The COVID-19 turmoil has resulted in a global economic crisis and has impacted most of the sectors worldwide. During the period when most of the industries were grappling with the coronavirus, some companies took this as an opportunity to support businesses in other sectors. A significant chunk of such companies was from the technology sector.
As more and more people were restricted to their homes because of the lockdowns and social distancing guidelines, it was the technology sector that supported other businesses so that their people can operate from a remote location.
Online conference calls, e-learning, network availability, cybersecurity have been some of the key areas under discussion ever since the lockdown measures started taking shape. Thus, focus on the technology sector increased as they were required to support a significant number of employees working from home by providing better network options, enhanced tools, and improved security, among others. The situation benefitted these companies and thus helping them strengthen their respective balance sheets.
In this article, we would be looking at two such companies - AssetOwl Limited and TechnologyOne Limited and see their recent updates.
AssetOwl Limited (ASX:AO1)
AssetOwl Limited is a tech company that has built an enterprise software application that allows real-estate owners to operate their properties remotely via a reliable platform.
Closure of the entitlement offer:
On 22 May 2020, AssetOwl Limited announced that it closed the non-renounceable pro-rata entitlement offer on 20 May. Under the Entitlement Offer, the qualified shareholders were offered to register on the record date to subscribe for three new shares for every eight shares held at an issue price of $0.008 per share to raise $903,662 (before costs).
The Company received applications for 78.951 million new shares which include applications for 29.034 million new shares above shareholders’ entitlements, to raise $631,606 before costs. It comprises of applications from eligible shareholders who are the Directors of the Company & their related parties for 22.523 new shares. Besides, significant shareholder Ogee Australia Pty Ltd applied for $55,000 of its entitlements under the Entitlement Offer.
Through Sequoia Corporate Finance Pty Ltd, the lead manager of the Entitlement Offer, AssetOwl received applications from investors to apply for Shortfall to the Entitlement Offer.
The Company has also secured binding commitments from investors to acquire the Shortfall, being 34.007 million new shares, to raise $903,662. The Company will issue new shares once the funds are received.
The proceeds from the Placement and Rights offer would be used for scaling the deployment capability of inspector360, which is the photo-centric property management platform of the Company. It would also provide working capital when the Company increases its customer base for inspector360.
Marketing of inspector360:
On 12 May 2020, the Company updated on the progress of the launch of inspector360, a property management platform, to real estate agencies & property managers across Australia.
On 9 April 2020, AssetOwl announced the beginning of a 12-month exclusive partnership with a leading provider of property management solutions, PPM Group.
PPM Group is a national coaching, training and product development company that has 20 years’ experience in providing service and assist the property management industry. PPM group has one of the largest property management databases in Australia. It manages the database and is kept up to date with regular monthly contact to clients, members, and subscribers.
AssetOwl has spent during April 2020 was working with PPM Group to enhance a marketing campaign before the launch of inspector360. The campaign included targeted social media posts, real estate industry competitions to encourage registration as well as informational posts to instruct property managers while endorsing inspector360.
AO1 shares have delivered a YTD return of 41.02%. By the market closure on 22 May 2020, AO1 shares were trading $0.008, in line with the previous close. The Company has a market cap of $3.01 million and ~ \376.22 million outstanding shares.
TechnologyOne Limited (ASX:TNE)
TechnologyOne Limited is the largest enterprise software company in Australia. TNE provides a global SaaS ERP solution that transforms business and makes life simple for its clients. The Company’s enterprise SaaS solution is accessible on any device, any location, any time, and is very easy to use.
On 19 May 2020, the Company announced its 1H FY2020 results for the half-year ended 31 March 2020 and reported 6% growth in the profit to $19.1 million because of robust demand for its Global SaaS ERP Solution.
Let us look at the key results for the six months ended 31 March 2020.
- Revenue during the period increased by 7% to $138.398 million as compared to the previous corresponding period (pcp).
- TNE noted 36% growth in its SaaS fees to $51.053 million on pcp.
- Expenditure reduced by 7% to $112.458 million.
- Profit Before Tax soared by 6% to $25.940 million.
- Dividend for the period was 3.47 cents per share (60% franked), up 10% on pcp.
- SaaS Annual Recurring revenue increased by 33% to $110.2 million.
- Cash Flow generation during the period was $9.9 million, improved more than 100%.
- Cash and cash equivalent increased by 23% to $84 million.
Outlook for FY2020:
The market where the Company provides services is mostly resilient. The Company expects that its SaaS ARR growth, the key indicator of the strength of the Company’s offering is anticipated to be up 30%+. Profit growth is projected to be in between 8% to 12%.
The Company was positioned well for the future and would continue to double in size every 4 to 5 years.
Long Term Outlook:
- Profit margin is expected to grow to 35+% and would be driven by significant economies of scale from our single instance global SaaS ERP solution.
- In FY2024, Total Annual Recurring Revenues would grow to $500+ million.
TNE shares have delivered a YTD return of 20.12%. In the previous three months, TNE shares have provided a return of 23.26%. By the end of day’s trade on 22 May 2020, TNE stock settled at $9.910, up 0.916% from the previous close and is near to its 52 weeks high price.
TechnologyOne Limited has a market cap of $3.13 billion and around 318.67 million outstanding shares.
Please note: $ used in the article refers to Australian dollar unless stated otherwise.