While US Technology sector was seen to be hammered lately with the Facebook data scandal, ASX technology stocks were also seen to come under slight pressure. However, the stocks started trading normally with the fading of any specific impact. Below are 6 Technology Sector ASX Stocks that have been gaining some attention lately.
 

Stocks’ Details
 

Xero Limited

Increased Footprint into Global Market Drives Subscription Growth: Xero Limited (ASX: XRO) provides online accounting and business services to small businesses and their advisors. The company has recorded operating revenue growth of 37% to $187.8 Mn in 1HFY18 from $137.2 Mn in 1HFY17. Gross Profit increased to $150.3 Mn in 1HFY18 from $103.4 Mn in 1HFY17, marking a growth of 45% YoY. For the first time in the company history, EBITDA recorded positive in 1HFY18 at $5.4 Mn. Net loss was recorded at 21.08 Mn in 1HFY18 from 43.92 Mn in 1HFY17, still due to higher operating expenses during the same period. Loss per share stood at 0.15 cps in first half of the year. On the other hand, the company is expanding its footprint into United Kingdom and United States and its total subscribers have grown to 1.2 Mn as at 1HFY18. Moreover, the management expects to improve its operating metrics in FY18. We expect that the company will continue to invest to expand its global products and platform across the regions, to help increase subscribers resulting into topline growth in year ahead. On the other hand, the company has now completed the consolidation of its listing on the Australian securities Exchange (ASX). Further, it has announced Steve Vamos as a new CEO of the company. Meanwhile, XRO stock has risen 33.95% in six months and is trading at a very high level. Looking at the trading scenario and group being added to S&P/ASX 100 Index effective March 19, 2018, we put a “Hold” recommendation on the stock at the current price of $35.00
 

Gross Margin Trend (Source: Company Reports)
 

NEXTDC Limited

Strong Performance in 1HFY18: NEXTDC Limited (ASX: NXT) has announced that Mr. Craig Scroggie (CEO of the company) has sold 1,768,093 NEXTDC fully ordinary shares which were issued earlier under the company’s Legacy Loan Funded Share Plan (LLFSP). As per LLFSP scheme, fully paid ordinary shares were issued to the participants with the purchase price lent to the employee under limited recourse and interest free loan for a maximum term of five years. Mr Scroggie will use this share sale to repay the LLFSP loan and associated personal tax liabilities. On the financial front, the Revenue and Underlying EBITDA for 1HFY18 were $77.5 million and $33.6 million, respectively, whereas in 1HFY17 Revenue and Underlying EBITDA were $58.7 million and $23.9 million, respectively. Number of customers also increased, with 176 new customers i.e., 25% rise from the previous corresponding year.  Further, the company has received orders for more than 5 MW of capacity at its Sydney data centre site. Revenue recognition from these orders will commence in FY19 and ramp up to full billing is expected over the following 30 months. However, the group’s net profit after income tax has been down 56% and it also expects that the rising energy prices and operating cost increases from the opening of the new data centres will impact the capital expenditure to rise to between $220 million to $240 million. Recently, Commonwealth Bank of America (CBA), a substantial holder of NEXTDC’s changed its holding from 6.10% of interest to 5.05%.Meanwhile, the stock price inclined by 50.44% in the past six months and the same was edging down in the last five days as at March 22, 2018. We give an “Expensive” recommendation on the stock at the current market price of $6.72
 

Revenue and EBITDA Growth (Source: Company Reports)
 

Adacel Technologies Limited

Expects second half of 2018 to be stronger than 1H 2018: Adacel Technologies Limited (ASX: ADA) stock has fallen 3.73% in three months as on March 21, 2018 as the company’s 1H 2018 net profit after tax fell by 7.4%. This is due to an increase in the effective tax rate, driven by the effect of withholding tax associated with the payment of a special dividend during the period. However, the company for 1H 2018, has reported 28.4% growth in the revenue due to an increase in gross margin for the period of over 16%, when compared to the prior corresponding period performance. The company has reported 1H 2018 PBT of $4.8 million, which is approximately 15% above prior corresponding period. Moreover, ADA expects second half of 2018 to be stronger than the first half and aims to witness stronger earnings for FY18. ADA is expecting FY18 profit before tax to be approximately 35% above FY17. We give a “Hold” recommendation on the stock at the current price of $2.31
 

Appen Ltd

Expects price and margin pressure to continue: Appen Ltd (ASX: APX) for FY17 reported 50% growth in the revenue to $166.6M, 62% growth in the underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to $28.1M and 86% growth in the underlying net profit after tax (NPAT) to $19.7M. However, APX expects price and margin pressure to continue, from customers, competitors and relevant macro factors and therefore the company aims to focus on operational efficiency and economies of scale to maintain and grow bottom line margins. Moreover, for FY18, APX expects underlying EBITDA to be in the range of $50M - $55M. Meanwhile, APX stock has fallen 8.29% in one month as on March 21, 2018 and is trading at a very high level. Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $9.66
 

NetComm Wireless Ltd

March 2018 Quarterly Rebalance of the S&P/ASX Indices & Turnaround to profit in 1H 2018: NetComm Wireless Ltd (ASX: NTC) stock was removed from S&P/ASX 300 Index, effective from March 19, 2018 as per March 2018 Quarterly Rebalance of the S&P/ASX Indices. On the other hand, NTC in 1H 2018 delivered 89% growth in group revenue to $88.6 million, EBITDA up 13 times to $9.2 million and NPAT rose to $3.7 million, compared to prior period loss of $(1.7) million. Moreover, in 1H 2018, NTC has received large orders for nbn FTTC, delivered fixed wireless devices to AT&T and signed additional contract with nbn for Network Connecting Devices. The company is also progressing discussions with Tier 1 Carriers globally. Additionally, NTC expects to continue to deliver strong revenue and EBITDA growth over the remainder of FY18 as key contracts are further rolled out. As a result, NTC stock has risen 13.48% in three months as on March 21, 2018. While the needle for NTC moves to a favourable position, we give a “Buy” recommendation on the stock at the current price of $1.31
 

1H 18 Financial Performance (Source: Company Reports)
 

WiseTech Global Ltd

Acquired LSP Solutions: WiseTech Global Ltd.’s (ASX: WTC) stock has fallen 22.95% in three months as on March 21, 2018 after the company reported 31% growth in the revenue and only 8% growth in the net profit attributable to equity holders to $15.6m for 1H 2018. Moreover, WTC in 1H 2018 to February 2018, announced about 11 valuable acquisitions across Brazil, Taiwan, Australia, North America, the Netherlands, Ireland and Belgium. The company has progressed product development in China, Italy, Germany and Brazil and across the global adjacencies. WTC’s recent acquisitions generally have lower profit margins, that affected the overall result. The total R&D expense has increased by 27% to $22.8 million, which includes $3.5 million related to investments in acquired businesses in 1H 2018. The company also increased its sales and marketing expenditure by 51% to $11.3 million, which included $1.2 million of acquisition-related costs and $1.7 million related to the impact of the increased share price on equity. Additionally, for FY18, WTC expects revenue in the range of $207m to $217m and EBITDA in the range of $71m to $75m. On the other hand, WTC has recently acquired LSP Solutions (LSP), which is a leading provider of customs and warehouse management solutions in the Netherlands. LSP is expected to be consolidated into WTC accounts from April 2018. Meanwhile, WTC stock is trading at a very high P/E, and looks “Expensive” at the current price of $10.64
 

1H 18 Financial Performance (Source: Company Reports)

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