The LiveTiles Ltd (ASX: LVT) share price has been amongst the biggest movers on the local market on Wednesday following the release of its half year results.
The intelligent workplace software company's shares were up as much as 16% to 39 cents in early trade. At the time of writing they are 10.5% higher at 37 cents.
What happened in the first half?
In the first half of FY 2019 the company delivered a 198% increase in total revenue and other income to $7.4 million.
This revenue included a $1.5 million government grant, down from $1.6 million in the prior correspond period. Importantly, subscription revenue rose 200% to $5.7 million.
At the end of the period the company had achieved annualised recurring revenue (ARR) of $22.9 million, which was an increase of 232% from a year earlier.
However, due largely to a large jump in operating expenses to $25 million, the company ultimately posted a loss after tax of $22.8 million. This left LiveTiles with a cash balance of $22.4 million.
The good news is that this cash balance appears to be more than sufficient to fund its working capital in the second half. This is because management expects operating expenses to be significantly lower due to the normalisation of expenses relating to sales and marketing services and cost savings from several non-customer facing staff reductions.
In addition to this, some of the funds raised for the acquisition of Denmark-based workplace software business Wizdom earlier this month are being allocated to working capital.
Whether that will be enough to see it through FY 2020 is hard to say at this stage, though.
But one thing that is clear is that management believes that LiveTiles is destined to deliver stellar sales growth over the next two and a half years.
Driven by its investment in sales and marketing, the recent launch of its AI products, co-marketing initiatives with Microsoft, and the increasing momentum of the N3 partnership, management aims to organically grow its ARR from $30.9 million as at December 31 to at least $100 million by June 30 2021. This is six months ahead of its original schedule.
Should you invest?
Whilst I do have concerns that LiveTiles may need another capital raising in FY 2020, I still feel it could be a good investment for investors looking for high risk/high reward options.
But if it's too risky for your tastes, then I would suggest you take a look at fellow tech shares Appen Ltd (ASX: APX) and Bravura Solutions Ltd (ASX: BVS).
