Foster Research PT of 54c

4^th August 2016

LiveHire Ltd (LVH, $0.135, mkt cap $27M) – Announces first offshore client and first via RPO channel. SPECULATIVE BUY. PT $0.54.


Event:

• LVH announces first client in Asia via Randstad Sourceright.

Investment Highlights:

• LVH announced it that its RPO partner Randstad Sourceright (Randstad) is implementing LiveHire’s Talent Community for one of its cornerstone clients. This crucially represents two major milestones for LVH. First, it is the company’s first customer via an RPO, demonstrating the value and execution capability brought by such a partner. Second, it is the first client building a Talent Community outside of Australia, providing LVH with its first step in building an offshore revenue base, and highlighting to the market the global scalability of its product with cornerstone clients internationally through an RPO partner.
• Randstad’s client is a global technology company with over 100k employees globally. The client has commenced implementation of its Talent Community initially in Malaysia, and then will roll out Singapore within the next few months.
• While no details were provided on the client’s number of employees in Malaysia, we estimate that these would number in the tens of thousands. This would translate potentially into tens of thousands of talent community connections (TCCs) eventually being created. As a reminder, LVH’s revenue sensitivity is that it can earn $0.6M revenue per 100k TCCs created, assuming A$0.50 per TCC per month.
• Highlights ease of scalability. The partnering with Randstad and an initial client in Asia success provides testimony to the scalability of the LiveHire platform, which will offer LVH significant economy of scale benefits as the demand for its product grows.
• RPO partnering provides key marketing channel resources. The alliance with Randstad illuminates a key benefit of partnering with an RPO - to utilise its marketing, sales, distribution, and client channels. This significantly reduces the time, capital, and resources LVH would require if it were to “go alone”. The client win occurred less than a month after LVH announced the Randstad partnership.
• Client’s Malaysia Talent Community can be catalyst for attracting other RPOs and companies. The successful implementation of the Talent Community in Malaysia can catalyse promotion of LiveHire across three key groups: 1) Other clients of Randstad who will adopt LiveHire via Randstad marketing; 2) Other RPOs signing partnerships with LVH; and 3) Other companies that are in the same industry vertical as the client implementing in Malaysia, who will become aware through word-of-mouth.

Valuation and Earnings:

• Our earnings forecasts remain unchanged, as we have already factored in growth in TCCs. Our valuation is unchanged at $0.54/share.

Recommendation:
We maintain our Speculative Buy recommendation and 12-month price target of $0.54/share. Today’s announcement is a significant earnings milestone for LVH. Further catalysts include: Signing of cornerstone enterprise clients; partnerships with further RPOs; reporting of growth in TCCs and revenues); and offshore expansion.