Technology

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

Tue 01 Feb 22, 12:31pm (AEST)
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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).

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Elmo Software up around 12% going into lunch.

Written By

Mark Story

Editor

Mark is an investigative financial journalist and editor who started his career working for Marathon Oil in London. He has a degree in politics/economics and a diploma in journalism. Mark has worked on 70-plus newspapers and financial publications across Australia, NZ, the US, and Asia including: The Australian Financial Review, Money Magazine, Australian Property Investor and Finance Asia. Mark is passionate about improving the financial literacy of all Australians through the highest quality content. Email Mark at [email protected].

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