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Summary
- The tech sector is leading from the front to deal with the challenging time amid COVID-19.
- There are many good technology companies listed on the London Stock Exchange in which one can invest.
Despite having a bumpy start this year, the UK technology sector has shown resilience and played an essential role in the revival of the economy amid the Covid-19 pandemic. The tech sector reached new highs in 2020 as lockdowns and restrictions due to the pandemic raised the demand for several web-based and online services, which prompted the growth of many tech companies. London being a prominent centre for global tech firms, saw billions of fundings for its home-based companies, which are expected to do well in the coming quarters.
As of January 2021, 55% of the UK workforce were working from home. In 2020, the number of $1 billion unicorn companies has increased from 10 in 2010 to 80 in the UK, taking the UK tech start-up and scaleup ecosystem value to $585 billion, as per the research data published by Tech Nation.
Let us look at some companies in the technology sector listed on the London Stock Exchange that are backed by strong financials:
Sage Group PLC (LON: SGE)
Sage Group is the second-largest technology company in Britain and world’s third-largest provider of enterprise resource planning (ERP) software. The company is confident that its investment in Sage business Cloud will speed up its growth as customers are moving towards digitalisation.
As per the group’s unaudited results for the six months ended 31 March 2021, organic recurring revenue grew by 4.4% to £811 million compared to £777 million a year ago, whereas total organic revenue reported a growth of 1.4% to £890 million. For the same period, the company reported a strong underlying cash conversion of 133% compared to 127% in H120, backed by continued growth in subscription revenue, improvements in working capital and strengthening receivables collection.
Softcat PLC (LON: SCT)
Softcat, which is a part of the FTSE 250 index, is a leading provider of IT solutions and services. As per the company’s trading update released for the third quarter ended 30 April 2021, the group had delivered double-digit growth in gross profit, revenue, and operating profit in its third quarter. Softcat is hopeful about the growth in its normalised EBIT during the next fiscal FY2022. Softcat holds a market capitalisation of £3,548.92 million.
Darktrace PLC (LON:DARK)
Darktrace is a leading provider of Autonomous Cyber Artificial Intelligence for enterprises across the globe. The company’s platform uses machine learning and AI algorithms to neutralise cyber threats across diverse digital estates. In June, the company has won an award for Best Security Company at the 2021 SC Europe Awards. The UK-based company operates in more than 100 countries and holds a market capitalisation of £3,306.77 million.
For the six months ended 31 December 2020, the company has reported revenue of $126.514 million compared to $91.076 million for the same period of unaudited financials a year ago. The company’s net asset stood at $297.336 million as of 31 December 2020 compared to $205.375 million a year ago.
Kainos Group PLC (LON: KNOS)
Software company Kainos develops IT and software solutions for businesses. It has two segments: Digital Services and Digital Platforms, which caters to government departments as well as individual companies. In June, the company acquired the Cloudator Workday segment to increase Kainos' Workday presence in Europe, adding 55 specialist Workday employees across the continent.
As per the group’s results for the year ended 31 March 2021, revenue growth of 31% (28% organic) reported to £234.7 million compared to £178.8 million a year ago. The adjusted pre-tax profit reported a growth of 124% to £57.1 million (2020: £25.5 million).
Micro Focus International PLC (LON: MCRO)
Micro Focus International PLC is a British multinational software and IT company that helps its clients run and transform their businesses. It is a part of the FTSE 250 index.
As per the company’s trading update released for the six months ended 30 April 2021, it expects to report revenue of approximately $1.4bn for the six months ended 30 April 2021 compared to a year ago, with a constant currency change of -5%.
