The ELMO Software Ltd (ASX: ELO) share price will be on watch on Thursday after the release of the cloud-based HR, payroll, and rostering software provider’s full year results this morning.

How did ELMO perform in FY 2020?

For the 12 months ended 30 June 2020, ELMO‘s strong form continued and its delivered further strong growth in annualised recurring revenue (ARR), statutory revenue, cash receipts, and customer numbers.

The company reported ARR of $55.1 million and statutory revenue of $50.1 million for FY 2020. This represents a 19.7% and 25% increase, respectively, over the prior corresponding period. Also growing strongly were its cash receipts. They came in at $57.5 million for the year, up 27.6% on FY 2019’s result.

Over the period the company’s gross profit margin fell 1.3% to 85.3%. However, this was due to its investment in client services to support an enlarged and growing customer base.

Statutory earnings before interest, tax, depreciation, and amortisation (EBITDA) was a loss of $4.2 million. Management advised that this reflects its continued investment to support its longer term growth initiatives.

Despite this, the company finished the period in a very strong financial position. Thanks partly to its capital raising in May, ELMO had a cash balance of $139.9 million at the end of the period.

Management advised that this means it is well capitalised to continue investing in both organic growth and strategic acquisitions.

What were the drivers of its growth?

One of the key drivers of ELMO’s growth was its increasing customer numbers. The company’s customer base grew to 1,682 organisations over the year, an increase of 25.4%.

Also supporting its growth was an increase in average modules per customer from 2.4 to 2.7.

Pleasingly, management notes that customer concentration remains very low, with the largest customer representing less than 2% of ARR. Furthermore, the 10 largest customers account for less than 7% of its ARR.

Another positive is that ELMO’s Customer Lifetime Value to Customer Acquisition (LTV:CAC) ratio remains high at 8.1. Management believes this underpins its continued investment thesis in growth.

ELMO’s CEO and Co-Founder, Danny Lessem, was pleased with the company’s performance in FY 2020.

He commented: “Despite some of the challenges associated with COVID-19, FY20 has been another year of robust growth for ELMO. Particularly at this time, businesses are recognising the benefits of cloud-based technologies to deliver flexible and innovative workplace solutions.”

“ELMO’s overall strategy remains unchanged: delivering organic growth supplemented with strategic acquisitions, continuing our growth trajectory into FY21 and beyond. We are well placed to capitalise on anticipated tailwinds in the adoption of cloud-based business tools, including HR-technology,” he added.

FY 2021 outlook.

Management appears confident that another year of strong growth awaits the company in FY 2021.

It has provided guidance for ARR of $65 million to $70 million, which represents year on year growth of 18% to 27%.

It will be a similar story for revenue, with the company expecting this to be in the range of $57 million to $61 million. This is expected to be driven by strong organic growth, supplemented with selective acquisitions.

Once again, the company is expecting to post an operating loss as it focuses on its growth strategy. ELMO’s EBITDA is expected to be -$4 million to -$7 million in FY 2021.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia has recommended Elmo Software. 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 post ELMO Software share price on watch after delivering more strong growth in FY 2020 appeared first on Motley Fool Australia.

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With the banks slashing the interest rates on their savings accounts and term deposits to ultra low levels this year, it is getting harder and harder to generate a sufficient passive income to live on.

In light of this, I think savers should look to the share market for their income needs due to the high quality dividend shares on offer.

Two dividend shares that I would buy are listed below:

BHP Group Ltd (ASX: BHP)

The first dividend share to consider buying is BHP. I believe the mining giant is a great option for income investors due to its world class operations, strong balance sheet, and its positive long term growth outlook. Combined with its low costs and favourable commodity prices, I believe BHP is well-placed to deliver strong free cash flows over the coming years. This is particularly the case given that iron ore prices are hovering above US$110 a tonne at the moment.

Pleasingly for shareholders, given the aforementioned strength of its balance sheet, I expect the majority of its free cash flow to be returned in the form of dividends. As a result of this and based on the current BHP share price, I estimate that its shares offer investors a forward fully franked ~5% dividend yield.

Commonwealth Bank of Australia (ASX: CBA)

Another option for income investors to consider buying is Commonwealth Bank. This banking giant is facing very tough trading conditions at present, particularly after the Victorian lockdowns. However, with its shares down 21% from their high, I’m optimistic that the worst has been priced into its shares now.

In light of this, I feel now could be a good time to pick up shares if you don’t already have exposure to the banking sector. And while estimating what kind of dividend Commonwealth Bank will pay in FY 2021 is difficult, I expect a fully franked yield in the region of 4% to 5% at present.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 post Why I would buy CBA and this ASX dividend share appeared first on Motley Fool Australia.

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On Wednesday the S&P/ASX 200 Index (ASX: XJO) was out of form. The benchmark index dropped 0.6% to 6,001.3 points.

Will the market be able to bounce back from this on Thursday? Here are five things to watch:

ASX 200 to bounce back.

It looks set to be a better day of trade for the ASX 200 index on Thursday. According to the latest SPI futures, the benchmark index is expected to open the day 27 points or 0.45% higher this morning. This follows a positive night of trade on Wall Street which saw the Dow Jones rise 1.4%, the S&P 500 climb 0.65%, and the Nasdaq index push 0.5% higher.

Oil prices higher.

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could be pushing higher today after another positive night for oil prices. According to Bloomberg, the WTI crude oil price has risen 1.2% to US$42.20 a barrel and the Brent crude oil price has climbed 1.7% to US$45.20 a barrel. Oil prices climbed to a five-month high after a larger than expected inventory decline.

Gold price rises again.

Gold miners including Northern Star Resources Ltd (ASX: NST) and Saracen Mineral Holdings Limited (ASX: SAR) will be on watch today after the gold price pushed higher again. According to CNBC, the spot gold price rose 1.5% to US$2,053.00 an ounce. This means the gold price hit a new record high overnight.

ResMed results.

The ResMed Inc. (ASX: RMD) share price could be on the rise this morning after the release of its fourth quarter result. ResMed delivered a 10% increase in revenue to US$770.3 million. This compares to the consensus estimate of US$752 million. This was largely down to strong ventilator demand during the period.

Mirvac result.

The Mirvac Group (ASX: MGR) share price will be on watch this morning when it releases its full year results. The property company has been battling with difficult trading conditions, so all eyes will be on its occupancy rates, property valuations, and rental collections. Mirvac has already indicated that it will pay a final distribution of 3 cents per stapled security. This is down by over half compared to the prior corresponding period.

More reading

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. 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 post 5 things to watch on the ASX 200 on Thursday appeared first on Motley Fool Australia.

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