A glance at financial performance of these ASX tech stocks

Highlights:

• Recently, many ASX-listed technology companies have shared their 2022 annual general meeting update.
• Australian information technology index has lost almost 33% in the last one year and on a year-to-date basis it has dropped by approximately 30%.

In 2022, the financial performance was significantly disrupted by floods, pandemic, rising inflation, fear of recession and global conflicts. Australian technology sectors seem to be significantly affected by these disruptions as the technology index, ASX 200 Information Technology index (INDEXASX:XIJ) fell by approximately 33% in one year. Since the beginning of 2022, the index has lost circa 30% (as of 30 November 2022).

In November 2022, a few ASX-listed technology companies have released the 2022 annual general meeting (AGM) update. This article discusses the update shared by WiseTech Global Limited, Computershare Limited, Altium Limited, and Link Administration Holdings Limited.

WiseTech Global Limited (ASX:WTC)

WiseTech develops and offers software solutions to the logistics industry worldwide. The company said that it had added more than 4,900 product enhancements to its global platform in the past five years. 

During the AGM results, Andrew Harrison, WiseTech Global Chair, first talked about the market conditions during the financial year 2022 (FY22), in which he highlighted that Covid-19 caused substantial disruptions to the supply chain globally. Disruptions like labour shortage, port congestion and capacity constraints.

Despite these challenges, the company reported a 25% rise in its total revenue. Revenue from the CargoWise platform surged by 35%, representing an increase in usage by current customers and the signing of new customers. The company reported recurring revenue of 89% and an attrition rate which is less than 1%. 

Over the previous year, EBITDA grew by 54%, and EBITDA margin grew by nine percentage points. Free cash flow increased by 71%, driven by growth in EBITDA. The statutory NPAT surged by 80% and the underlying NPAT by 72%.

WiseTech’s board determined to pay a final dividend of 6.40 cents per share, up 66% from the previous year. The existing dividend policy of the company is to target a dividend payout ratio of around 20% of NPAT.

According to ASX filing, the company expects 20 - 23% growth in revenue in FY23. The expected growth in the CargoWise business is around 30 – 35%. The anticipated growth in yearly EBITDA is 21-30%.  

Computershare Limited (ASX:CPU)

Established in 1978, Computershare offers software solutions for high-volume transaction reconciliation and processing, integrity data management and stakeholder engagement. The company operates across five continents. 

In the AGM 2022, Simon Jones, chairman of Computershare, informed the market that full year earnings during FY22 were ahead of guidance. It grew by 12.2% to AU$2.6 billion. With the implementation of cost controls during the year, the company managed the effect of inflation as the group enjoyed the benefits of increased interest rates by the end of the year. 

As reported, management EPS grew by more than 10% and management EBIT increased by 19%. During the year, the free cash flow was more than AU$320 million.

The highlight of the year was the acquisition of Canadian Corporate trust (CCT) in the US. Stuart Irving, CEO of the company, said that the business is exceeding expectations. This transition added more than AU$18 billion of client balances and increased leverage to rising interest rates. In FY23, the company anticipates the business to deliver circa AU$450 million of EBITDA and a margin income of around AU$400 million. The expected ROIC is 32%. 

Through AGM, the company also provided a year-to-date trading update. According to ASX announcement, the trends observed during the fourth quarter have continued in FY23. CCT is performing well, and margin income drives the group’s performance.

In FY23, the company expects margin income to be approximately AU$800 million, and in FY24, the expected margin income is approximately AU$1 billion. The company expects to report management earnings per share of around 90% in FY23.

Altium Limited (ASX:ALU)

Founded in 1985, Altium offers innovative PCB design software to manufacture and develop electronics products in an efficient manner and at a faster pace. 

In FY22, the revenue grew by 23% over the previous year, and the EBITDA margin increased to 36.7% from 34.3%. In the AGM 2022, the company mentioned that strong platform adoption and business model transition drove the average subscription seat price and recurring revenue. 

Operating cash flow grew by 17%, and recurring revenue increased to 75% from 65%.  

According to ASX filing, the company is on track to meet its guidance range for the fiscal year 2023. The company expects 15-20% growth in the total revenue and an underlying EBITDA margin of 35-37%.  

Link Administration Holdings Limited (ASX:LNK)

Link is a digitally enabled business that helps establish connections between people and their assets. 

During FY22, the company reported a 1.3% rise in revenue, an 8.8% increase in operating EBIT, and a 7.1% surge in operating NPATA. The Operating EBIT margin increased from 12.2% in FY21 to 13.1% in FY22, and recurring revenue fell from 84.6% to 84.1%. 

While sharing the AGM update, the company reaffirmed its guidance for FY23; that is, the expected growth in operating EBITDA is 8-10% in FY22. The group revenue is expected to rise by a single digit. 

In FY22, the company was working towards the proposed acquisition of Link by Dye & Durham Corporation. For implementing the scheme, certain conditions precedent was necessary to be satisfied. At the second court hearing on 23 September 2022, the court did not approve the scheme and proceedings were dismissed. As a result, the proposed scheme would not proceed further.