Livetiles Ltd (ASX:LVT) delivered an impressive March quarter result which featured strong revenue growth and an upbeat outlook statement.
One of the company’s compelling attributes is that it generates a substantial proportion of recurring revenue, providing income predictability.
As at March 31, 2018, annualised recurring revenue reached $11.2 million, up 315% on a year-on-year basis.
Growth in cash receipts
Paying customers increased 47% on a year-on-year basis in the March quarter and the company now has 472 registered paying clients.
This has assisted in generating strong growth in cash receipts with $1.5 million recorded in the March quarter, more than double that in the previous corresponding period.
From an operational perspective, the company has bolstered its North American business having formed a partnership with N3, a key Microsoft sales and marketing vendor.
N3 partnership
The partnership with N3 will see the promotion of LiveTiles products by the group, effectively using its sales and marketing resources.
N3 is the leading outsourced sales and marketing execution vendor for Microsoft’s Azure and Dynamics platforms.
Based in Atlanta, the group serves a global client base, which in addition to Microsoft, includes SAP, IBM and Cisco.
Management expects that this partnership will result in the establishment of a strong and highly scalable customer base which can generate substantial growth in North America.
Promotion of artificial intelligence solution
Co-marketing activity with Microsoft has resulted in direct engagement with several large, US-based enterprises to promote its artificial intelligence solution, LiveTiles Bots.
The ongoing relationship and support from Microsoft provide a strong endorsement of the LiveTiles brand and offering, and it has resulted in the commencement of paid pilot projects with a number of large organisations.
Robust financial position
Having raised $20 million via a placement in February, the company finished in a robust financial position at the end of March with cash of $24 million.
Assessing the remainder of fiscal 2018, LiveTiles’ continued investment in sales and marketing is driving significant growth in its sales pipeline.
The recent launch of the company’s artificial intelligence products, co-marketing initiatives with Microsoft and the launch of the N3 partnership are expected to drive strong customer and subscription revenue growth in fiscal 2018 and beyond.
Blue Ocean Equities likes the story
Blue Ocean Equities views LiveTiles as a transformational growth company, providing user-friendly, digital workplace solutions which drive productivity.
As with any business, creating product demand is the key to success.
Blue Ocean Equities' take on LiveTiles’ emerging technologies suggests that they fit under the banner of non-discretionary rather than discretionary spending for businesses.
Where technology can be used to increase efficiencies and improve profitability one normally finds a significant degree of sales resilience.
Blue Ocean had a buy recommendation on the stock with a price target of 90 cents but noted in a report today that this was under review given the quality of its quarterly result.