Livetiles’ Share Price Surges then Plummets on Quarter Update

Today, small-cap global software company Livetiles Limited [ASX:LVT] experienced an interesting bout of volatility during trading. Upon releasing their record fourth quarter results, Livetiles shares rushed high to 60 cents apiece, signalling an 8% gain from yesterday’s close. This spike meant the company had gained 36% on their share price in a week.

But the surge was short-lived, with the share price reverting back to the 55-cent mark just before midday. By 3:00pm, a further two cents were shed from the price, resulting in a 4.5% drop for the day’s trading.

At time of writing, Livetiles’ share price is trading at 54 cents.

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Why investors were initially excited

The update revealed an annualised recurring revenue (ARR) of $40.1 million as of the end of FY19, showing a significant increase from the ARR figure recorded on 31 March, which was $34.5 million.

Year to date, ARR has increased by 167%, and compared to two years ago, the figure is up ten-fold. The company intend to ‘organically grow’ ARR even further, hoping to increase it by at least $100 million in the next two years.

Livetiles also listed some customer highlights for the June quarter, which included a US fast food chain, a major Australian and UK university, and an international film studio. They also confirmed that Hyperfish — an AI and Bot technology profile automation service — has ‘exceeded its earn-out targets’, having produced a recurring revenue growth of 425% since its acquisition.

What does this mean for the future of Livetiles share price?

The company stated in the update that they plan on delivering ‘another year of strong customer and revenue growth in FY20, driven by our continued investment into our products, partners and sales and marketing channels’.

They also claimed they are ‘well positioned’ to achieve the $100 million increase in ARR by June 2021.

But it’s tricky to gauge the future trajectory of a small-cap stock like Livetiles, where its size makes it subject to intense waves of volatility, with today being a clear case in point. Major price swings are quite common in small-caps, aren’t they aren’t guaranteed to always swing in favour of investors.

However, there are some key things that you can look out for to spot a small-cap that could be packed with potential.

Here at Money Morning, we regularly update you on small-caps that are piquing our interest. In fact, one of our editors, Sam Volkering, has written a report on ‘Three Small-Cap Stocks to Own Right Now’ revealing great starting points for your own research into the potentially lucrative world of small-caps. To download this free report, click here.


Ryan Dinse,

For Money Morning

Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

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