The technology sector comprises of companies engaged in providing software solutions and AI-based services, among others. At present, when we talk about technology, the first things that come to an individual’s mind are artificial intelligence, cloud computing, cybersecurity, machine learning, and drone technology, as they are the future of the industry.
The sector is extremely dynamic and witnesses significant changes with each passing day. Companies in the tech space tend to have a higher Price to Earnings and Price to Sales ratio as market participants are more confident about their earnings potential, given the widespread use of technology in all the industries. However, there are risks associated in the tech space because of the pace at which technologies become outdated and the constant advancements.
In this article, we will look at some high-performing, ASX-listed companies in the tech space – BTH, MNF and WTC.
Bigtincan Holdings Limited (ASX:BTH)
Bigtincan Holdings Limited is a global software company, which provides a leading AI-powered sales enablement automation platform. The Company’s major income is drawn from contracted and recurring revenues with subscription revenue reflecting around 95% of total revenue.
Acquired New Customer in March 2020 Quarter
BTH recently notified the market with its operational and financial performance for the three months ended March 2020 and outlined the following:
- During the period, the Company introduced a coronavirus awareness toolkit and remote working awareness course, to help companies which are adopting working from home.
- Considering the uncertainty caused by COVID-19 pandemic, the Company has reviewed its operations and adjusted the operating cost base. BTH was also focused on efficiency and productivity in sales and marketing, product development as well as general administration throughout its global operations.
- BTH announced a new customer “DXC Technologies” during the quarter and continued the practice to focus on expanding existing customers and acquiring new customers.
- Customer cash receipts for the period stood at $14.9 million, reflecting a rise of 178% as compared to $5.4 million in March 2019 quarter.
- Cash operating payments went up by 63% to $11.1 million, versus $6.8 million for the previous corresponding quarter. The Company closed the quarter with the cash and cash equivalents of $31.5 million.
On the outlook front, the Company has reiterated its guidance for FY20 and expects organic revenue growth in the ambit of 30-40% with stable retention on a YoY basis.
BTH stock was trading at $0.780 on 30 April 2020 (at 01:30 PM AEST), an increase of 5.405% over its previous close. The market cap of the Company stood at $228.74 million, and BTH had ~309.1 million shares outstanding. The stock has generated an impressive return of 67.50% in the past month.
MNF Group Limited (ASX:MNF)
MNF Group Limited provides broadband VoIP services to the residential and business markets in Australia. Considering fluid and unusual circumstances created by the COVID-19 pandemic, the Company has notified the market with the operational and trading updates, which are as follows:
- The Company continues to refine and improve the initiatives undertaken to deal with COVID-19, which commenced during February, to hedge the risk for its people. Initiatives involved protocols initiation, which consists of a complete transition to work-from-home with the employees now using MNF tools to remain connected.
- MNF is experiencing a bigger demand for collaboration and voice technology as work and school continue to run from home, given the restrictions imposed by the government on social gathering. The Company added that the demand for information as well as improved connectivity via technology has increased.
- As a provider of telecom software and communication technologies, the Company continues to witness robust demand for its major products.
- Considering the increase in demand from small businesses, government customers, and enterprises for voice services, the direct business of MNF is witnessing higher than normal usage volumes. Its domestic Wholesale business is profiting from the increased demand for voice minutes.
Coming to the liquidity position, the cash balance of the Company stood at $38.6 million with undrawn committed debt facilities of $30.0 million as on 31 December 2019. The Company recognises that the COVID-19 situation is continually evolving and that there is robust demand, at present, for its services, but the external environment is uncertain. For Financial Year 2020, the Company expects EBITDA in the vicinity of $36 million to $39 million.
MNF stock was trading at $4.700 on 30 April 2020 (at 01:30 PM AEST), an increase of 2.845% over its previous close. The market cap of the Company stood at $385.3 million, and MNF had ~84.31 million shares outstanding. The Company has a P/E ratio of 28.210x and has generated a positive return of 2.24% in the past month.
WiseTech Global Limited (ASX:WTC)
WiseTech Global Limited provides software solutions to the logistics services industry globally. Recently, the Company updated the market with the performance for the quarter ended 31 March 2020:
- WTC stated that its business reflects continued growth in revenue, cash generation from operations and further onboarding of additional users, which substantially offset the anticipated reductions from disruptions caused by COVID-19. This includes the deferred launch of new products and the slowdown in new business growth.
- The financial position of the Company is resilient with solid cash generation, as well as significant liquidity to assist its strategic and operational initiatives. As on 31 March 2020, the net cash balance of WTC stood at $230 million, and its established debt facility of $190 million is undrawn with a further $200 million facility in place.
- The Company is well-financed to execute its strategy under numerous circumstances, and it is not planning to raise additional capital or debt.
For FY20, the Company is expecting revenue in the range of $420 million - $450 million while EBITDA is likely to be in the ambit of $114 million - $132 million. The Company is confident that COVID-19 would continue to negatively impact many economies as well as global supply chain movements, throughout all modes of transportation. It anticipates that the demand for global technology, digital transformation and integrated platforms, like CargoWise, would continue to rise. The Company is hopeful that it has a vast long-term opportunity.
WTC stock was trading at $18.450 on 30 April 2020 (at 01:30 PM AEST), an increase of 4.949% over its previous close. The market cap of the Company stood at $5.6 billion, and WTC had ~318.38 million shares outstanding. The Company has a P/E ratio of 60.830x and has generated a positive return of 8.83% in the past month.