Are Small-cap Tech and Digital Stocks Finding A New Pillar of Growth?


  • With the increase in work from home culture, many tech stocks have gained traction in the market.
  • SKO is well-placed for growth when the travel industry starts its recovery, and trading conditions begin to improve.
  • In order to strengthen its balance sheet, VGL has adopted wide-ranging measures.

During the current COVID-19 crisis where several companies are struggling to survive with lockdowns and social distancing norms impacting their respective businesses, it can be said that technology companies have evolved as a winner during this period. Because of the lockdown in multiple geographies, more and more people were allowed to work from home as per the government guidelines to prevent the spread of coronavirus.

Let us look at five small-cap tech stocks that investors have their eyes on.

Serko Limited (NZX: SKO)

Fourth Quarter Performance Drags Down Full Year Results

The first three-quarters of FY20 showed monthly revenue growth, and the company also achieved some key milestones. However, its performance was impacted in the Q4 because of COVID-19 pandemic that affected booking volumes. Total income from all sources rose by 9 percent to $26.8 Mn from $24.6 Mn in the prior year. Notably, net loss after tax for the year stood at $9.4 Mn, down from an FY19 profit of $1.6 Mn and EBITDAF fell to a loss of $6.1 Mn from a profit of $2.6 Mn in the same period a year ago.

Financial Dashboard (Source: Company Reports)

Outlook for FY21

The company considers itself to be well-positioned for growth when the travel industry recovers, and trading conditions start to improve. The company has a strong hold in Australasia, with its major transactions being domestic and Trans-Tasman in home markets. The company is now mainly focussing on domestic travel within North America, where it continues to add resellers to its platform and continue development work to localise content in that region.

Stock Performance

The stock of SKO closed the day’s trading at $3.680 per share on 26th August 2020, reflecting a rise of 1.66% on an intraday basis. SKO has a market capitalisation of approximately $341.326 million.

Vista Group International Limited (NZX: VGL)

For the full-year ended 31st December 2019, VGL posted total revenue amounting to $144.5 Mn, up 11% and EBITDA of $31.1 Mn, down by 5%.

Financial Performance (Source: Company Reports)

The company has responded to challenging circumstances presented by coronavirus pandemic by taking wide-ranging measures in order to strengthen the balance sheet to ensure it is well placed to dodge significant downside scenarios. The company has managed to successfully wrap up NZD$65 Mn capital raise and witnessed robust support from the existing institutional as well as retail shareholders.

Stock Performance

VGL’s stock price closed the day’s trading at NZ$1.350 per share on 26th August 2020, reflecting a rise of 0.75% on an intraday basis. However, the stock has gained 5.46% in the past one month.

EROAD Limited (NZX: ERD)

EROAD Continues to Perform Well Despite Challenging Conditions

The company has provided its quarterly update for 3 months to 30 June 2020. Key highlights are:

  • The company’s New Zealand sales have returned to near normal growth levels across both the Small and Medium (SMB) and Enterprise growth segments;
  • ERD continues to operate as well as achieve growth throughout its 3 markets even though operating conditions are challenging;
  • Continued deployments towards additional functionality as well as products would help to extend EROAD North America product suite into the larger fleet sizes.

Financial Performance (Source: Company Reports)

Stock Performance

ERD’s stock closed the session at NZ$4.150 per share on 26th August 2020. The stock rose ~22.41% in the past one month and, in the time frame of 6 months, it has witnessed a rise of ~41.15%.

Plexure Group Limited (NZX: PLX)

PLX Reported Excellent Results

FY20 has been a successful year for the company as it reported total revenue of $25.5 million for the year ended 31st March 2020. Net profit after tax was $1.0 Mn, a stellar growth of 243% from FY19 loss of $0.7 Mn. In the month of April 2019, McDonald’s purchased 9.9 percent equity stake in Plexure.

Key Highlights (Source: Company Reports)

Stock Performance

The stock price of PLX closed the day’s trading at NZ$1.420 per share on 26th August 2020. Notably, the company’s market capitalisation stood at ~$199.338 Mn.

Smartpay Holdings Limited (NZX: SPY)

SPY Reports Strong Recovery in the First Quarter

In the release dated July 27, 2020, the company has provided trading update for first quarter to June 30, 2020 of FY 2021 financial year. The quarterly Australian acquiring revenue reflected 59 percent increase on same quarter of the last year and 11% fall on prior quarter.

Road Ahead

With COVID-19 largely behind, the company has prepared the business to resume and accelerate growth. The company has progressed with an external capital raise which was strongly supported by both current and new shareholders. The capital from this raise will allow it to continue to pursue its growth strategy and also increase its financial strength through significantly reducing debt.

Stock Performance

On August 26, 2020, the stock of SPY closed the day at NZ$0.685 per share, down by 1.44% on an intraday basis. SPY has a market capitalisation of approximately $143.485 Mn.

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