The ASX technology indices have taken a breather in January, coming back from being one of its hardest hits in 2022.
The new year saw the sector being one of the top performers, gaining 10% amid news of massive layoffs across the big tech powerhouses.
This is a positive trend for the industry in contrast to the beating it took in the latter half of 2022 when interest rates skyrocketed from historic lows.
Analysts are now predicting better times for the sector, as the developed world is nearing peak inflation and approaching the end of the current central bank rate hike cycle.
Consequently, we are going to be seeing growth shares like tech stocks regaining a prominent place in investor portfolios.
Sector trends
it’s surprising to observe that revenues have grown 10% per year although the industry has registered an overall loss across a three-year period.
This means that despite more sales being generated, either the cost of doing business or the level of investment back into businesses has increased, which has decreased profits.
According to Simply Wall St, analysts are most optimistic about the semiconductors industry, expecting annual earnings growth of 89% over the next five years.
Meanwhile, the IT industry is expected to see its earnings grow by 28% per year over the next few years.
Perpetual Global Share Fund portfolio manager Thomas Rice said: “January has been a very strong month and, according to the market, the end of the interest rate rising cycle seems to be in sight.
“So we might see tech stocks have another leg down at some point, but a lot of them faced pretty significant pain in 2022, so some may have really bottomed out.”
In the spotlight: ASX tech stocks
Hiremii
Hiremii Ltd (ASX:HMI) delivered positive quarterly figures, with revenues totalling $4.56 million in the December quarter, up 81% from the previous corresponding period in 2022.
During the period, the AI-driven hiring solution provider integrated GPT-3 artificial intelligence into its Adwiter product and received approvals from OpenAI.
Hiremii managing director, Andrew Hornby said: “Buoyed by the continued global interest and growth of GPT-3, we gained successful approval with OpenAI and complete integration of the GPT-3 API with our AdWriter product.
“Adwriter enables users in any location and any industry to draft a job advert to 80-90% accuracy in under 2 minutes, reducing administration time by over 75% while improving the quality of ads.
“The new product forms part of the broader Hiremii platform and provides customers an on-ramp to the larger integrated hiring platform.
“AdWriter brings a product to market at commercial scale which will funnel users to the platform.
“Our recruitment subsidiary, Inverse Group, delivered another strong performance in the quarter, increasing average gross margins to 13.5% and delivering a record $620k Gross Profit.
“Our continued focus on delivering low risk, high value service to the future metals and sustainable energy sectors within global ASX listed and multi-national corporates provides ongoing confidence in our ability to grow a sustainable and disciplined business.
“Our exposure to asset owners over the quarter increased further, particularly with lithium and rare earths."
Hiremii unaudited quarterly figures.
Remsense
RemSense Technologies Ltd (ASX:REM) has had a busy quarter with new contracts awarded and executed as it continues the roadmap of integrating its virtual plant into IBM’s Maximo Applications Suite (MAS).
The company is now seeing the benefit of these new awards and is in the final stages of project negotiation with tier one clients valued at more than $2 million for work in 2023 and 2024 with ongoing SaaS opportunities.
RemSense is presently pursuing 77 qualified Australian-based opportunities, totalling $16 million value in various stages of development and a number of pilot programs are active or being proposed to local WA-based industrial companies.
Remsense's virtual plant technology.
Sensore
Sensore Ltd has ended the December quarter in a strong financial position, with a cash balance of $2.22 million, achieving several technology and service milestones during the quarter.
During the period, the company received cash receipts of $1.2 million from customers, up 82% from the September quarter.
On the technology front, SensOre continued customer trials of its data platform solution for its clients.
There was a significant increase in services business development activity in the quarter and strong interest in SensOre’s intrepid targeting services.
In the field, Sensore completed due diligence and data compilation at its Gecko North lithium targets and progressed evaluation and negotiation of additional joint ventures.
Furthermore, aircore drilling on its wholly owned Boodanoo DPT target identified new gold mineralisation in an area with no previously known gold occurrences or drilling.
Sensore's financials.
Sprintex
During the December quarter. Sprintex Ltd (ASX:SIX) received its first production order from UK technology company Aeristech Ltd, for the manufacture of high-speed electric compressors to suit hydrogen fuel cell applications.
Notably, Aeristech placed its first production order of 50 units of the new S15 6kW hydrogen fuel cell compressor from the company for US$72,500.
