ELMO raises FY22 revenue guidance: share price up double-digits today

By Market Index
Tue 01 Feb 22, 12:31pm (AEST)

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.

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Market Index

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