manage remote and hybrid workforces, Elmo upgraded its FY22 ARR guidance to $107 million to $113 million.

Elmo said that "operating leverage continues to improve with a reduction in key spend ratios across the business".

Capitol Health Ltd (ASX: CAJ)

Capitol Health describes itself as a leading provider of diagnostic imaging and related services to the Australian healthcare market. It has clinics across Victoria, Tasmania, South Australia, and Western Australia.

The Capitol Health share price has fallen by 17% since the start of 2022.

The ASX share is currently rated as a buy by Ord Minnett with a price target of $0.44. That implies a possible upside of more than 30%.

Ord Minnett thinks the business has demonstrated the defensive nature of its earnings and that the end of COVID-19 will help the business.

In the first six months of FY22, Capitol Health announced that revenue rose by 11.2% to $94.9 million. Operating EBITDA grew by 6.9% to $22.2 million. Statutory net profit after tax (NPAT) jumped 30.2% to $8.1 million.

The company is looking to expand its network through both bolt-on acquisitions and the opening of greenfield/brownfield locations. It's also developing various synergies from the acquisition and opening of clinics. The ASX share is working on becoming more efficient by standardising its processes across its clinics.

According to Ord Minnett's projections, the Capitol Health share price is valued at 24 times FY22's estimated earnings with a grossed-up dividend yield of 4.3%.

The post Brokers rate these 2 top ASX shares as buys in May 2022 appeared first on The Motley Fool Australia.

Some business valuations are much lower amid volatility after the Russian invasion of Ukraine and the talk of rising interest rates.

With that in mind, here are two businesses that those leading analysts like:

Xero Limited (ASX: XRO)

Xero is a world leader when it comes to cloud accounting software. It has a global subscriber base, with significant numbers in Australia, the United Kingdom and New Zealand.

Since the start of 2022, the Xero share price has declined by around 30%.

The broker Ord Minnett has called Xero a buy, thinking it's not the same sort of company as the no-profit businesses that have been sold off heavily this year.

Ord Minnett believes that Xero can benefit from the tailwinds that the ASX growth share is seeing. The price target is $107.

The Xero CEO Steve Vamos himself acknowledged how the environment benefited Xero when he commented in the FY22 half-year result release:

Small businesses around the world increasingly recognise the critical importance of digital tools to help them adapt to, and succeed in a change operating environment. This is reflected in Xero's half-year 2022 performance, where we delivered strong revenue and subscriber growth.

That result saw operating revenue growth of 23% to NZ$506 million, subscriber growth of 23% to 3 million and the gross profit margin increased 1.4 percentage points to 87.1%.

ELMO Software Ltd (ASX: ELO)

ELMO is another software company that helps businesses. It provides HR and payroll software to small and medium businesses in Australia and the UK.

Morgan Stanley currently rates ELMO as a buy with a price target of $7.80. That implies an upside of approximately 80%.

The company continues to launch new modules that can provide more services to customers, increase customer loyalty, and make more revenue.

For example, it launched the 'hybrid work' and 'wellbeing' modules to customers a few weeks ago to manage the new way of working.

In the first six months of FY22, the company continued to report growth. HY22 revenue rose by 41% to $43.1 million year on year. Annualised recurring revenue (ARR) was up 35% to $98.3 million compared to 30 June 2021.

The ASX growth share also made positive earnings before interest, tax, depreciation and amortisation (EBITDA) of $0.3 million.

The company said its UK acquisitions were performing "exceptionally well and provide a solid foundation" to increase market share in the region.

ELMO said that it was continuing to experience increased demand as more organisations adopt cloud-based technology to manage different workforces.

FY22 ARR is expected to be between $107 million to $113 million. It's also expected to generate between $1.5 million to $6.5 million of EBITDA in FY22.

The post 2 top ASX growth shares leading brokers say 'buy' appeared first on The Motley Fool Australia.

But if your tolerance for risk allows for it, having a bit of exposure to this side of the market could be a boost for a balanced portfolio. This is due to the potential returns on offer from promising small caps.

With that in mind, here are three small cap ASX shares that analysts rate highly:

Airtasker Ltd (ASX: ART)

The first small cap ASX share to consider is Airtasker. It is growing online marketplace for local services with an estimated total addressable market of $600 billion across Australia, the UK, and the US. Morgans is very positive on Airtasker's outlook due to this significant market opportunity and its attractive business model. Its analysts also highlight that this is a market that is in the early stages of ecommerce adoption, which puts Airtasker in a great position to benefit as the shift accelerates. Morgans has an add rating and $1.25 price target on the company's shares.

Elmo Software Ltd (ASX: ELO)

Another small cap to watch is ELMO. It is a cloud-based human resources and payroll software company that provides a unified platform to streamline processes. It has been growing at a strong rate in recent years and has continued this impressive form in FY 2022. During the first half, Elmo grew its annualised recurring revenue (ARR) by 35% since the end of June to $98.3 million. This reflects strong trading conditions due to the increased adoption of cloud-software solutions by businesses to manage remote or hybrid workforces. Morgan Stanley is positive on the company and has an overweight rating and $7.80 price target on its shares.

PlaySide Studios Limited (ASX: PLY)

A final small cap ASX share to watch is PlaySide Studios. It is one of the largest video game developers in the ANZ region. It has developed a portfolio of games independently and in collaboration with studios such as Disney, Pixar, Warner Bros, and Nickelodeon. But it won't stop there. The company has recently announced work for hire deals with games publishing giants 2K Games and Activision Blizzard. This could see the company work on some major titles for these gaming giants, which could give its reputation a huge boost. Canaccord Genuity is a fan of PlaySide. It currently has a buy rating and $1.30 price target its shares.

The post Here are 3 small cap shares analysts rate as buys appeared first on The Motley Fool Australia.