ELMO Software (ASX:ELO) CEO, Danny Lessem discusses the company’s listing, business model and outlook.
Carolyn Herbert: Hello, I’m Carolyn Herbert from the Finance News Network and joining me from newly listed HR software company ELMO Software (ASX:ELO) is CEO Danny Lessem. Danny, congratulations on the listing.
Danny Lessem: Thank you.
Carolyn Herbert: Can you start by giving us an introduction to ELMO Software?
Danny Lessem: ELMO is a cloud based software company. We automate HR processes for over 470 organisations in Australia and New Zealand. We’ve only touched four per cent of the addressable market in the region, therefore we have heaps of headroom for growth into the future. We have a subscription based revenue model, so this recurrent revenue coupled with long term contracts, on average around 3 years in duration, ensure strong revenue visibility into the future.
Carolyn Herbert: So now to your IPO, how much did you raise and where are the funds going?
Danny Lessem: We raised 25 million dollars, and we are deploying the funds to accelerate our growth primarily in bringing products to market quicker, deploying in sales and marketing and also facilitating any opportunistic acquisitions which are accretive or bring us complimentary technology.
Carolyn Herbert: So at what price did you list and where does this put your market cap?
Danny Lessem: We listed at $2 and this puts our market cap at just north of $108 million.
Carolyn Herbert: And now to your software Danny, what does your software do and what’s your target market?
Danny Lessem: Our software is a unified talent management platform which automates the HR process throughout the employee life cycle from hire to retire. We focus primarily on mid tier sized organizations. Organisations with between 100 and 1000 employees. That’s not to say that the solution is not scalable. Indeed we have customers with up to 60,000 employees.
Carolyn Herbert: So how does it work alongside in-house HR function?
Danny Lessem: It really is an enabler. It enables the HR stakeholder to have a lot more visibility over the people within the organization. Of course it automates the processes and then it provides elaborate reporting so it provides the business and the HR function with the analytics which enable them to make strategic decisions.
Carolyn Herbert: And Danny what’s the size of the HR software market?
Danny Lessem: It’s a $700 million opportunity and it’s constituted of over 12,000 organisations.
Carolyn Herbert: And turning to your financials now Danny what are you forecasting for FY18?
Danny Lessem: We are forecasting another year of strong growth. Revenue at $22.4 million. EBITDA at $2.6 million and year on year SaaS revenue growth of 40 per cent.
Carolyn Herbert: Finally Danny, what is the company focus for the next 12 months?
Danny Lessem: We look forward to executing on our growth strategy and now that we have the funds available, we look forward to delivering on our potential.
Carolyn Herbert: Danny Lessem, congratulations on the listing and thanks for joining us.
Danny Lessem: Thanks so much.