Fortunes can be made and lost betting on the success of technology companies. Despite the recent volatility in their share prices, companies like Afterpay Touch Group Ltd (ASX: APT) and WiseTech Global Ltd (ASX: WTC) have delivered strong returns to early investors. But for every Afterpay, WiseTech or Appen Ltd (ASX: APX), there is a GetSwift Ltd (ASX: GSW) or Big Un Ltd (ASX: BIG). Picking the right companies for long-term returns can require a lot of research, industry knowledge and also a fair degree of luck. So, with all that in mind, here are two of my top picks…
Fortunes can be made and lost betting on the success of technology companies. Despite the recent volatility in their share prices, companies like Afterpay Touch Group Ltd (ASX: APT) and WiseTech Global Ltd (ASX: WTC) have delivered strong returns to early investors. But for every Afterpay, WiseTech or Appen Ltd (ASX: APX), there is a GetSwift Ltd (ASX: GSW) or Big Un Ltd (ASX: BIG). Picking the right companies for long-term returns can require a lot of research, industry knowledge and also a fair degree of luck.
So, with all that in mind, here are two of my top picks for small companies operating in the tech scene that could really take off in the next couple of years. Both are exciting companies developing software and technologies that could reshape the future of their industries.
Sky and Space Global Ltd (ASX: SAS)
SAS is a technology company, headquartered in Australia, that aims to build a telecommunications network that will allow people from anywhere on the planet access to affordable communication services. It plans to do this by launching 200 nanosatellites, each armed with the company’s proprietary telecommunications software, into the Earth’s orbit. Nanosatellites generally weigh less than 10kg, meaning that they are easier to accurately track and control once in space.
The software allows the tiny satellites to communicate with one another as well as beam back down to a focal point on Earth. SAS plans to launch enough nanosatellites to create a constellation that will operate like a wireless mesh network high in the sky. SAS plans to initially target the 3 billion people living along the Earth’s equatorial belt who currently have no access to reliable communications networks. The company believes it can deliver full coverage to this section of the globe by 2020.
And while it sounds like science fiction, nanosatellites are far more common than you might think. The Nanosatellite & Cubesat Database, a website which tracks nanosatellite numbers, estimates that as of 28 October 2018 966 nanosatellites have been launched from Earth by 323 different companies. It forecasts that over 3000 nanosatellites will be launched over the next 6 years.
SAS has already successfully launched 3 nanosatellites to demonstrate the feasibility of the software and network. And it has obviously managed to impress some clients with its technology – SAS claims to have already inked contracts worth over $30 million in revenues, with more in the pipeline for the coming year.
Livetiles Ltd (ASX: LVT)
Livetiles is an Australian IT company that develops intranet portals and online working environments for corporate clients. Livetiles believes companies too often outsource the building of these types of technologies to overpriced consultants. It aims to address this problem by providing affordable and cutting-edge software solutions that are intuitive, easily customisable, and that can offer businesses varied ways to increase collaboration and efficiency amongst their employees.
And Livetiles has already got some industry heavyweights behind it: Microsoft named Livetiles its 2018 “Partner of the Year for Modern Workplace Transformation”. Livetiles has recently been collaborating with the US tech giant to accelerate development of various AI technologies such as bots and other intelligent workplace software. Livetiles was even invited into Microsoft’s prestigious “AI Inner Circle Partner Program”, meaning it will now be allowed unique opportunities to integrate its software with Microsoft’s technologies. Livetiles will also have access to Microsoft funding and co-selling opportunities, meaning it can rapidly expand its consumer reach.
As of 30 September 2018, Livetiles reported that 566 paying customers were using its services. Annualised recurring revenues were $18.6 million, a 272% increase on the prior year, and customer cash receipts for the September quarter were $2.4 million. The company expects to see continued significant growth in cash receipts in the December quarter.
We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.
That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Atlassian.
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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 AFTERPAY T FPO, Appen Ltd, 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.