Further orders are expected to follow for the two larger models included in the agreement.
The production order for the fuel cell compressors followed customer interest at the recent World Hydrogen Expo in Bremen, Germany on October 18 and 19, 2022 where numerous NDAs were signed with many key players in the hydrogen energy sector which the company expects will lead to further orders.
In November, Sprintex presented at the world’s largest Automotive expo, the SEMA Show, held annually for more than 50 years in Las Vegas.
Encouragingly, the product launches demonstrate the company’s expansion into the rapidly growing clean energy and clean air supply market sectors.
SenSen
SenSen Networks Ltd (ASX:SNS, OTCQB:SNNSF) has continued to deliver another record quarter, with cash receipts of $2.6 million, a 72% increase from the previous corresponding period in 2022.
The AI software and solution provider is on a roll with its eighth consecutive record quarterly figures.
SenSen ended the quarter in a strong financial position, with cash and cash equivalents of $3.7 million and unused finance facilities available of $2.2 million.
All key market segments including smart cities, fuel retail, casinos and surveillance continue to grow strongly supported by continuous innovations and improvement in the company's processes to deliver its products and support them at scale.
Sensen quarterly figures.
Strategic Elements
Strategic Elements Ltd (ASX:SOR) delivered a strong December quarter, with a cash balance of $3.47 million, advancing innovation at its investee companies.
At Australian Advanced Materials (AAM), the company reported multiple successful developments in the Energy InkTM, a revolutionary new power source that generates electrical energy from moisture in the air.
Meanwhile, Stealth Technologies has been developing new products for the security sector and is currently testing the market demand for these in conjunction with a customer.
Stealth also continued to build momentum in the mining sector, with activities during the quarter including testing in a live underground mining environment in conjunction with a major mining company and targeting applications directed towards increasing mine throughput and productivity.
At Maria Resources, the company finalised the terms of a $220,000 EIS drilling grant from the West Australian government for the Leviathan carbonatite rare earths and rare metals target.
AMM's printable nanocube memory ink.
Spenda
Spenda Ltd (ASX:SPX) has delivered another quarter of consecutive growth, with all key leading indicators continuing to perform strongly and funds flowing through its platform growing to about $20 million in the month of December.
This growth comes on the back of wins with Carpet Court and various other customers in multiple verticals, highlighting the ability to offer value to “any business who needs to make or receive payment”.
In addition to customer wins and growth in payments and lending as outlined above, Spenda delivered on each of the targets outlined below:
- the continuous rollout of Spenda services to contracted customers, including the staggered deployment of Spenda into Carpet Court franchises;
- further strategic growth in its integration team to enable faster deployment of solutions to existing and new customers;
- improvements in customer onboarding and resource utilisation for support, implementation and integration; and
- further execution of the Agri-solutions plan, including considerable work to secure funding to deliver farm enhancement lending and input financing.
Spenda's wallet application
SRJ Technologies
SRJ Technologies Group PLC (ASX:SRJ) ended the December quarter in a strong financial position, securing revenues of $1.7 million, up 205% compared to the previous corresponding period in 2022.
During the quarter, the company was reinstated to official quotation after more than a year in suspension.
Considering the strengthening market, SRJ is maintaining a strong focus on revenue-generating activities while continuing actively to evaluate acquisition opportunities.
Furthermore, the company is negotiating the terms for a new loan facility to replace that recently approved at the AGM, seeking the ability to access additional funds to support potential future acquisitions.
SRJ's revenue receipts.
Skyfii
Skyfii Ltd (ASX:SKF, OTC:SFIIF) has delivered positive cash flow during the December quarter, banking cash receipts of $9.5 million from its customers, up 49% from the previous quarter, on track to deliver more than $20 million annual recurring revenue by the end of FY2023.
During the quarter, the company generated a cash inflow from operating activities of $3.1 million, which was exclusive of the impacts of capitalisation of employees, contractors and other expenditures attributable to software development.
Skyfii has also secured key contract wins during the period, signing an initial three-year contract with McDonald’s with a total contract value of $2 million.
The company continues to experience very strong demand for the company’s queue management product for ticketing and security checkpoints through our LiDAR-based solutions within the airport and mass transit hub verticals.
It signed several key contracts in the global airports vertical with a combined total contract value of $2.8 million including with Phoenix Sky Harbour International Airport, Newark Liberty International Airport and Miami International Airport.