In early trade the Class Ltd (ASX: CL1) share price has fallen 3% to $3.46 following the release of its quarterly update.
Despite this decline, the shares of the cloud-based software provider to self-managed superannuation fund (SMSF) administrators are still up 21% in 2017.
What was in the update?
For the quarter ending September 30, the company saw its Class Super accounts increase by 6,232 to 146,922. This increases its market share to 25% of the estimated 598,000 SMSFs.
In addition to this, the company's Class Portfolio accounts grew by 12% during the quarter to 3,631.
Pleasingly, management has been successful at cross-selling its Class Portfolio to existing customers. According to the release, approximately 28% of Class Super customers are now using Class Portfolio.
Finally, the total number of customers using Class increased from 1,164 to 1,204 during the quarter.
Should you invest?
I think Class is a great buy and hold option for investors and one of the highest quality companies on the Australian share market.
Proof of this can be seen in the impressive retention rates it enjoys. In FY 2017 the company revealed that its retention rate was a whopping 99.4%.
Whilst its growth may not be meteoric and its shares may trade at a significant premium to the market average, I believe its quality software and high retention rate puts Class is in a position to grow its bottom line at an above-average rate as it scales.
In light of this, I would put it up there with XERO FPO NZX (ASX: XRO) and PUSHPAY FPO NZX (ASX: PPH) as one of the best shares in the industry.
