Winning Streak for ASX Tech Stocks: PPH, SZL, XRO, DTC

  • Jul 14, 2020 AEST
  • Team Kalkine
Winning Streak for ASX Tech Stocks: PPH, SZL, XRO, DTC

Summary

  • The technology sector has witnessed a surge in demand for various services ranging from digital payment technologies and cybersecurity to e-learning applications and online gaming.
  • Since the 23 March-low, the S&P/ASX All Technology Index has risen by ~91%.
  • Pushpay reported 32% growth in its revenue in FY2020; expects its EBITDAF to range from US$50 million to US$54 million.
  • Damstra Holdings has signed an implementation agreement to acquire Vault Intelligence Limited via Scheme of Arrangement.

With an increase in demand for a range of products and services including business management related services, digital payment technologies, online gaming, network security, and e-learning applications, the technology sector players have been busy in catering to the sudden shift in service requirement. The tech sector has played a vital role in supporting different industries to adapt to the changing trends in the current environment.

The performance of its components directly influences the performance of a sector index. In the last year, the S&P/ASX 200 Information Technology Sector index has delivered a return of 17.86%. From 23 March 2020 till 13 July 2020, the index had gone up by 90.53%. The YTD return of the index is 12.70%.

In this article, we would look at four ASX-listed technology stocks and see their respective performance the recent updates.

Pushpay Holdings Limited (ASX:PPH)

Pushpay Holdings Limited provides donor management system. It includes finance tools, donor tools & custom community applications to the faith division, non-profit businesses & education contributors in the US, Canada, Australia, and New Zealand.

PPH stock has consistently delivered a positive return to its investors since it got listed on ASX. In the last three months and six months, the shares have delivered impressive returns of 117.21% and 109.38%, respectively. On 14 July 2020, PPH shares were trading at A$7.895 (at 1:58 PM AEST), down 9.357% from the last close.

On 14 July 2020, Pushpay announced that shareholders connected with the Huljich family entered a block trade agreement under which the shareholders sold 25% of their share in the Company. Post the deal with UBS New Zealand Limited and J.P. Morgan Securities Australia Limited, the shareholders will have a combined interest in ~43.2 million shares.

In the annual presentation on 18 June 2020, the Company reported a 32% growth in the revenue to US$129.8 million. EBITDAF was up 1,506% to US$25.1 million. Profit before tax grew 1,631% to US$21.7 million.

Image Source: PPH's report

In FY2020, around 25.9 million transactions were processed with average transaction value over the year of US$195. The count of total customers by 31 March 2020 stood at 10,896.

Pushpay during COVID-19:

During the COVID-19 crisis, the Company shifted to digital mode as the services moved online. It noted an increase in the demand for the services. Pushpay also partnered with Stream Monkey during the period.

Guidance for FY2021:

In FY2021 ending 31 March 2021, the Company expects its EBITDAF to range from US$50 million to US$54 million.

Sezzle Inc. (ASX:SZL)

Sezzle is a public-benefit corporation based in Minneapolis, Minnesota aiming to empower the next generation financially. Its #1-shopper-rated BNPL product allows various shoppers across the US and Canada to control their expenses.

The shares of SZL have remained consistent in delivering positive and impressive return since its ASX debut. In the last three months and six months, the shares have delivered exceptional returns of 490.28% and 372.22%, respectively.

On 14 July 2020, SZL shares were trading at A$7.640 (at 1:58 PM AEST), down 10.118% from the last close.

Completion of A$79.1 million via placement:

On 13 July 2020, SZL announced the completion of a fully underwritten institutional placement of 14.9 million CDIs at A$5.30 per CHESS Depository Interest (CDI). SZL raised A$79.1 million via placement which was well supported by the existing and new CDI holders. The Company has plans to raise another ~A$7.2 million via non-underwritten Security Purchase Plan (SPP). The proceeds via fully underwritten institutional placement and SPP would be used to accelerate its growth strategy and strengthen its balance sheet.

Q2 FY2020 Highlights:

  • Underlying Merchant Sales improved by 58% QoQ to US$188 million and over 349% to A$272.3 million.
  • Active Consumers grew 28% QoQ to 1.48 million and active merchants by 27% QoQ to 16,112.
  • Consumer profile improved because of increased repeat usage and purchase frequency of cohorts.

Outlook:

The Company anticipates achieving an annualized run rate for UMS surpassing US$1 billion per annum by the closure of FY2020.

Xero Limited (ASX:XRO)

Xero Limited offers online accounting software for small businesses.

Xero shares have consistently delivered a positive return since it got listed on ASX. In the last six months, the shares have delivered a return of ~11% and the three-month return was ~18%. On 14 July 2020, XRO shares were trading at A$89.450 (at 1:58 PM AEST), down 3.662% from the last close. At present, the XRO shares are close to their 52-week high price.

Xero’s plans in July 2020:

In a recent media release on 8 July 2020, the Company shared its activities for July 2020. Some of them include:

  • Understanding of new machine learning search functionality in the Xero App Marketplace. Now, there are 800 apps to assist small businesses to grow from moving sales online to forecasting cash flow and managing inventory.
  • Several updates have been made on the Xero platform over the last month. These include sending bills Xero via email, creation of the beautiful report, and maintain best-practice security.

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Damstra Holdings Limited (ASX:DTC)

Damstra Holdings Limited provides integrated workplace management solutions across multiple industry segments globally. The Company develops, sells, and implements integrated hardware and SaaS solutions in industries where compliance & safety are of extreme significance.             

Damstra has performed consistently on the ASX. In the last three months and six months, Damstra shares have delivered attractive returns of 97.86% and 40.61%, respectively. On 14 July 2020, DTC shares were trading at A$1.345 (at 1:58 PM AEST), down 2.888% from the last close.

Acquisition of Vault Intelligence Limited:

On 8 July 2020, Damstra Holdings announced that it signed an implementation agreement to acquire Vault Intelligence Limited via Scheme of Arrangement. Under the agreement, the shareholders of Vault would receive one share in Damstra for every 2.9 Vault shares held by them.

The offer signifies a 36.5% premium to undisturbed Vault closing price. Vault shareholders will come out with 25% of fully diluted Damstra issued capital.

Damstra’s legal adviser for the entire process is Gilbert + Tobin.

FY2020 Trading Update:

Damstra announced that the business achieved strong FY2020 unaudited results. The performance of the Company has consistently performed well and is particularly pleased with the result because of the dramatic economic impacts along with industry disruptions triggered by COVID-19.

In FY2021, the Company expects its EBITDA on an unaudited basis for FY2020 to be A$5.5 million. In FY2020, the revenue and other income generated by the Company was A$22.1 million, up 39% as compared to FY2019. In FY2021, DTC expects its business to grow at a rate similar rate to that in FY2020 of 30% to 40%.

 


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