Performance and Outlook of 4 IT Stocks - APX, TNE, SKO, AD8

We are in the earnings season, and most of the investors are looking for their favourite stocks’ performance. In this article, we have cherry-picked four stocks from the technology sector, which have updated the market with their performance and outlook.

Appen EBITDA Up 42% In FY2019

On 25 February 2020, Appen Limited (ASX: APX), a global leader engaged in developing superior, human-annotated datasets for machine learning (ML) & artificial intelligence (AI), released its FY2019 results for 12 months ended 31 December 2019.

FY2019 Result Highlights -

• The company reported a 47% year on year growth in its revenue to $536 mn.
• Underlying EBITDA increased by 42% to $101 mn and statutory EBITDA went up by 29%.
• Underlying net profit after tax (NPAT) grew by 32% to $64.7 mn while statutory NPAT remained flat on the previous corresponding period (pcp).
• Organic revenue increased by 37% to $498.1 mn.
• Organic underlying EBITDA increased by 51% to $107.3 mn.
• Dividend declared: 5 cents per share to be paid on 20 March 2020. Total dividend for FY2019 stood at 9 cents per share.

Pleased with the company’s FY2019 performance, Appen CEO Mark Brayan highlighted the company’s ability to maintain a high level of growth in revenue & convert this into improving margins and earnings growth.

He felt extremely proud that the company not only delivered strong FY2019 results, but also maintained a strong focus on the ethical treatment of its crowd along with a continuing dedication to social impact via its Crowd Code of Ethics & membership of the Global Impact Sourcing Coalition.

Appen reported a 32% increase in its revenue from Speech and Image to $67.7 mn on pcp. Relevance revenue grew 37% to $430 mn and margin improved to 25.7%.

Outlook

At A$1 = US$0.70, Feb-Dec 2020, the full-year (ending 31 December 2020) guidance for the company’s underlying EBITDA is $125 mn - $130 mn. Mr Bryan has a positive outlook for the company.

10 Consecutive Years of Record Profit for TechnologyOne Limited

Australia's largest enterprise software company, TechnologyOne Limited (ASX: TNE), on 25 February 2020, released a presentation highlighting its FY2019 results, outlook for FY2020 plus its long-term outlook.

• Revenue was up by 13% to $286 mn. SaaS Annual Recurring Revenue went up by 44% to $102 mn.
• For FY2019 ended 30 September 2019, the company delivered a net profit before tax of $76.4mn, a growth of 50% on the prior year. It was the tenth consecutive year for the company with a record profit.
• The company declared a total dividend of 11.93 cents per share, representing a growth of 8%.
• Profit margin increased to 27%, propelled by the substantial economies of scale from its single instance global SaaS ERP solution.
• Balance sheet of the company remained strong, with 38% growth in net assets to $29.4 mn.
• Cash and cash equivalents by the end of FY2019 grew by 1% to $105 mn.
• From the APAC region, profit increased to $78.3 mn while from the UK, the company reported a loss of $1.9 mn.

Outlook:

SaaS is the driver of the company’s continuing strong growth and the enterprise software market is accelerating its move to Software as a Service. The company’s key markets which include local govt, higher education, and govt & govt related businesses, remain solid.

The company expects to register strong profit growth in 2020 and to continue to double its size every 5 years.

Serko Expecting FY20 Operating Revenue Growth Near Low End of Guidance

On 25 February 2020, Serko Limited (ASX: SKO), a provider of integrated cloud-based corporate travel booking and expense management solution, released a market update where it highlighted on the factors which would affect its FY2020 revenue performance. The company is due to release final results for the current FY20 year in May 2020.

As per the company’s announcement during May 2019, total operating revenue growth was expected to come in the range of 20% to 40% for the year ending 31 March 2020. However, based on the current market trend, the company expects operating revenue growth to be at the lower end of the guidance.

Given the coronavirus epidemic, the company has been closely observing travel booking trends in the Australasian region and noted that transactions year-to-date went up when compared with the same period a year ago. However, over the past week, there had been a fall in bookings, owing to travel decline because of the Covid-19.

The company anticipates softer transaction counts to continue, as corporate clients are making changes to their travel policies in order to put a check on unnecessary travel.

These events have moderated otherwise strong increase in the Australasian market from total new business plus the shift of existing clients from Serko Online to Zeno. At the mid of February 2020, there was an increase in the total number of new corporate customers by ~ 584 YTD for the company, while Zeno transactions accounted for ~ 25% of the online booking transactions.

North American transactions have begun, after the shift of numerous Travel Management organisations from the test stage to onboarding of their 1st corporate clients. Still, there is a doubt in terms of revenue numbers to be significant for this financial year, as the company confirms that Zeno is appropriately tailored as per the market requirement in North America.

There are several factors that are likely to positively and negatively impact the company’s revenue during the remaining part of FY20.

Audinate Group Registers Revenue and Gross Profit Growth in First Half

On 24 February 2020, Audinate Group Limited (ASX: AD8), a developer of the professional AV-industry leading Dante® media networking solution, released its 1H FY2020 results for the period ended 31 December 2019.

• The company reported a 14% growth in revenue to $16.1 mn as compared to the previous corresponding period, primarily driven by the impact of US tariffs and global macro-economic conditions.
• Gross profit rose 20% to $12.5 mn on pcp.
• Operating cash flow soared 425% to $2.9 mn.
• Total Dante-enabled products were 2,371, a growth of 35% on 1H FY2019.

According to CEO Aidan Williams, AD8 continued to perform in line with its strategic goals, delivering ongoing revenue & gross profit growth, supported by software sales growth. The Dante ecosystem continues to grow & interest in Dante is bigger than ever with the release of record 147 new Dante enabled products at the recent Integrated Systems Europe Event.

Outlook:

As highlighted above, the company experienced impacts from the macro-economic conditions and US tariffs in 1H FY2020, and it expects the situation to continue in 2H FY2020 along with the potential Coronavirus impacts. In spite of these challenges, the company expects further growth in its revenue, although below the historical range.

Beyond FY2020, rise in Dante enabled products, increasing software sales and other leading operational indicators would provide confidence to the company to deliver attractive long-term growth for shareholders.

Stock information of the above-discussed companies listed on ASX, as on 25 February 2020 -

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