Why the Limeade (ASX:LME) share price is on watch

The Limeade Inc (ASX: LME) share price is one to watch after the employee software solutions group provided its latest quarterly update.

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The Limeade Inc (ASX: LME) share price is on watch after an early morning announcement from the US-based software company.

ASX share price on watch represented by man looking through magnifying glass

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Why is the Limeade share price on watch?

Limeade is a Bellevue, Washington USA based employee software solutions group that currently boasts a $204.9 million market capitalisation on the ASX.

The Limeade share price will be one to watch after the software group's latest quarterly update for the period ended 31 March 2021 (Q1 2021). Limeade said "pent up demand" remains for employee experience (EX) software following the coronavirus pandemic.

Limeade reported quarterly cash receipts from customers of $23.6 million – a record result for the growing company. Net cash receipts after adjusting for payments to the sale of third-party products and services was down 8% in Q1 2020 to $17.1 million.

Third-party payments were down 6% in Q1 2020 to $6.4 million. However, that figure remains a 177% increase over December quarter figures posted by Limeade.

Limeade said headcount continued to track at a lower rate than prospectus forecasts due to efficiencies and a hiring reduction due to uncertainty during the COVID-19 pandemic.

The Limeade share price will be one to watch this morning with the company's valuation already falling 46.8% in 2021

Limeade reported a quarterly operating cash flow of $0.6 million, down 69% on Q1 2020 numbers. Overall year to date Net Revenue Retention was 98% as of 31 March 2021 according to the release.

On the balance sheet side, Limeade reported a $31.3 million cash balance while remaining debt-free during the quarter. One notable update for the quarter was the company reporting strong attendance for its fifth annual Limeade Engage conference. 

The conference was virtually held due to COVID-19 and attracted 275% more registrations compared to 2020. New customer prospects jumped 268% on the prior corresponding period to 545 registrants.

Limeade's total sales and marketing pipeline fell 19% versus Q4 2020 to $182.4 million as early stage qualifying leads declined.

FY2021 guidance

The Limeade share price is one to watch this morning after an update on guidance from the software solutions group. Limeade has maintained full-year guidance of US$50 million to US$53 million revenue with forecast earnings before interest, tax, depreciation and amortisation (EBITDA) loss of US$5 million to US$8 million.

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Limeade, Inc. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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