The WAAAX shares have had the lion’s share of the limelight for the ASX tech sector, but they have not quite hit the mark in terms of shareholder value and consistency in the past few months.
The WiseTech Global Ltd (ASX: WTC) share price was put to the test following a short seller report, with its share price sinking more than 20% in the past week. Likewise, the Afterpay Touch Group Ltd (ASX: APT) share price has also been shaken after UBS slapped a $17 price target on the buy-now, pay-later leader. The Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX) share price are also yet to make any meaningful moves in FY20.
So, here are 3 ASX tech shares to watch that aren’t your typical WAAAX shares.
1. Dicker Data Ltd (ASX: DDR)
Dicker Data is a wholesale distributor of computer hardware, software and related products. The company is looking to capitalise on the growing market around cloud migrations, storage, software analytics and hyper converged infrastructures. There is also the major refresh cycle for Microsoft Windows 10 as Windows 7 support ends in January 2020.
Dicker updated the market about this strong growth environment with a Q3 market update released on 24 October. This update highlighted that YTD results (as at the end of September quarter in FY19) had revenues up 17.8% and operating profit before tax rising 38.6%. It cited that the company is tracking ahead of forecast and looking to deliver a full year operating profit before tax of over $60 million.
2. EML Payments Ltd (ASX: EML)
EML offers innovative financial technology that provides solutions for payouts, gifts, incentives and rewards, and supplier payments. This comes in the form of mobile, virtual and physical card solutions. EML processes billions of dollars in payments each year, and manages more than 1,200 programs across 21 countries in North America, Europe and Australia.
To recap EML’s performance in FY19, it delivered a 37% increase in group revenue and 40% increase in earnings before interest, tax, depreciation and amortisation. In its recent October investor presentation, the company highlighted strong organic growth drivers in both the short and long term. It cited salary packaging and instant gift cards as short-term growth drivers, while VANS processing, delegated authority, European and American gaming are the company’s long-term growth drivers.
3. Rhipe Ltd (ASX: RHP)
The Rhipe share price soared 7.6% on Friday on no news and is looking to push higher. The company provides wholesale subscription software licenses in the Asia Pacific region. It has an exciting expansion on the horizon with a joint venture signed with Microsoft Japan and Japan Business Systems Inc. (JBS).
Rhipe Japan will be 80% owned by Rhipe and 20% by JBS. Rhipe Japan will aim to target the significantly under-served small- and medium-sized business (SMB) segment of the market. Rhipe’s growth forecast for FY20 does not include any potential earnings from its Japanese operations. However, at this point in time, the company is still quantifying the timing and investment required for Rhipe Japan.
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Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Emerchants Limited, and WiseTech Global. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia has recommended Emerchants Limited. 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.