Technological investments are growing exponentially in recent years. The companies are getting more and more gravitating towards this as they visualise not only current benefits but also more in the times to come. Two such ASX stocks are
Xero Limited (ASX: XRO)
Xero Limited has entered into an agreement to acquire Syft Analytics, the global cloud-based platform for advanced reporting and analytics. Xero will further enhance accounting services in support of its strategic objectives and improve capacity to provide more comprehensive and insightful reporting and forecasting capabilities to accountants, bookkeepers, and small businesses around the world. Capabilities from Syft will be rolled into Xero over time and will provide customers with powerful data-driven tools. The acquisition is valued at up to US$70 million, with Syft’s 70+ employees, mostly based in South Africa, transitioning to Xero.
Xero delivered strong revenue growth in FY24, reaching $970 million in total revenue across Australia and New Zealand with 22% year-over-year (YOY) growth. The international market was also showing good trends. In the UK and North America, subscriber growth remains good; there are still challenges in Canada. Xero's revenue in international markets was up 24% YOY, driven by strong performance in South Africa. The company continues to focus on driving balanced growth across its regions, with positive subscriber and average revenue per user (ARPU) trends.
In FY24, Xero made significant product investments, focusing on improving accounting, payroll, and payments solutions. Notably, the company expanded its US direct bank feed coverage from 20 to over 600 banks and introduced enhancements to the UK tax system. Xero also made strides in modernizing its payroll system and improving onboarding processes globally. Additionally, partnerships like the one with Bill for embedded bill pay capabilities in the US are part of Xero's broader strategy to provide a more integrated suite of services to small businesses.
For FY25, Xero plans to focus on profitable growth while continuing to invest in product development. The company expects operating expenses to account for around 73% of revenue, with higher product design and development costs. Xero is also addressing its subscriber base by removing long-idle subscriptions, which should positively impact ARPU. The company aims to double its size and maintain strong financial performance with a balanced approach to subscriber growth and ARPU expansion, aspiring to become a world-class SaaS business with Rule of 40 performance.
Catapult Group International Limited (ASX: CAT)
Catapult achieved a milestone year in FY24, marking a pivotal inflection point for the company. Revenue reached the US$100 million mark for the first time, driven by 20% Annualized Contract Value (ACV) growth on a constant currency basis, year-on-year. This growth rate, also 20% on a constant currency basis, highlights the strength across both core business verticals—Performance & Health (P&H) and Tactics & Coaching (T&C)—underscoring the robustness and demand for Catapult’s offerings.
Catapult’s investment in scaling operations over FY22 and FY23 is now yielding results, as FY24 saw maintained cost discipline alongside this strong revenue growth, generating a substantial improvement in incremental profitability, measured by Management EBITDA. This reflects the operating leverage embedded within Catapult’s business model, which the company expects to benefit from as it continues to expand. Revenue growth, alongside widening profit margins, contributed to a free cash flow of US$4.6 million, marking a more than US$26 million improvement year-on-year. Notably, the company achieved positive cash flow without resorting to additional equity financing, signalling a strong financial foundation.
A significant advantage for Catapult is its industry-leading customer retention rate, which concluded FY24 at an impressive 96.5%. This high retention underscores the effectiveness and relevance of Catapult’s technology for professional teams and athletes worldwide, demonstrating the critical role it plays in enhancing decision-making through its comprehensive all-in-one platform.
Looking into FY25, Catapult anticipates continued ACV growth with low churn, aligning with its strategic focus on scaling while maintaining cost efficiencies. The company projects further improvement in cost margins, tracking toward its long-term targets, alongside higher free cash flow as the business scales. Catapult remains dedicated to achieving its strategic priorities, with a clear emphasis on sustainable and profitable growth. The operational efficiency, robust customer retention, and disciplined cost management position Catapult well for future expansion and underscore its long-term potential in the competitive sports technology landscape.
(Source: Company’s Report)
Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.