Fresh UK integrations and record recurring revenue push ELMO Software into the black

Sydney-based ELMO Software (ASX: ELO) saw its net losses mount in FY21, but the well-capitalised company managed to operationally rise into the black for the period on the back of bumper revenue growth.

Total revenue hit $69.1 million, up 38.1 per cent, and the company’s earnings before interest, tax, depreciation and amortisation (EBITDA) nudged into the black at approximately $400,000.

Ignoring the $37.62 million net loss after tax, the software company’s results were certainly solid; annualised recurring revenue (ARR) was a record $83.8 million - up 52.1 per cent on FY20.

“ELMO’s growth journey continued in FY21 as we delivered on our growth strategy,” ELMO Software CEO and co-founder Danny Lessem said.

It was a year of acquisitions for the group which develops HR and payroll processing software, with ELMO bringing self-service small business HR solution Breathe and expense management platform Webexpenses - both based in the UK - into the fold.

“We have completed the integration of the Webexpenses solution, and it is being successfully cross-sold in the ANZ region,” Lessem said.

“Breathe, the small business segment posted exceptional growth of 51.8 per cent. In 2H FY21, we added modules to the Breathe suite in the UK and it’s pleasing to see strong uptake. We recently launched the Breathe solution in ANZ and expect to ramp up activities in the region during FY22.”

Following bumper year for revenue growth, Lessem expects ARR to surpass $100 million in FY22.

“Returning business confidence and the increase in remote-based working is driving the adoption of cloud-based business tools, including HR technology,” says Lessem.

“FY22 is shaping up to be a good year for ELMO, across both mid-market and small business segments.

“We anticipate strong growth in FY22 and expect to surpass $100 million in ARR, an exciting milestone.”