Journey of 5 Tech Shares over the last three months – XRO, 360, RHP, BTH, SKO

Summary

  • From 23 March 2020, the day S&P/ASX 200 Information Technology index hit its lowest level amid COVID-19 crisis, till 22 June 2020, the index has improved by ~85%.
  • Growth in the sector has been driven by a rise in demand for technology and software to support operations from home and ensure business continuity despite the lockdown-related challenges.
  • Industries such as retail, education, and gaming have benefitted using technology.
  • Stocks of XRO, 360, RHP, BTH and SKO have delivered returns of 39.65%, 11.76%, 53.08%, 200% and 165.55% respectively in the last three months.

The technology sector has played a crucial role during the COVID-19 crisis as most people from different industries were supporting operations from remote locations. Further, the concepts of e-tailing, online gaming, and e-learning, which gained prominence in the last couple of months, were only possible due to the advancement in technology.

It has been almost three months since the technology sector reached its lowest level. From 24 March 2020, the index started moving in the upward direction with technologies like cloud computing, financial technology, and artificial intelligence in demand during this period.

From 23 March 2020 till 22 June 2020, the index has improved by ~85%. By the market closure on 22 June 2020, S&P/ASX 200 Information Technology dropped by 1.57% and settled at 1,570.1.

In this article, we would be looking at a few ASX-listed technology stocks that have shown improvement in their share price in the past three months and cover some important updates within last three months.

Xero Limited (ASX:XRO)

Xero Limited offers online accounting software for small corporations.

In the past three months, the shares of XRO have delivered an impressive return of 39.65%. On 22 June 2020, XRO stock last traded at A$88.520, a decline of 0.862% from the previous close.

Updates in the past three months:

  • On 8 April 2020, Xero announced the launch of Xero HQ Payroll to support advisors during the COVID-19 crisis. Xero HQ Payroll would support accountants and bookkeepers to help their small business customers keep on top of payroll & compliance requirements.
  • On 11 May 2020, Xero unveiled that it was recognised as a global leader in the IDC MarketScape.
  • On 14 May 2020, Xero signed an agreement with MNP LLP (one of the largest national accounting, tax and business consulting firms in Canada) under which accountants across MNP’s 80+ offices in Canada can access a cloud accounting ledger & financial management tools and services.
  • On 2 June 2020, Xero launched new tax & compliance tools to aid Australian accountants & bookkeepers pass through the upcoming tax season with their clients.
  • On 4 June 2020, Xero released new search functionality on Xero’s app marketplace, powered by enterprise SaaS platform Coveo to make it easier for small businesses to search right apps as per their requirement.

Life360 Inc. (ASX:360)

Life360 Inc provides location-based services application for customers worldwide to track their contacts & an integrated driver-protect service that contacts emergency services.

In the past three months, the shares of Life360 have delivered a return of 11.76%. On 22 June 2020, Life360 stock last traded at A$1.980, an increase of 4.211% from the previous close.

Updates in the past three months:

Quarterly Rebalance:

In the quarterly rebalance of the S&P/ASX index revealed on 12 June 2020, Life360 Inc was included in All Ordinaries, effective at the Open on 22 June 2020.

March Quarter 2020 updates:

  • Revenue up by 71% to US$19.1 million YoY. Annualised Monthly Revenue in March 2020 increased 64% to US$76.1 million YoY.
  • Global Monthly Active User increased by 36% to 28 million.
  • Free and paid user retention rates were in the normal range on a cohort basis despite a substantial COVID-19 impact on new registrations in the second half of March 2020.
  • Average Revenue Per Paying Circle zoomed up by 15% YoY, backed by the shift to higher-value Driver Protect subscriptions & monthly subscription packages.
  • Paid User Acquisition expenses declined 24% YoY to US$4 million.
  • Life360 by the end of March 2020 quarter reports zero debt and a cash balance of US$57.5 million.

