Daily Brief TMT/Internet: AAC Technologies Holdings, Taiwan Semiconductor (TSMC) – ADR, At&T Inc, Sap Se Sponsored Adr, F5 Networks Inc, 1Spatial Plc, Gaia and more

• In my previous insight in Mid-March 2023, we had a look at the potential index changes and the resultant capping flows for the HSTECH Index in June 2023.
• Since then, our flow expectations have changed with changes in prices and/or float and total share counts.
• Here are our latest flow expectations based on the current prices.

• Another major earnings week with AMD, Qualcomm, Apple, Acer, Winbond, Wistron, Micro-Star, and more.
• Hon Hai could terminate its investment deal in U.S.-based Lordstown Motors as per an exchange notice posted by Lordstown.
• AMD reportedly transfers some 4nm chip business to Samsung from TSMC.

• AT&T delivered mixed results in the quarter with below-par revenues but profitability above expectations.
• As a result, wireless service revenues and EBITDA may increase, and margins may improve.
• Despite a slowdown in industry growth, their Business Solutions wireless service revenues increased by almost 7%.

• SAP delivered a highly disappointing set of results failing to meet the revenue expectations as well as the earnings expectations of Wall Street.
• The current cloud backlog and cloud revenue for S/4HANA increased by 79% which is why Q1 revenue increased by 9% overall.
• Their SaaS and PaaS portfolios continued to expand by 25%, with SaaS cloud revenue increasing by 22% and PaaS cloud revenue increasing by 45%.

• F5 managed an all-around beat in its second quarter results despite ongoing macro-uncertainty.
• Global Services revenue increased by 8% to $363 million, owing to high maintenance renewals and the effects of the price increase implemented in Q4 of last year.
• Product sales increased 14% year on year, reflecting strong system shipments compared to a more difficult comparison in the previous quarter.

1Spatial’s full year results confirm the solid progress made over the course of the year with revenue growing 11%, recurring revenues growing 21% and EBITDA margins expanding from 15.5% to 16.7%. With momentum continuing into this year, and a healthy order book and pipeline, the company looks well set for 2024. Progress in its key strategic growth pillars – traffic management, US expansion and smart partnerships – looks promising and could accelerate scalable high-margin recurring revenue growth. Investment in key sales hires suppresses our profitability estimates for FY24, but we expect this to start delivering returns in the form of faster growth and margin expansion from FY25.

• Gaia reported 1Q23 revenue of $19.6 million versus $21.8 million in 1Q22, in line with expectations, but more importantly, this was the first quarterly sequential improvement in a year, which was also accompanied by the first member count growth in a year (+7,500 members).
• Sequential revenue growth, member count growth, and improved retention all indicate a fundamental turn in Gaia’s business.
• The company seems to have completed the cycle-through of its “COVID cohort bulge” and is now left with higher lifetime value members, providing a solid base for forward growth.