Sectors: Technology
Yesterday Zip Co (Z1P) delivered a very impressive report for the December quarter and the market certainly responded with the stock soaring 23% in just one session however we believe Z1P still appears very cheap when compared to its peers in the BNPL space like Afterpay (APT) and Affirm (AFRM US). Customers for Z1P almost doubled YoY to 5.7m while importantly merchants increased to 38,500, these impressive stats rolled through to an 88% increase in revenue.
Afterpay (APT) is now valued at $42.5bn compared to Zip (Z1P) at $4bn but APT only transacts ~2.5x more than Z1P. I like Z1P’s attitude to chase quality growth as opposed to any growth, a goal which translated to bad debts as a factor of turnover falling 20% from the previous quarter.
Megaport (MP1) -1.31%: The stock was down today after providing a business update this morning while outlining the appointment of a new Chief Revenue Officer to be based in the US. In terms of the business update, they talked a big game and the business is growing, however growth rates are a shade below where we were hoping they would be. Todays update showed top line sales increased by 8% on the quarter and 35% YoY however that has them doing~ $80m sales for FY21, around a $4m miss to expectations. In any case, Monthly Reoccurring Revenue (MRR) continued to expand, again, at a slightly more modest rate than we thought they would. We remain holders for now in the growth portfolio.
Tyro Payments (TYR) +25%: Had a day out today after refuting the various claims made in a short seller report released on Friday. As mentioned in a few reports of late, Tyro’s payments systems have been plagued with issues over the past few weeks causing, in their words, around 20% of terminals to be offline. The short seller report came up with a number closer to 50%, along with a number of other issues including that the fault fell on Tyro’s software update, there was a lack of communication with users, that Tyro caused issues with Westfield gift cards as well as claims Tyro was using deposits to support business cashflows.
Tyro was out strongly rebutting each of the points made in a reasonably succinct update. They also expect all terminals up and running again by weeks end. They certainly won this round, and the short squeeze helped the stock recover at least last week’s selling, but the dance is unlikely to end there. The hit to reputation will be significant, and Tyro tends to work without lock-in contracts so impacted users likely would have switched to competitors such as US listed Square. We like Tyro still though, backing it to do well out of the corner. It’s in a similar spot to Seek (SEK) a few months ago when it came under fire from short sellers, now the stock is trading around 25% higher.
Buddy Technologies (BUD) operates a cloud-based data management platform. The Company offers a data management, monitoring, and compliance reporting solution that delivers real-time data directly from connected devices. Buddy Technologies serves customers in Australia and the United
States.
Tyro Payments (TYR) is the fifth largest point of sale payments provider in Australia (behind the big 4 banks). The Company offers payment solutions such as bank account, loans, and security activities. Tyro Payments serves customers in Australia.
Amazon.com, Inc. is an online retailer that offers a wide range of products. The Company products include books, music, computers, electronics and numerous other products. Amazon offers personalized shopping services, Web-based credit card payment, and direct shipping to customers. Amazon also operates a cloud platform offering services globally.
Zoom Technologies (ZM US) through its subsidiaries manufactures, researches, develops and sells electronic communication products for the mobile phones, wireless communication circuitry, and related software products. The Company’s products are both exported and sold domestically. Zoom have been the big COVID-19 beneficiary as the world oscillated to their video conferencing platform.
The Trade Desk (TTD US) operates a software platform that allows for advertisers to buy digital screen time on various formats and devices. It operates a real-time bidding system, providing data about potential readership to potential advertisers.
Microsoft (MSFT US) is an international software company which develops and licences a range of personal and corporate computing programs, operating systems and cloud technology.
In Melbourne in the late 1990s, SEEK was formed with the idea of making it simpler and faster for people to find jobs and for employers to fill positions. Prior to this, the marketplace relied on the printed word. SEEK saw an opportunity to essentially move these job ads online. Since those early days, SEEK has shown itself to be an online innovator, investing in AI and tech to create a suite of products that help support and progress the job-seeking industry. From those Melbourne beginnings, the business became one of Australia’s Top 50 listed companies (as of March 2022) and has expanded its operations into New Zealand, Latin America and has minority investments in China and Korea. It employs more than 3,000 staff worldwide and maintains 50-million candidate and 300,000 hirer relationships. Its original jobs service has also expanded, with SEEK Learning (focused on education-specific employment opportunities), SEEK Business (enables the selling of businesses and franchises) and SEEK Volunteer. Through online education, SaaS and Contingent Labour, the SEEK Growth Fund aims to invest in the human capital management sector.
