IPO Fact Sheet: Elmo Software (ASX: ELO)

IPO Fact Sheet: Elmo Software (ASX: ELO)

 

Brought to you by IPO Society and ShareStart

Overview                                 

ELMO Software Limited (ASX: ELO) is leading provider of SaaS, cloud-based talent management software throughout Australia and New Zealand. The company targets its integrated platform and software modules towards mid-market organisations as a centralised software solution for human capital management (HCM) during an employee’s tenure. As at December 31 last year, ELMO had 472 clients across 13 industries.

Continue reading about the company at Sharestart…

 

Offer Details

As part of an IPO, the company is issuing 12.5m new shares at $2 each to raise a total of $25m. ELMO’s IPO does not include a general public offer, only broker firm, institutional, and priority offers.

Wilsons are acting as the lead manager for ELMO Software and underwriting the IPO in full. The offer is set to officially open June 13th, before closing June 20th. ELO is expected to list on the ASX June 29.

 

Investment Highlights

  • Large target markets for HCM solutions
    • ANZ: US$556m in 2015, expected to reach ~US$901m by 2020;
    • Globally: US$12.2bn in 2015, expected to reach ~US$15.4 billion by 2018
  • The growing adoption of SaaS HCM solutions and increasing focus on talent management
  • Strong client retention across a broad mix of industries in 3 countries (including Singapore)
    • 93% recurring revenue (FY16);
    • Top 10 clients account for 19% of SaaS revenue
  • Strong financial position
    • Positive free cash flow;
    • Pro forma SaaS revenue is forecast to grow 36% and 40% in FY17 and FY18;
    • EBITDA to operating cash flow conversion: 253%, 219% and 195% from FY14 to FY16
  • Multiple growth channels via scalable software
    • Cross-selling and upselling extra modules;
    • New clients (increased market penetration; new industries);
    • Product development (new modules);
    • Entry into new geographical markets (US & UK);
    • Acquisitions (smaller vendors)
  • Experienced management team with a record of delivering strong revenue growth

 

Use of Funds

ELMO intend to use the IPO proceeds to invest in sales and marketing, as well as fund product development of its modular applications and platform. The funds will also be used to cover working capital and offer financial flexibility to enhance growth. Such growth may include acquisitions of complementary HCM businesses. Lastly, $3.4m has been set aside to cover the costs of the offer.

 

Capital Structure

Upon completion of the IPO, ELMO Software will have a market cap of $108.3m and an enterprise value of $84m. The enterprise value represents a multiple of 3.75 times pro forma FY18 forecast revenue ($22.4m).

After the IPO, existing shareholders and management will own 76.9% of the business, with the entirety subject to 24 months escrow. Neither management nor any other existing holder will be selling down their stake in the IPO. Meanwhile, the company’s free float will be 23.1%.

         

For more information on ELMO Software, click here to visit ShareStart.

ShareStart profiles ASX listed companies with a simple goal of clearly explaining a company’s activities. ShareStart’s free reports provide clear, unbiased information to help investors understand what they’re investing in.

 

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The information contained on this website in no way reflects the opinions of IPO Society. It is provided for informational services only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. The information is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. Detailed information may be needed to make an investment decision, for example: financial statements; a business plan; information about ownership of intellectual or industrial property; or expert opinions including valuations or auditors’ reports. The information contained on this website is not intended to be the only information on which an investment decision is made and is not a substitute for a disclosure document, product disclosure statement or any other notice that may be required under the Act, as the Act may apply to the investment.

 

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IPO Fact Sheet: Elmo Software (ASX: ELO)
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