An unpredictable summer lies ahead and for once we aren’t talking about the weather. Glastonbury’s gone. Wimbledon’s out. But even as lockdown eases we’re still unsure how many of the things we know and love about the great British summer will remain. As it stands, the technology sector has seen its share of saviours, beneficiaries and victims throughout the COVID-19 crisis and this sense of unpredictability pervades around half of our companies.
The reduction in visibility from COVID-19 recently led to 18 of 40 withdrawing forecasts from the market. At the same time, some of our companies kept their forecasts live through to December 2020, and some are even demonstrating greater upside in these inclement conditions.
As we originally suspected in the early stages of lockdown, the companies who kept their forecasts are exposed to a combination of themes involving digital transformation, providing software or a platform where remote demand is at least resilient, and providing services for connectivity and communications networks.
Indeed, if there has been one trend we can rely on as a hallmark of the crisis, it is the pace of change. The acceleration of digital transformation in its many forms has been the burden of more or less every sector, and our tech companies are carrying the load. Perhaps most notable in this respect is the rise and rise of data privacy, cybersecurity and connectivity providers to meet the needs of a sudden and vast at-home workforce.
Increasingly we believe three core facts are emerging for enterprise software providers: firstly, that while new business is hard to come by, existing customers, already embarked on their digital pathway, are accelerating change and buying more.
Secondly, those that have yet to commit will surely soon follow, when a sense of normality returns, and accelerate their cloud transition or digital transformation aspirations.
And thirdly, the new normal will be very like the old normal, it’s just we’re expecting change to happen a bit faster.
Payments and enterprise software
Some of the companies who have retained forecasts should be unsurprising. In enterprise software, Ideagen and Proactis highlight one of our favourite themes as they enable organisations to effectively automate the unglamorous but essential functions, and their clients continue to push ahead with projects in this remote climate.
Similarly, Netcall’s suite of software solutions around customer experience and engagement are enabling it to deliver digital transformation for its clients while minimising cost and disruption. We expect that existing locked down enterprise customers for all three are buying more seats and products, and new customers are strategising to follow. Netcall enabled Croydon Council’s urgent response to COVID-19, a demonstration of the capabilities of Low-code. Netcall participated in our recent finnCap Tech Lockdown Demo Day and we will be publishing the video of this demonstration in due course.
Understandably mobile payments are benefiting (despite the hot weather), as the security issues associated with giving credit card details over the phone come further to the fore and we move more universally to systems that rely on remote and contactless solutions. In the payments space, Bango is experiencing a surge in demand as spend on app stores has grown with people trapped inside, and PCI-Pal’s secure payment solutions have increased in importance with more transactions happening remotely.
Intercede’s customer base is typically large enterprise or public sector, with customers’ large projects often years in the formulation – and short term delays to implementations are unlikely to get in the way of an increase in the long term adoption of credentials and identity management. With the expansion of the nature of their personal identity verification (PIV) tech base to include FIDO (Faster Identity Online), they will dramatically expand their addressable market. We look forward to their presentation at the next finnCap Lockdown Demo on 8th July.
Cybersecurity and privacy
The heightened need for remote working and transactions processing solutions of course brings with it far wider cybersecurity and data privacy issues that needed addressing at an unprecedented rate.
We recently spoke with Ido Erlichman, CEO, Kape Technologies. For Kape, there was sizeable uplift in demand for their products as data privacy suddenly became important for those who found themselves needing a secure Wifi connection.
Risk management and compliance
Related to this are a group of smaller companies with forecasts maintained, which each provide software that enables their clients to continue to function remotely. Arcontech and KRM22 supply financial services firms with software that is embedded into their systems and controls risk, as they have moved to working from home. At the same time, Access Intelligence’s solutions enabling the effective management of PR and corporate communications are highly relevant through the pandemic.
Video marketing and advertising
It’s also not just sales to enterprise that have prospered and remained confident.
Industry specifics give reasons to be cheerful such as for Tremor, connecting advertisers with available advertising inventory in connected TV and digital video, and Altitude connecting demand for customised products with a network of trusted suppliers.
And on the subject of digital video services, Amino Technologies’ video software and equipment has been excellently positioned as the pandemic led to a greater demand for video services, especially in the rapidly growing streaming market where Amino is focusing.
Donald McGarva, CEO, Amino Technologies recently told us about the intense demand for consumption of online content, for example, Broadway HD which delivers stage shows online, that meant the technology was fully exercised in accommodating the client’s rapid growth. He described the unconscionable scale of rapidly switching from thousands of subscribers to hundreds of thousands of subscribers, with subscriber numbers growing 4,000% during lockdown.
Broadband and connectivity
Of course, all of this is a moot point without the element of connectivity. Never has the strength of one’s broadband signal or effectiveness of your WiFi been such a high value commodity.
The picks and shovels of the internet enable all of these solutions to function, where providers of connectivity and managed services including iomart, Maintel and Redcentric continue to be essential as they work to keep clients connected and deliver projects in this changed environment – with much excitement for their prospects as the tech-laggards among their customer base now must play catch up, and quickly: perfect examples where we expect the relative peace of working from home will drive some more transformational thinking from customers who may have struggled to see the strategic wood from the operational trees.
In more rural areas, Bigblu Broadband has seen an increase in demand as households look for better broadband, and Telecom Plus continues to deliver its communications and utility services through its innovative partner model.
Meanwhile, also with forecasts retained, Filtronic is busy delivering and developing its range of communications equipment, and Telit continues to develop its IoT solutions for a broad range of end-markets looking to embrace remote connectivity.
The accelerated pace of change of consumption of technology brought about by the COVID-19 crisis and ensuing lockdown was, to use a popular phrasing, unprecedented. What follows as we begin to emerge from the lockdown period may still be difficult to predict, but what has remained encouragingly fleet of foot is the tenacity and innovative mindset of our tech sector.
Read a summary of our latest Tech Sector Quarterly note - and find out how to subscribe - as our sector experts make observations as to how COVID-19 has impacted the price, valuation, and growth potential of the sector.