Tech: Today’s earnings show investors care about cash flows; unless you’re Zip
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Earlier this year, analysts warned us of an unprofitable tech stocks bubble. This morning’s results and investors’ responses indicate people may now share the concern.
Education and HR software company ReadyTech (ASX:RDY) only listed in April but jumped 9 per cent after its annual results.
While it ultimately recorded a statutory loss of $1.5m, this was inflated by IPO costs. Its pro-forma earnings were $12.8m and its revenue was $33m. It also celebrated 400 new client wins.
CEO Marc Washbourne said the FY19 result was consistent with ReadyTech’s strategy.
“We continue to put innovation at the forefront of what we do and are actively seeking opportunities to unlock new value and enhance the customer experience for our clients,” he said.
iCar Asia (ASX:ICQ) said its annual results were strong but the stock didn’t move. The company incurred an earnings loss of $3.7m but noted that some markets were cash flow positive and affected by Indonesia’s election and Thailand’s monarch coronation.
Cloud-based software provider Urbanise.com (ASX:UBN) booked a $3.5m loss after tax but this was 86 per cent lower than the previous year. The company also announced a 48 per cent increase in revenue to $8.1m due to new client wins. CEO Saurabh Jain labelled the result “outstanding” and the stock jumped 7 per cent this morning.
Child tracking app Life360 (ASX:360) is now down over 40 per cent from its peak on IPO day after falling another 1 per cent today. Being based in the US and thus using the calendar year it only released half-yearly results. But its net loss was $US17.1m ($25.2m), more than double the loss in the previous corresponding period.
This morning’s announcement didn’t give any indication of a path to profitability but rather an expansion of its products and into new markets. But the company does have net cash of $US78.7m.
But for BNPL profitability – who cares?
Zip (ASX:Z1P) was the first of the buy now, pay later stocks to release its annual results. Its loss was only half of last years’ but still a hefty $11.1m. But to find that figure you’d have to dig into its formal annual report rather than this morning’s press release. This did not stop the stock jumping another 1.5 per cent this morning.
It boasted $84m in revenue and aimed this year for 2.5 million customers and $2.2 billion in annualised transaction volume. CEO Larry Diamond promised that in the months ahead, Zip would become more available.
“We are proud of these results but are only just beginning and are now well positioned to drive more customers, to transact at more places, more often,” he said. “We have a number of strategies in place to execute, both locally and globally, and are genuinely excited by the opportunities that lie ahead.”