2 tech companies to light up the market in FY19 

After the explosive price increases of tech stocks like Afterpay Touch Group Ltd (ASX:APT) and ELMO Software Ltd (ASX:ELO), the hunt is on for the next big tech success stories. Here are two smaller companies that should be on your radar in FY19.

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The ASX is not short on tech stocks, from dependable market stalwarts like Altium Limited (ASX: ALU) and Nextdc Ltd (ASX: NXT) to relative newcomers like Afterpay Touch Group Ltd (ASX: APT), WiseTech Global Ltd (ASX: WTC) and ELMO Software Ltd (ASX: ELO).

But here are two smaller tech companies that you might not have heard of yet, but based on their recent results could be ones to watch in FY19. 

  1. Livetiles Ltd (ASX: LVT) 

Australian tech company LiveTiles develops software that can help businesses create their own internal dashboards, intranet portals and online working environments. LiveTiles believes that businesses will either spend too much money hiring outside consultants to build this type of technology, or alternatively use outdated software and miss out on key opportunities to engage their employees and improve their workplaces.

LiveTiles aims to provide software solutions that are intuitive, easily customisable, and that can offer businesses ways to increase collaboration and efficiency amongst their employees. 

Earlier this week, the company announced that FY18 annualised recurring revenues (what it describes as representing “committed, recurring revenue on an annualised basis”) increased by 275% versus FY17 to $15 million. Customer numbers were up 46% to 536 as at 30 June 2018. 

Microsoft named LiveTiles its 2018 “Partner of the Year for Modern Workplace Transformation”.  And LiveTiles also recently announced that it is collaborating with the US tech giant to develop AI technology. This offers the company a key opportunity to increase awareness of its brand internationally.  

  1. Serko Ltd (ASX: SKO) 

Based in New Zealand, Serko is a technology company that develops software to help client firms better manage their business travel expenses. It was the best-performing stock on the New Zealand stock exchange in 2017, but has only been listed over our side of the Tasman since June 25. 

Serko has two key products, Serko Online and Serko Expense. The Online platform is a booking tool that provides clients with access to a wide variety of travel providers including low cost carriers. The cloud-based Expense product is an expense management software that can help record and reconcile travel expenses. 

Serko reports its results based on a financial year ending 31 March. For FY18, the company posted revenues of NZD$18.3 million, which was an increase of 28% on the prior year. EBITDA was NZD$2.2 million, an increase of NZD$4.7 million on the prior year, and net profit was NZD$1.8 million, up NZD$5.3 million on FY17. 

Serko also recently upgraded its FY19 market guidance after it signed a letter of intent with Flight Centre Travel Group Ltd (ASX: FLT) to develop unique product offerings based on Serko’s travel management technology. The company now expects annual revenue growth for FY19 in the range of 20%-30%.  

Foolish takeaway

Both of these companies are still reasonably speculative plays. LiveTiles currently has a great opportunity to expand its brand awareness internationally through its AI deal with Microsoft. The fact that LiveTiles is intent on locking in recurring revenues is also a great sign for shareholders. 

Serko lit up the New Zealand market last year, but on the ASX it’s competing for investor attention with local Australian success story, Corporate Travel Management Ltd (ASX:CTD). The share price of Corporate Travel Management is already up over 40% this calendar year, and shareholders in that company probably won’t see much of a diversification benefit from investing in Serko.  

On the other hand, investors who watched from the sidelines while Corporate Travel Management’s share price continued to climb might see an opportunity to get in on the ground floor with Serko. 

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Motley Fool contributor Rhys Brock owns shares of AFTERPAY T FPO and WiseTech Global. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Flight Centre Travel Group Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, Altium, and WiseTech Global. 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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