3 ASX Tech Companies

Xero Limited, strategizing to grow small business platform

TEAM VEYE | 19 OCT 2020 | ASX – XRO

Xero Limited (ASX: XRO)

Xero to acquire invoice lending platform Waddle

Key step in Xero helping small businesses access capital

Xero Limited (ASX: XRO) 25 August 2020 announced the acquisition of Waddle, a cloud-based lending platform that helps small businesses access capital through invoice financing.

(Chart source: TradingView)

The acquisition aligns with Xero’s strategy to grow the small business platform and to address critical small business financial needs. Waddle’s best-in-class cloud-lending platform, combined with small businesses’ invoice data, will enable the delivery of tailored invoice financing solutions.

Founded in Australia in 2014, Waddle’s lending platform service allows a range of banks and fintechs to more easily lend to small businesses by leveraging their accounting data and automating many of the manual processes typically involved in invoice financing.

Waddle has existing agreements with banks and lenders in Australia and the UK. Alongside its core lending platform, Waddle also operates a small direct lending portfolio used primarily for product development purposes.

Post the acquisition of Waddle, Xero will continue to explore how to facilitate small business access to capital, beyond invoice financing. The acquisition positions Xero to partner with lenders globally, to better serve small businesses’ working capital and other financial needs. 

(Graphic Source – Company Reports)

With an upfront cash payment of AUD $31 million and subsequent earnout payments based on product development and revenue milestones, of up to AUD $49 million, the total potential consideration for the purchase of 100% of Waddle is AUD $80 million. Any earnout payments are expected to be settled 50% in ordinary shares in Xero and 50% in cash. Completion of the transaction is expected before the end of calendar year 2020 and is subject to satisfaction of closing conditions. Transaction, integration and operating costs are anticipated to have minimal impact on Xero’s FY21 EBITDA (Data Source – Company Reports)

Veye’s Take

The acquisition of Waddle is an important step in Xero’s strategy to help small businesses better manage cash flow and gain access to working capital. Waddle’s lending platform has the potential to enable a wide range of banks, fintechs and other lenders to better support small business financial needs. Waddle can bring benefits to many of its customers and banking partners. Xero is trading above 50 and 200 MAs on both daily and weekly t/f. The stock has many good supports up to $95.0 area. In the near to medium term, it can have the potential of growing further from here. “Buy” was given to “Xero Limited” at the price of $79.94 on 21 May 2020. It returned more than 25% for just about three months. Veye maintains a “Buy” on “Xero Limited” at the current price of $ 116.45

Nearmap Ltd, enhancing its market and technology leadership

TEAM VEYE | 19 OCT 2020 | ASX – NEA

Nearmap Ltd (ASX: NEA)

FY20 Results: 

Nearmap scales for a Global Market opportunity

Nearmap Ltd (NEA: ASX) on 19 August 2020 announced its financial results for the year ended 30 June 2020(FY20).

Group Annualised Contract Value (ACV) portfolio at 30 June 2020 of $106.4m (30 June 2019:$90.2m) with incremental ACV of 16.2m (30 June 2019:$24.0m). Incremental ACV of $9.8m in 2H20(1H20: $6.4m) as the business showed strong resilience despite economic uncertainty related to COVID-19.

(Chart source: TradingView)

  • Group cash balance on 30 June 2020 of $33.8m (30 June 2019:$75.9m). In April 2020 Nearmap implemented a range of cash management initiatives in response to economic uncertainty related to COVID-19. These initiatives ensured the business was in a cash flow breakeven position as at 30 June 2020 and included a 10% permanent reduction to employment costs, a temporary 20% reduction to employee salaries (25% for Directors) and other operating and capital cost reductions.
  • Statutory revenue of $96.7m increased by 25% on the prior comparative period (PCP) (FY19: $77.6m). 
  • Statutory loss after tax of ($36.7m) (FY19:($14.9m)) following a period of significant investment across all areas of the business in support of growth initiatives.
  • Group EBITDA of $9.1m (FY19: $15.5m).
  • Group customer churn increased to 9.9% (FY19:5.3%), with 1H20 impacted by a small number of large enterprise subscription churns in North America (NA). Normalised churn, excluding these events, was 5.4% demonstrating returns from ongoing investment in customer retention initiatives.

