I've been in awe of ASX-listed New Zealand tech stocks this year.
Many have been delivering growth consistently for the last few years, but 2017 in particular has been red-hot.
Just check the XERO FPO NZX (ASX: XRO) share price which is up 73% this year, while shares in utility billing software company Gentrack Group Ltd (ASX: GTK) are up 43% and shares in niche payments company PUSHPAY FPO NZX (ASX:PPH) have jumped 87%.
With great products and limited competitors, here is a quick guide to these big movers.
XERO (ASX: XRO)
Xero is the market leader in cloud accounting software in Australia and New Zealand with almost 700,000 subscribers. But it's the U.K and U.S. markets that represent significant long-term growth opportunities.
The company has a product that customers love and Xero works hard to add value and empower those customers. It's a rare combination.
Subscription revenue grew 44% in the year to 31 March 2017 and the company continues to grow closer towards financial break-even.
I think Xero has the potential to become a dominant brand in accounting software over the next decade and think it's an attractive business for investors with a long time horizon.
Gentrack Group Ltd (ASX: GTK)
Gentrack is the type of low-profile, all-weather, growing business that Warren Buffett would love. The company provides 'mission critical' software to airports, and gas, water, and electricity utilities with a growing percentage of reoccurring revenue.
I think Gentrack would make a good fit for long term, buy-and-hold investors, but I would be cautious about buying it at today's share price.
Pushpay (ASX: PPH)
Pushpay enables secure mobile donations and payments and is highly focused on churches in the U.S.
That's no small niche!
The company notes there are upwards of 340,000 churches in the U.S. and in 2014 US$115 billion was given to religious organisations.
At 31 March 2016 Pushpay was pulling in US$19.6 million in 'Annualised Committed Monthly Revenue' (ACMR). By March next year (2018) Pushpay is targeting US$100 million in ACMR.
The rate of growth is phenomenal and, although not currently profitable, I think the company could have a big future.
Foolish takeaway
It's great to see NZ's tech scene thriving and that the growth is being recognised by investors. However, be sure that you understand the risks that come with reporting losses to fund rapid growth and high valuations before diving into any of these red hot companies.
