Tech shares have delivered some of the highest (and most well publicised) returns on the ASX. Over the last two years, shares in Afterpay Touch Group Ltd (ASX: APT) have exploded from under $5 to well over $30, a gain of more than 600%. Over the same time period, WiseTech Global Ltd (ASX: WTC) shares have surged almost 300%. And more recently, shares in promising young payments and identity verification company iSignthis Ltd (ASX: ISX) skyrocketed 630% (and that's only since January!).
Needless to say, plenty of people have made a lot of money investing in these up-and-coming tech companies – especially those that got in early. But picking the right ones for success can be hard and fraught with risk. So here are 3 young companies I've recently put my own money behind.
All 3 target similar clients and offer niche products or services with a particular focus towards harnessing the power of artificial intelligence (AI) and machine learning. Without a crystal ball, I can't say if they will soar to the heights of Afterpay or Altium Limited (ASX: ALU). But if they capitalise on their potential – and benefit from a little luck along the way – all 3 could deliver plenty of growth in the mid to longer-term.
1. Dubber Corp Ltd (ASX: DUB)
Australian software company Dubber develops cloud-based technologies that help its business and corporate clients record, manage and analyse their phone calls and communications. Dubber's AI technology even allows users to analyse a caller's emotions and stress levels. Tools like this can help a company improve its customer service and become more efficient.
In FY19, revenues jumped by 132% to $7.4 million driven by a 222% increase in active customers. The company is focused on expanding its global footprint in North America and Europe while attempting to disrupt an industry traditionally reliant on hardware with its software-as-a-service (SaaS) model.
2. Livetiles Ltd (ASX: LVT)
I'm excited by Livetiles, even if the market reaction to it recently has been muted. Since hitting a 52-week high of $0.61 back in April, its shares have slid 34% lower to $0.40 as at the time of writing. That still puts it up 25% so far in 2019 – which isn't a return to be scoffed at. But I think it has far more growth potential than that.
An Australian company now based out of New York, Livetiles helps its business clients create engaging and collaborative online working environments for its employees. It has been cosying up to Microsoft in the US, with the tech giant now co-selling Livetiles products in 39 countries worldwide.
FY19 results were also positive, with annualised recurring revenues up by 167% to $40.1 million and greatly improved net quarterly operating cash flow. It is still a risky investment however, with the company posting an overall net loss of $42.8 million for the 2019 financial year.
3. ELMO Software Ltd (ASX: ELO)
With a market cap of over $400 million, Elmo is the largest company on this list. It produces a suite of cloud-based software to help its business clients with HR needs such as payroll and people management. Last month it too announced that it would be using AI technology to enhance its product offering, partnering with the University of Technology Sydney to develop analytical software to improve its clients' understanding of their workforce.
FY19 revenues increased by 51% to a touch over $40 million, but rising employee costs as well as the significant costs involved in two business acquisitions made during the year meant the company still posted a net loss for the year of $13.2 million. This makes it a risky investment too – but given these expenditures have been made with the aim of growing the business, it's a risk I've so far been willing to take.
