WTC, CPU, XRO, SQ2: How are these ASX tech stock performing?

Highlights:

• Following the Wall Street, ASX benchmark index, ASX 200 closed at 6,965.50 points, 1.95% down from the previous close.
• Today (29 August 2022), all eleven significant sectors closed in red.
• Information Technology was the worst performing sector as it closed more than 4% down.

Australian benchmark stock market closed sharply lower on Monday (29 August 2022). S&P/ASX 200 (INDEXASX:XJO) closed 138.60 points down at 6,965.50 points. Over the last five trading days, the index has lost 1.16% while in last 52 weeks, the index has shed off 6.98%.

The All Ordinaries index (INDEXASX:XAO) closed 2.075% down and S&P/ASX 200 VIX (A-VIX) closed 13.15% up. A-VIX is a real-time volatility index that provides insight into the expected market volatility and idea about the investor’s sentiments.  

All eleven significant sectors were in deep red today, information technology being the worst performer with a fall of 4.38%. The materials sector was down by 2.40%, and the financial sector was down 2.18%.

Including today’s fall, the Information Technology sector (INDEXASX:XIJ) has dropped by 2.18% in the last five trading sessions and in six months, it has corrected by 13.63%. In 12 months, it has declined by over 36.36%, and on a year-to-date basis, it has decreased by 32.11%.

Software & services, technology hardware & equipment and semiconductors & semiconductor equipment companies make up the Australian Information Technology sector. There are around 150 software and services companies that are listed on the ASX, and the present article focuses on the top software and services companies. Companies discussed here are - WiseTech Global Limited, Computershare Limited, Xero Limited, and Block Inc.

Why is ASX tech sector under selling pressure today?

The Australian tech sector has marked a significant fall today following the tech-heavy NASDAQ, which closed 4.56% down on Friday.

The US stock market headed south on Friday after Jerome Powell, US Federal Reserve Chairman, commented in a speech that stricter monetary policies would be required for some time in order to tackle inflation. Powell added that a hike in the interest rate would bring ‘some pain to households and businesses’’.

The tech sector has been most vulnerable to the expectation of the rise in interest rates. This happens because the value of the tech stocks is driven by the future earnings growth potential and the rising interest rates have an impact on the present cost of future revenue growth.

WiseTech Global Limited (ASX:WTC)

WiseTech provides software solutions to the supply chain industry. As per the company’s website, 170 countries are licensed to use the company’s product, and more than 18k customers are making use of WiseTech’s software.

During the financial year 2022 (FY22), the company registered a 25% rise in its group revenue and met the top end of the yearly guidance. EBITDA surged by 454% to AU$319.0 million, with a nine percentage points improvement in the EBITDA margin. Reportedly, underlying NPAT grew by 72% and statutory NPAT by 80% in FY21.

The company declared a final dividend of 6.40 cents per share, bringing the total dividend to 11.15 cents per share, a hike of 71% in FY21. The tentative payment date is 7 October 2022.

Today, WiseTech shares closed 4.84% lower at AU$56.26 apiece.

Computershare Limited (ASX:CPU)

Image source: © Shawnwil | Megapixl.com

Computershare offers software that are specialised in the stock, financial and share registry market. The services offered by the company are utilised by other companies to maximise and streamline the value of a relationship with customers, creditors, employees and investors.

In FY22, the company delivered a management revenue of AU$2.6 billion, 12.2% up on the previous year. Management EBIT grew by 19% and margin income by 74.3%. In 12 months, the company generated a free cash flow of AU$322.6 million.

Reportedly, the acquisition of Computershare Corporate Trust (CCT) has been exceeding expectations.

Computershare’s board has announced a final dividend of 30 cents per share, up 30% on the previous year’s final dividend. The expected payment date is 12 September 2022.

On Monday, Computershare shares closed 1.10% down at AU$24.35 per share.

Xero Limited (ASX:XRO)

Xero offers online accounting software to small businesses. The platform offers services related to the project, expenses, workforce management, payroll, and accounting solution. The company provides access to an ecosystem of over 1,000 connected apps and over 300 connections to financial institutions and banks.

The financial year of Xero ends on 31 March 2022, so it shared its earnings report in May 2022. During FY22, the company’s operating revenue increased to AU$1.1 billion, up by 29% on the previous year. Total subscribers grew by 19% to 3.3 million. Group’s EBITDA increased from AU$191.2 million to AU$212.7 million.

Xero has not declared a dividend yet.

Today, Xero shares closed at AU$83.09, 5.60% lower from previous day close.

Block Inc. (ASX:SQ2)

Image source: © Selagin | Megapixl.com

Block Inc. is a fintech company that develops tools to empower individuals and businesses to participate in the economy. Square, Cash App, Spiral, TBD and TIDAL are the building blocks of the company.

Block’s financial year ends on 31 December every year. Recently, the company shared its second-quarter report for FY22. During the quarter, the company reported a gross profit of AU$1.47 billion, an increase of 29% year over year. AU$208 million of net income loss was reported during the three months.

Block Inc. has not announced any dividend yet.

Today, Block shares have marked a fall of 7.84%. shares last traded at AU$97.50 per share.