ELMO raises FY22 revenue guidance: share price up double-digits today
Today's upbeat 1H FY22 update should help to allay previous liquidity concerns
Mentioned
KEY POINTS
- Elmo up 10.59% in early morning trade
- Annualised organic growth up 35% from June 2021
- Morgan Stanley's price target is 85.7% upside to current price
Workplace software platform Elmo Software (ASX: ELO) was up 10.59% in early morning trade after today’s first half FY22 business update reset annualised recurring revenue guidance for FY22 to between $107m and $113m, which represents growth of 28 to 35% on the previous year.
Unsurprisingly, following the 3.4% overnight rally on the NASDAQ, other local tech stocks have also rallied today - including Zip (ASX: Z1P), Block (ASX: SQ2), Life360 (ASX: 360), WiseTech Global (ASX: WTC), and Xero (ASX: XRO) – with the IT sector leading the charge today, up 3.39%.
Organic growth accelerating and churn rate declining
Elmo’s upbeat result comes as welcome relief for the small cap ASX tech share which has witnessed a -14% share price fall in 2022 and a -44% decline over the past year.
While management provided no commentary along with today’s result, the company expects FY22 adjusted earnings of between $1.5m and $6.5m on revenue between $91m and $96m.
As at December 31 the company had cash-on-hand of $58.4m.
Elmo’s first half highlights
Other highlights of today’s update include:
Annualised organic growth up 35% from June 2021, with annualised recurring revenue growth up 48% annually since first half FY18.
Cash receipts up 63% first half FY21.
Cash burn reduced by 36% versus first half FY21.
While brokers are yet to comment on today’s result, consensus on the stock is a Moderate Buy.
The stock is currently trading at an 85.7% discount to Morgan Stanley’s $7.80 target price and Overweight rating (22/10/21).
Elmo Software up around 12% going into lunch.
