Technology shares have continued their bullish run with the tech-heavy NASDAQ closing at another record high overnight in the United States. Whilst the Australian market does not possess companies of the size and scale of Facebook, Amazon, Netflix and Alphabet (A shares), there are a number of intriguing technology companies listed on the ASX for Australian investors.
Appen Ltd (ASX: APX)
Appen is a global leader in developing high-quality human annotated datasets that are used for machine learning and artificial intelligence. The company’s share price has risen 32% in 2018 after delivering a strong full year earnings report in February. Revenue for the period was up 50% to $166.6 million with underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increasing 62% to $28.1 million.
Management has guided for underlying EBITDA in 2018 to be at the upper end of $50 million – $55 million, which is based on an AUD/USD exchange rate of 80 cents. Appen could exceed the upper end of this guidance on currency movements alone if the weakness in the Australian dollar persists over 2018.
Hansen Technologies Limited (ASX: HSN)
Hansen Technologies is a provider of customer care and billing software, and meter data management systems for a wide range of clients, including utilities, pay TV and telecommunications companies. The company’s share price is up 9% in 2018 after delivering a solid half yearly result in February. Hansen saw first half revenues for the period rise 36% to $118.4 million with net profit after tax climbing 33% to $18.0 million.
The main driver of growth was the acquisition of Nordic-based Enoro which delivered better-than-expected EBITDA margins. The company also benefitted from a lower effective tax rate following the reduction in the US federal corporate tax rate and Enoro’s profits being derived in Norway and Finland. The recent weakness in the Australian dollar could also boost future profits as only 19% of Hansen’s revenues are generated in AUD.
Nearmap Ltd (ASX: NEA)
Nearmap is an aerial mapping company that sells its aerial imagery on a Software as a Service (SaaS) basis. The highly detailed visual and topographical content allows its diverse clientele to accurately survey and measure a location remotely to boost productivity by saving time and money on site visits.
Nearmap’s share price has risen 58% in 2018 after reporting a 27% increase in revenue from ordinary activities to $24.4 million for the first half of FY18, and a 31% increase in Annualised Contract Value (ACV) to $54.2 million. Nearmap uses the free cash flow from its profitable Australian operations to fund its expansion into the US market which delivered the majority of growth in ACV.
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Motley Fool contributor Tim Katavic owns shares of Appen Ltd, Facebook and Alphabet (A shares). John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Amazon, Facebook, and Netflix. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. The Motley Fool Australia owns shares of Appen Ltd and Hansen Technologies. The Motley Fool Australia has recommended Alphabet (A shares), Amazon, Facebook, and Netflix. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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