Rhipe Limited (ASX:RHP)

Rhipe Limited is a Cloud Channel Company which offers business development & licensing, and knowledge services to assist services providers, software vendors, and system integrators speed up the implementation of the cloud by the end-user.

In the past three months, the shares of RHP have delivered a return of 53.08%. On 22 June 2020, RHP stock last traded at A$1.935, down 2.764% from the previous close.

Updates during the past three months:

Completion of A$33.6 million unconditional placement:

On 21 April 2020, RHP announced the completion of A$33.6 million unconditional placement of ordinary shares to sophisticated and institutional investors and conditional placement of A$0.2 million to Directors and employees.

The proceeds would support the company to strengthen its balance sheet as well as pursue acquisitions that are corresponding to its current cloud software subscription business.

Trading Update:

On 17 April 2020, RHP provided a trading update for nine months ended 31 March 2020.

  • Sales grew up by 32% and revenue by 19% as compared to the previous corresponding period (pcp).
  • Sales and revenue growth were driven by the rise in the sales of Microsoft’s Cloud Solution Provider products. The increase in Microsoft Office365 and Azure products remained consistent with the previous announcement.
  • Operating profit improved 14% to A$9.7 million apart from the investment in the new Japanese joint venture on pcp.
  • RHP’s joint venture signed up ten partners with the first sale.
  • Cash position on 31 March 2020 was A$23.5 million.

Bigtincan Holdings Limited (ASX:BTH)

Bigtincan Holdings Limited assist sales and services team in improving their win rates and customer satisfaction. BTH’s mobile, AI-powered Sales Enablement Automation Platform enables sales and service representatives to boost their use of content to connect with clients and prospects more efficiently.

In the past three months, the shares of BTH have delivered a massive return of 200.00%. On 22 June 2020, BTH stock last traded at A$0.770, down 3.145% from the previous close.

Updates within the past three months:

Completion of the Share Purchase:

On 19 June 2020, BTH completed the share purchase plan. It received more than valid applications from qualified shareholders totalling ~A$16.1 million.

Completion of Institutional Placement:

On 21 May 2020, BTH announced the completion of A$35 million institutional placement, where each share was issued at A$0.67.

The proceeds from the equity raising would support in accelerating its key strategic priorities highlighted by the company in its 1HFY20 results. It would also support the company to take advantage of SaaS market tailwinds as the market pace of digitisation & mobilisation of work speed up. These funds would also be used in growing technology investments to continue product leadership and would strengthen the balance sheet to take advantage of M&A opportunities that comes amid FY2021/2022.

Quarterly Rebalance:

In the quarterly rebalance of the S&P/ASX index revealed on 12 June 2020, BTH was included in All Ordinaries, effective at the Open on 22 June 2020.

Q3 Highlights:

  • Customer cash receipts improved 178% to A$14.9 million, from the March 2019 quarter of A$5.4 million.
  • Cash operating payments soared 63% to A$11.1 million.
  • By the Q3 FY2020 ended 31 March 2020, BTH had net cash and cash equivalent of A$31.5 million.

Serko Limited (ASX:SKO)

Serko, using intelligent technology, eases the process of booking and managing business travel and related expenditures.

In the past three months, the shares of SKO have delivered an outstanding return of 165.55%. On 22 June 2020, SKO stock last traded at A$3.060, down 3.165% from the previous close.

Updates in the past three months:

Market Update:

Business travel disruption due to COVID-19 significantly impacted travel transactional revenue. However, SKO’s cash position (A$42 million as on 31 March 2020) remained strong after its capital raising in October 2019.

The company implemented a cost reduction program and eliminated non-essential expenditure and reduced operating expenditure. It retained its core development teams and achieved cost savings via a drop of external contractors & rationalisation of non-essential staff.

During the lockdown period, Serko utilised the time in strengthening its core technology and expects that it would be in a better position once business travel resumes.


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