From WTC, XRO to CXZ: Why are these ASX tech stocks in limelight?

Image Source: © Logoboom | Megapixl.com

Highlights:

  • The benchmark Australian S&P/ASX 200 index closed 0.21% lower at 7,112.80 points on 18 August 2022.
  • Eight out of eleven significant sectors closed in red zone.
  • Information Technology was the worst performing sector followed by Utilities and Consumer Discretionary sectors today.
  • The S&P/ASX 200 Information Technology (INDEXASX/XIJ) closed 2.43% lower at 1,539.4 points.

Australian share market closed in the negative territory today. The benchmark ASX 200 closed 0.21% lower at 7,112.80 points.

Weak Wall Street leads to falls in significant commodities and missed profits from industry titans like Origin Energy and Transurban were the main contributors to the decline in the market.

Today, eight of eleven sectors closed in the red, barring energy, healthcare and consumer staples. Energy producers recovered as oil prices rose.

IT was the worst performing sector. The S&P/ASX 200 Information Technology (INDEXASX/XIJ) closed 2.43% lower at 1,539.4 points.

This article features some leading ASX-listed information technology stocks - Xero Limited, WiseTech Global Limited, Computershare Limited and Connexion Telematics Ltd, and their respective performances on the ASX this year.

 

Xero Limited

Xero Limited (ASX:XRO) is a software-as-a-service company. It provides accounting software that runs on the cloud.

In its full-year report for 2022, Xero's operating revenue increased by 29% to AU$1.1 billion. Robust software as a service metrics highlights the high calibre of Xero's performance, delivered against the backdrop of changing market conditions.

Total LTV climbed 43% to NZ$10.9 billion, led by strong subscriber growth, an improvement in average revenue per user (ARPU) of 7% (9% in CC), and monthly churn (0.90%), which has consistently been lower than levels seen before to the COVID-19 epidemic. LTV/CAC was 6.9, which shows how well returns are doing for the company.

Xero further informed that its operating revenue increased by 29% year-over-year. As a result of rising ARPU and subscriber growth, core accounting revenue climbed by 23%. The company's platform revenue grew from 7% in FY21 to 11% of overall operating revenue, a 113% increase.

EBITDA climbed modestly from the prior year to NZ$212.7 million, striking a balance between rising operational costs and further development of the gross margin, which increased to 87.3%. A NZ$9.1 million net loss and a NZ$2.1 million free cash flow align with Xero's preference to reinvest capital gains into the company.

Meanwhile, shares of Xero ended 7.11% lower at AU$90.65 per share on Thursday. On YTD basis, the company's shares have fallen 38%.

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WiseTech Global Limited

WiseTech Global Limited (ASX:WTC) specialises in offering software solutions to the logistics sector. The company creates, markets, and uses software solutions that let logistics service providers move things around and store data domestically and abroad easily.

Last month (15 July), WiseTech upgraded its FY22 guidance. According to the ASX release, the high end of the AU$600 million to AU$635 million guided revenue range is anticipated for FY22, while the estimated range for EBITDA is improved to AU$310 million to AU$320 million from AU$275 million to AU$295 million, indicating strong top-line growth and cost reductions that are ahead of schedule.

On 24 August 2022, the company will announce its fully audited statutory results. This guideline update's unaudited financial data is undergoing additional examination and finalisation.

Meanwhile, shares of WiseTech closed at AU$53.58, down 1.89% on ASX today. The company's shares have declined 11% on YTD basis.

Computershare Limited

In addition to offering mortgage and rental property services, Computershare Limited (ASX:CPU) also offers issuer, employee share plans and vouchers, business, communication and utilities, and technology services.

Last week (9 August), Computershare CEO Stuart Irving said that the company outperformed expectations in terms of full-year management earnings. Weaker transaction revenues have been mitigated by growth in client fee income.

"We managed the effects of inflation through strict cost management and benefited from higher interest rates," Irving stated.

With management revenue up over 12%, including Computershare Corporate Trust, the investments in the company's high-quality international businesses are generating growth. Employee share plans and issuer services are still gaining market share.

In an ASX filing, the company informed that market turbulence in the second half impacted transaction-based revenues in corporate actions.

Despite a promising prognosis, Mortgage Services in the US had a dismal performance.

Computershare's free cash flow and balance sheet stand out in this outcome. With a 60% cash conversion, the company had a free cash flow of AU$322.6 million. 

The board declared the final dividend, which represents a 30% increase over last year's final payout at 30 cents per share.

Outlook

In FY23, an approximate 55% increase in management EPS is anticipated. Though company's operating businesses are being affected by inflationary pressures and expenses are expected to rise in FY23, margin income, which is predicted to be over AU$520 million this year, is supporting solid earnings growth. 

Meanwhile, shares of Computershare closed at AU$24.04 per share, up 1.61% on ASX today. The shares have jumped over 18% on year-to-date basis.

Connexion Telematics Ltd

Australia-based Connexion Telematics (ASX:CXZ) creates software-as-a-service (SaaS) solutions for the worldwide automotive sector.

On 22 July 2022, Connexion updated its activities for the quarter ended 30 June 2022 (Q4 FY22).

With a Net Profit Before Tax of US$180k in Q4 FY22 compared to a Net Profit Before Tax of US$89k in Q3 FY22, Connexion showed enhanced profitability.

This was made possible by a Gross Profit in Q4 FY22 of US$795k, an all-time high for Connexion and a 20% increase over the Gross Profit in the prior quarter of US$661k.

The company reported US$1,006k in total revenue for the quarter, which included service revenue at a 10-quarter high of US$170k. This resulted in the greatest unaudited Gross Profit in Connexion's history for the quarter (US$795,000).

Meanwhile, shares of Connexion were spotted trading at AU$0.011 per share on ASX today, down 8.33%. However, the company's shares recorded a positive growth of around 10% on YTD basis.


 


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