ASX tech companies have delivered some stellar returns to shareholders. Market darlings like fintech disruptor Afterpay Touch Group Limited (ASX: APT), AI and machine learning specialist Appen Ltd (ASX: APX) and aerial imaging company Nearmap Ltd (ASX: NEA) have all more than doubled in price over the last 12 months. Over a longer time frame of a couple of years or more, these gains become even more astronomical. Needless to say, those few savvy stock pickers who managed to identify these star performers early have racked up a fortune.
Predicting which tech stock will light up the market next has become something of an art form – and could wind up making you a lot of money.
And while none of us have a crystal ball, there is one well-performing and little-known Australian company that could be currently vying to be the next Appen or Nearmap.
What does iSignthis do?
Payments and identity verification company iSignthis Ltd (ASX: ISX) provides solutions to help online businesses navigate the complex world of anti-money laundering and counter terrorism financing regulations. Its share price has already exploded, more than quadrupling in value over the last 12 months, but at just 72.5 cents it is still flying under the radar for many investors.
iSignthis has a number of in-house developed and patented software solutions. Paydentity is its core product offering, providing customer verification to assist online firms comply with “Know Your Customer” (KYC) regulatory requirements. iSignthis has direct connections to the major international card schemes including Visa, Mastercard and American Express and can verify the transaction owners for online payments.
The company also offers an integrated secure payment platform for merchants called iSXPay. The platform helps firms manage and reduce risk from fraud, while allowing merchants to accept a variety of different payment methods.
What’s the outlook for iSignthis?
The exponential growth in global e-commerce and fintech, combined with ever increasing and more complex international anti-money laundering regulations, has created greater demand for payment security and customer identification solutions. This gives iSignthis ample future growth opportunities.
Revenues for FY18 soared by more than 350% to more than $6.3 million, and while iSignthis still posted a $5.5 million loss for the year, this was down from $5.7 million in FY17. In a recent update to the market, iSignthis announced that it had now approved more than 150 account applications and was beginning to target larger businesses.
iSignthis is still in its growth phase, which means it is a risky play. Despite growing customer numbers, the company has yet to prove that it can post a profit. However, given the surge in its share price over the last year, plenty of investors are already betting on it being a success.
It is easy to see the potential in iSignthis. Failure to adhere to anti-money laundering regulations can carry severe penalties for ecommerce businesses, and therefore implementing systems to ensure compliance is a high priority. So the demand for its products should definitely exist. It’s just a question of whether iSignthis can differentiate itself enough from its competitors to turn its great idea into big profits.
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Motley Fool contributor Rhys Brock owns shares of AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. 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.