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This is why the Livehire results could disappoint investors

Tom Richardson
Two businessmen in a boxing ring ready to spar

The LiveHire Ltd (ASX: LVH) share price could come under pressure this morning after the online-based recruitment platform posted a net operating cash flow loss of $3.6 million on revenue of just $624,000 for the quarter ending June 30 2019. The company blamed the result on timing issues in terms of payments and some churn (customer losses) that it reported were unrelated to the product quality. 

Over the quarter it finished with a net 6 new enterprise clients as it continues to invest heavily in sales and marketing efforts. It now has 79 enterprise customers in total that represent $2.53 million in annualised recurring revenue. 

LiveHire CEO, Christy Forest, said: “Whilst we delivered only modest growth in the June quarter, our new direct sales team started to secure real traction, with 10 new logos added in the quarter since their formation in March. This new team is ahead of where we expected, and we anticipate the momentum from June will carry through the current quarter.”

The company has a reasonably strong balance sheet with no debt and $34 million cash in hand, but as always small-cap investors should be cognisant of the fact it’s unprofitable and posted an operating cash loss totalling $11 million over the past 12 months. 

I wouldn’t suggest buying Livehire shares going by its latest update, as I reckon they’re far better risk-adjusted returns elsewhere on the share market.

Other small cap software stocks that might be worth researching include Serko Ltd (ASX: SKO) and Alcidion Ltd (ASX: ALC).

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Serko and Alcidion. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019