- Published 20 February, 2018
- "Credit cards, AI and an Aussie tech darling"
Folks have been asking for our thoughts on some of the fund's exposures.
Below are three interesting companies that have reported their earnings in the last week (and why we like them).
Rakuten (TYO: 4755)
Rakuten operates Japan’s largest e-commerce site, the country's largest internet bank, and third-largest credit card company by transaction value.
Its other services have over 1.1 billion users worldwide and we think of it like the Japanese Amazon.
Rather than move towards money management like main rival Softbank, Rakuten is investing heavily in its delivery and e-book services. It's partnering up with Walmart to launch online grocery services in Japan and sell audio and e-books in the US.
They are also planning to expand their insurance business into travel.
Rakuten mostly make their money through their credit cards and reward systems, and revenue is up 20.8 per cent year-on-year.
We like Rakuten because their credit cards mostly encourage people to buy within their own ecosystem and they have all-encompassing eyes on customer behaviour.
Our investment guys say this piece is a good company breakdown.
Rakuten also has a venture capital arm which is invested in Pinterest, Lyft, Cabify and Carousell.
Baidu (NASDAQ: BIDU)
A Chinese multinational with a focus on internet products and services and artificial intelligence, Baidu has a lot going on!
In December, Baidu signed a deal with Huawei to develop AI-powered smartphones which will come with Baidu App and Maps pre-installed.
Baidu Search results are improving with 30 per cent of people's queries satisfied with the top result. It's easily the biggest search engine in China, and anything China-related indicates very large scale.
Content distributed in the Baidu feed is up 20 per cent last quarter and total daily time spent in the Baidu app is up 30 per cent year-on-year. That's very attractive engagement!
We like that Baidu is doubling down on its AI research, which decides what content users want to read and has rapidly become a major source of ad revenue.
We are also looking forward to the US IPO of its Netflix-like video streaming service iQiyi. We are curious to see what the market will value it at...
Netflix is valued at around $US120 billion
Integrated Research Limited (ASX: IRI)
This is an Australian company that does quite a lot: it designs, develops, implements, and sells systems and management software for business-critical computing, unified communication networks, and payment networks primarily in Australia, the Americas, Europe, and the Asia Pacific.
We really like that 95 per cent of Integrated Research's revenue is derived from outside Australia, making it one of the few Australian tech companies that are successful overseas.
The company's most recent results show total revenue is up 5 per cent to $45.7 million, mostly from licence sales, consulting and testing solutions, while maintenance revenue is down.
We like that 87 per cent all Integrated Research's revenue is now recurring, compounding every 3 to 5 years.