VGL, ERD, RAK: Top 3 NZX tech stocks by market cap

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VGL, ERD, RAK: Top 3 NZX tech stocks by market cap

 VGL, ERD, RAK: Top 3 NZX tech stocks by market cap
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Highlights

  • Companies within the tech sector need to invest swiftly in R&D to innovate, expand and grow their customer base.
  • VGL signed its first major deal to shift an American enterprise client to the Vista Cloud platform on 30 May.
  • EROAD expects its revenue to be between $150 million - $170 million in FY23 and increase to at least $250 million in FY25.

New Zealand has a thriving tech sector, which employs over 12K employees and is the third biggest export sector of the country. Companies within the tech sector need to invest swiftly in R&D to innovate, expand and grow their customer base.

Budget 2022 has reintroduced grants for new research and development, announcing $250 million investment in the next 4 years. Stats NZ data has revealed that software businesses have invested over $1 billion in R&D in the past year.

The NZ government has been working beside the tech industry on a Digital Technologies Industry Transformation Plan (ITP). The plan will assist NZ’s tech companies in realising their capability as producers of jobs and export revenue.

Amid this background, let’s skim through 3 top tech stocks that have the highest market cap on the NZX.

Source: © 2022 Kalkine Media®

Vista Group International Limited (NZX: VGLASX: VGL)

A technology solutions supplier to the movie industry, Vista Group, has a market cap of $387 million.

On 30 May, VGL signed its first major deal to shift an American enterprise client to the Vista Cloud platform. The Group will transition more than 300 sites from the existing client to its cloud platform under the 10-year contract. The deal is likely to begin in Q3 2022.

DO READ: RAK, WDT, ERD: 3 NZX tech stocks creating buzz among Kiwis

The deal is in line with Vista’s SaaS revenues and the Group plans to bring the client and others in the pipeline in 2022 and 2023.

Vista ended the day flat to close at $1.66.

EROAD Limited (NZX:ERDASX:ERD)

EROAD is a transportation technology services company and has a market cap of $251.3 million. The Group’s revenue rose from $91.6 million to $114.9 million but the company’s normalised EBITDA declined from $30.7 million to $21 million in FY22 compared to FY21.

Do Read: Look at the 5 largest NZX tech stocks

The Group’s NZ market delivered strong growth with customers crossing over 100K connected vehicles, while Australia posted its first year of positive EBITDA.

The Group expects its revenue to be between $150 million - $170 million in FY23 and increase to at least $250 million in FY25. It also expects EBIT to be between -$5 million and breakeven in FY23.

ERD ended the day flat to close at $2.27.

Rakon Limited (NZX:RAK)

The creator and maker of superior-frequency control and timing solutions, Rakon, has a market cap of $355 million.

The Group posted record earnings in FY22 because of persistent strong growth in global demand for its frequency control and timing solutions. Rakon witnessed a 34% rise in total revenue to $172 million and a 132% increase in underlying EBITDA to $54.4 million in FY22. Its NPAT sky-rocketed 244% to $33.1 million for the year.

Related Read: Rakon reports spectacular full-year results; registers record earnings

Rakon has a positive outlook for the future with a robust development pipeline, new proprietary chips in works and new XMEMS nanotechnology.

RAK ended the day 0.65% in green to close at $1.55.

Bottom Line

The tech sector has a much better outlook going ahead than other sectors as commerce has gone online. Subsequently, the sector is likely to attract more investments.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)

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