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Originally posted by alpha100:
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Citi have a new research report out on LVT with a Buy rating and target price of $0.39 (reduced from $0.63) as below. The report is not overly positive but is a lot more realistic than their past overly ambitious ones. ValueSearch, it also addresses your concerns regarding recent customer churn - they estimate only 30 customers lost and I would suggest that this is likely to be accurate seeing as they would have a direct line of communication to the company.Waiting for the partner channel to kick in Execution needs to improve — With LiveTiles in the midst of transitioning its productand channel strategy, the increase in churn and weaker than expected organic growthbrings into question whether LiveTiles will deliver on its growth targets. We maintainour Buy/High Risk rating but lower our target price by -39% to $0.39. LiveTiles tradeson an undemanding EV/FY20e Rev multiple of 3x, with 50% revenue growth expectedin FY21e. However, the company needs its partner channel to kick-in and ARRgrowth to step-up to deliver on our forecasts and the share price to re-rate. Not growing as fast as expected — After a weak 1Q, LiveTiles delivered a better2Q, adding $5.1 million in ARR (excl. $4.7 million from the CYCL acquisition), up+19% yoy. While 2Q ARR would have been negatively impacted by FX, LiveTilesgrowth is not as strong as expected when considering that the quarter would havebenefited from the Wizdom acquisition and also benefited from the ARR added byCYCL over the course of 2Q20. What is driving the increase in churn? — LiveTiles’ 2Q was negatively impactedby an increase in churn among smaller customers (CitiE:~30 customers), drivenprimarily by Bots and Page Designer customers. While the increase in churn couldbe a reflection of LiveTiles’ increased focus on larger enterprise customers,management noted that increased competition as well as delayed decision making(as well as cannibalisation) from Microsoft’s new Sharepoint version also contributedto an increase in churn. When will LiveTiles hit $100 million ARR mark? — LiveTiles’ short term goal is tohit $100 million in ARR. Given LiveTiles’ new go to market strategy is taking longerto gain traction, we have rebased our FY20e – FY22e ARR growth forecasts by -7%to -22% and forecast $90 million in ARR by Jun’21 and $106 million by Dec’21. Cost management reducing cash burn — One of the positives from the 1H20 resultwas strong cash receipts combined with better than expected cost control reducingcash burn (-$12 million excl. CYCL acquisition). We expect LiveTiles to be free cashflow positive in FY22e. In our view, the recent capital raise provides LiveTiles withample balance sheet capacity to support the cash burn till FY22e.
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Adm, Citi is not accurate as the LVT CFO confirmed to me by email that 50+ lost clients is "not unreasonable'. Do the math.
