The Recent Acquisition by ELMO Could Not Impress Investors – Share Price Tumbled by 2.068%.

ELMO Software Ltd (ASX: ELO), a HR tech firm offering HR and payroll technology across APAC region through cloud technology announced the acquisition of HROnboard which is a cloud-based employee onboarding software in order to strengthen its position in terms of leading provider of SaaS onboarding solutions in Australia and New Zealand.

HROnboard has maintained a consistency of delivering strong SaaS recurring revenue growth of 40% annually. Out of the total HROnboard ‘s revenue of $2.6 million, SaaS contributes 97% of the revenue for the past 1 year. It also has a high customer retention rate of 93%. The customers are from a wide range of industries. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]

There are around 25 employees working on HROnboard who is supporting in generating the revenue for the company. HROnboard was successful in building a foundation which consist of high quality and loyal customers who comes from 131 organizations. These organizations are ranges from small size to large size across different industries. Through the HROnboard, ELMO’s customer base will be offered extended products as well.

Peter Forbes who is the founder of HROnboard and he also specializes in the field of onboarding software will be joining ELMO and will provide support in driving the onboarding product and manage the cross-selling strategies of its extended products.

The company believes that the acquisition of HROnboard will result in the strong organic growth followed by increase in revenue.

The official listing date of ELMO on ASX is 29 June 2017. Since inception, the performance of the company is 112.80%. The last one-year performance of the company is 45.36%. However, for the past 6 months, the performance of the company is negative.

For the financial year ending 30 June 2018, the company made a net loss of $2.988 million. The company has maintained a healthy balance sheet with the net asset base of $68.212 million and debt to equity ratio of 0.456. The company holds a total current asset of $57.725 million and a total current liability of $26.088 million which indicates that the company is in a position to meet the working capital requirements and also its short-term obligations. However, there is an increase in the accumulated losses as compared to the previous year which might have a negative influence on the investors and the shareholders of the company. The total shareholder’s equity is worth $68.212 million.

By the end of the financial year 2018, the net cash and cash equivalent available with the company was $45.995 million.

Despite HROnboard’s acquisition, there is a fall in the share price of the company. Since its inception, after seeing the positive performance till last one year, it might be possible that the investors were confident about the company. However, last 6 months performance might have influenced the share price.

By the end of trading on 20 December 2018, the closing price of the share was A$5.220 which is 0.010 points below its previous day’s closing price. The stock holds a market capitalization of A$329.28 million.


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