(Graphic Source – Company Reports)

  • Global subscriptions of 10,458(FY19:9,800), with Group Average Revenue Per Subscription (ARPS) increasing 11% to $10,178 (FY19: $9,208).
  • $57.7m (54%) of the portfolio now relates to subscriptions incorporating premium content, a 122% increase on the PCP (FY19: $26.0m).
  • 43% of the Group ACV portfolio is now on multi-year subscriptions (FY19:40%).
  • The Group continues to monitor the impact of COVID-19 on trading conditions. ACV portfolio growth has continued, with trading conditions seven weeks into FY21 consistent with growth in the same period in FY20. (Data Source – Company Reports)

 

Veye’s Take

Nearmap’s unique value proposition was strengthened as can be seen by an improvement in retention and growth in its Annualised Contract Value. In FY20 the Company continued to add new content types and in June launched transformative Nearmap AI. This enabled it to extend its technology leadership and furthered its penetration into its core growth verticals within the global location intelligence market. Nearmap has invested significantly in its operational foundations to create a highly scalable business that will support its future growth aspirations. The stock had a breakout from an ascending triangle pattern with high volume. It has a good support area above the $2.75 level. After some possible retracement on the daily t/f, it can have the potential of reaching its earlier highs. “Buy” was given to “Nearmap Ltd” at the price of $1.28 on 23 April 2020 and at $2.29 on 1 June 2020. It returned more than 125% less than five months and more than 26% in just three and a half months respectively. On each and every buy call the stock has given very good returns. Veye maintains a “Buy” on “Nearmap Ltd” at the current price of $ 2.59

BrainChip Holdings Ltd, achieving commercial success

TEAM VEYE | 19 OCT 2020 | ASX – BRN

BrainChip Holdings Ltd (ASX: BRN)

BrainChip Announces India Software Development Center

Company Establishes Presence in Hyderabad, India

BrainChip Holdings Ltd (ASX: BRN), a leading provider of ultra-low power high performance AI technology, on 20 September 2020 announced that the Company had established a Software Development Center in Hyderabad, India. The Akida NSoC is a complex integrated circuit that includes multiple interfaces, Data-to-Event Converters, a CPU complex, on-chip memory and a neuron fabric to implement a complete neural network with no external components required. The development center will concentrate on software and firmware development to support the AkidaTM Neuromorphic System-on-Chip (NSoC). Software for device drivers, the CPU complex and firmware are critical components of an Akida commercial implementation.

(Chart source: TradingView)

BrainChip Confirms Validation of the AkidaTM Neural Processor

Company Completes Initial Functional Testing

BrainChip Holdings Ltd (ASX: BRN), a leading provider of ultra-low power high performance AI technology, today announced that the Company has validated the Akida Neuromorphic System-on-Chip (NSoC) design with functional silicon. The Akida NSoC is a complex integrated circuit that includes multiple interfaces, Data-to-Event Converters, a CPU complex, on-chip memory and a neuron fabric to implement a complete neural network with no external components required.

The Akida device was produced at a Taiwan Semiconductor Manufacturing Company (TSMC) foundry and utilizes a standard logic 28nm process. The Multi-Project Wafer (MPW) used by the Company in April 2020 in order to accelerate the delivery of the integrated circuit engineering samples, provided packaged and tested devices for internal validation and testing in August 2020. These devices will support the demands of customers participating in the Company’s Early Access Program (EAP). (Data Source – Company Reports)

 

Veye’s Take

BrainChip has validated the functionality of the Akida silicon and performed significant testing. The devices received from the MPW will provide engineering samples and evaluation boards for its early access customers. Now its focus is on the continued development of software and firmware drivers. BrainChip expects to produce a production mask set in the fourth quarter of 2020 and then move forward with volume production wafer fabrication, assembly and test operations. The stock after making a bull flag had been moving up. However, it could not sustain above its resistance area and has fallen to the older trendline. Maintaining this, it can have the potential to make another attempt and reach earlier highs. The Latest “Buy” was given to “BrainChip Holdings Ltd” at the price of $0.19 on 4 August 2020. It has gained more than 81% in little over a month until now. Veye maintains a “Buy” on “BrainChip Holdings Ltd” at the current price of $ 0.46

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