Australian software company Elmo's shares have jumped 80%, just 5 months after the year's biggest tech IPO

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Elmo Software has seen its share price spike up 80% just five months after floating on the ASX as the biggest tech IPO of the year.

Elmo floated at the end of June after raising $25 million via shares at $2 each.

Now its stock price is $3.59, a 79.5% increase.

Elmo originally started developing an e-learning platform, and has expanded to make systems that manage recruitment, education and performance appraisal activities for employees.

Its cloud-based “talent management software”, competing against big names such as Oracle and SAP, is sold via subscription to mid-sized businesses.

The June IPO in June gave Elmo market capitalisation of $108 million, making it the biggest public float by an Australian tech company this year.

Co-founder and chief executive Danny Lessem told Business Insider that the “stronger balance sheet” resulting from the $25 million cash injection and “increased transparency” that comes with publicly listing has helped it win government customers.

“The demand for Elmo is expanding – our strategy of new product development supplemented by targeted acquisitions, including the recent PeoplePulse and LiveSalary acquisition, has seen growth in new customers and increased revenue from existing customers,” he said.

“We are well positioned for growth in 2018.”

Last month, the Sydney firm acquired fellow human resources software providers PeoplePulse and LiveSalary from Quinntessential Marketing Consulting for a total cash consideration of $10 million.

LiveSalary is a database that allows users to compare salaries with comparable job requirements, while PeoplePulse is an online survey system that allows enterprises to conduct staff questionnaires.

“These modules are well established and bring 300 attractive clients for potential cross-sell. They complement and fit well with our existing integrated product suite, which is our clear competitive advantage,” Elmo chair Jim McKerle told shareholders at the AGM last week.

The 2017 financial year saw Elmo generate $16.6 million in revenue, up 36% from the previous year. However, a small profit in 2016 turned into a $920,000 net loss a year later.

McKerle reported to shareholders last week that earnings were 42% ahead of forecast in the IPO prospectus, with the EBITDA hitting $1.2 million.

Elmo is concentrating on the mid-market segment – customers with 100 to 1000 staff, he said. And with Elmo only holding 4% of that market, there is still plenty of “headroom” for growth.

“The mid-market continues to trend towards HR automation with the majority of mid-market businesses not yet taking advantage of a single integrated platform solution,” McKerle said.

“Customers are structurally shifting towards a single integrated platform such as ELMO. We are purposefully designed and well placed to benefit from this thematic.”

Elmo, established in 2002 by Lessem and Manuel Garber, is headquartered in Sydney with branch offices in Melbourne, Brisbane, Perth, Canberra, Auckland, Wellington and Singapore.

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