ReadyTech provides SaaS technology in Australia and operates in three segments: Education, Workforce Solutions and Government and Justice. It offers various cloud-based solutions that help its clients with administration and management. ReadyTech was founded in 1998 and listed on the ASX in 2019 at $1.50 per share. Although it is off its all-time highs, it is still well ahead of its IPO price.

Organisations in all three segments of ReadyTech’s business – Education, Workforce and Government – are experiencing a growing and ongoing migration to cloud and SaaS. This digital transformation across all industries is nothing new, but what is new is that this transformation has been accelerating in the wake of COVID-19 shutdowns as demand soared for technology-driven initiatives to enable remote work, distance learning, new customer experiences and new online sales channels. We think the trend is still in the early days and that ReadyTech is poised to derive a benefit.

In FY23, the 12 months to June 30 2023, ReadyTech recorded $130.3m in revenue, up 31.9% overall and 13.3% on a like-for-like basis (excluding the impact of M&A). EBITDA rose over 22% to $34.8m – representing a 35.6% margin – while NPAT rose 7% to $9.1m. The company boasted a highly sticky customer base that is willing to pay a premium for its services.

For FY24, ReadyTech has advised shareholders to expect organic revenue growth to be in the mid-teens and a 34-35% EBITDA margin. It is aiming to achieve over $160m in organic revenue in FY26.

Infomedia provides cloud-based parts and service software to the global automobile industry. It has over 250,000 active users in 186 countries and it has a healthy geographical mix of revenue (37% from the Americas, 32% from the Asia-Pacific and 31% from Europe). Infomedia can help its customers capture data, provide more personalised service to existing and would-be customers and monitor supply chains.

It has had some difficulties during the pandemic including the difficulty of business development during pandemic restrictions, the volatility in car sales and potential takeover bids falling through..

Turning to FY23, Infomedia’s total revenue was $129.9m (up 8%) and its NPAT was up 16% to $9.6m, even with an acquisition earnout expense. It paid a total dividend of 4cps, representing a 2.8% yield. Looking ahead to FY24, it is expecting revenue of $135-142m but has not given any other guidance besides that. Analysts covering the company expect $140.4m in revenue (up 8%), $59.4m in EBITDA (also up 8%) and 5c EPS, equating to a ~$18.8m profit (nearly double the year before).

We think the company can capitalise on several trends being adopted in the automotive industry including electric vehicles, the dealer agency business model and data-driven marketing.

Universal Store is a chain of casual fashion stores aimed at Millennial and Gen Z customers (think 18-35 year olds). Universal Store has 79 stores across Australia, which tend to be in major shopping centres, as well as a further 20 or so stores exclusive for particular brands like Perfect Stranger, and the group makes 14% of its sales online. Both curated third-party products and private brand products are sold in-house, although the former dominates.

It is a good business but has been hit by perceptions that its customers will cut back their spending because they feel the brunt of the cost of living crisis. We think the recent Taylor Swift shows and the merchandise spent by them (estimated to be over $60m at the concerts alone) show that they will still spend when they perceive value.

In FY23, total Sales were up $263.1m, up 26.5% overall, although like-for-like sales were only up 1.2%. It made underlying EBIT of $40.4m, up 24%) and an NPAT of $23.6m, up 15%. Not bad in the rising interest rate environment. This was because the company was better able to manage inventory and offset costs of doing business. We are optimistic for further growth in the next 12 months as the Stage 3 Tax cuts come into effect. The revised package will put more money into the pockets of Universal Store's customer base.