Foster Stockbroking identifies growth.
Over the last 2 years there have been many new ASX listings of technology companies. Along with the broader market, the last 12 months has seen somewhat of a consolidation phase for the technology sector, with the market becoming more selective and more demanding of tangible performance metrics.
But one thing is for certain – technology is here to stay. Global adoption rates of technology products is accelerating and will continue to do so. Every day technology becomes a larger part of our lives and ultimately no industry will be un-affected by technology disruption.
The longer term performance of a tech company/ stock comes down to the quality of the business and its management. But there are certainly some noticeable trends of performers in the sector. These include:
- The company is not a ‘startup’ and does not require millions of dollars for further development. Preferably, the company has spent 3-4 years as a private company prior to listing, and conducted at least a couple of private rounds. This reduces the likelihood of a company missing key deadlines / deliverables whilst being in the public market environment, which can often result in the market punishing a stock.
- Preferably generating revenue, or be on the cusp of generating revenue. Perhaps ‘pilot’ customers / clients or some other reference to product/service validation (i.e growing market share).
- Attacking a large market opportunity (i.e multi-billion dollar market) with international ambition.
- Quality of Board and management, ideally with a proven track record. Ultimately investing in early stage technology companies is very much a ‘people backing exercise.’
- If a company can demonstrate steadily improving KPI’s (i.e client growth, contract wins, market share, etc) the market will gain further confidence in the story.
Three of the company’s preferred exposures in the smallcap tech space are detailed below:
Updater Inc. (UPD) makes moving easier for the 17 million households that relocate every year in the US. With Updater, users seamlessly transfer utilities, update accounts and records, forward mail, and much more. Hundreds of the most prominent real estate companies in the US (from real estate brokerages to property management companies) rely on Updater’s real estate products to save clients hours with a branded and personalised Updater moving experience.
Updater can enable contextual and personalised communication between relocating consumers and the US businesses spending billions of dollars trying to reach them. Updater is headquartered in New York City, and prior to listing on the ASX, Updater received significant investments from leading US venture capital firms including SoftBank Capital, IA Ventures and Second Century Ventures (the strategic investment division of the National Association of REALTORS®). Since listing on the ASX, Updater have secured Fidelity International and Thorney Investment Group as key shareholders.
9 Spokes International’s (9SP) smart dashboard enables SMEs to connect all their software to one dynamic interface – giving them a clear overview of their business. It allows management and advisors to access data and new metrics across key areas, from any device at any time. With these insights, it’s easier to make the big decisions to either manage or grow a business.
Businesses can integrate their supported software into the dashboard as well as choose from a selection of recommended and accredited apps to suit their industry. The smart dashboard from 9 Spokes is available as a direct model to small businesses and as a white labelled platform that Channel Partners can offer to their SME customer base.
LiveHire (LVH) is the technology company behind the Live Talent Ecosystem, where people privately connect with Live Talent Communities of the best brands. Live-Hire’s vision is to empower the flow of the world’s talent, to create a more agile, open and awesome working world.
The platform makes managing the flow of talent into and through businesses seamless, delivering value through perfect visibility of existing employees, and shifting recruitment of new talent from reactive to proactive, reducing time and cost to hire, with an unrivalled candidate experience.
