Why this ASX tech investment group is on watch today

Shares in ASX tech investment group Bailador Technology Investments Ltd (ASX: BTI) are on watch after the group's half-year earnings report.

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Bailador Technology Investments Ltd (ASX: BTI) shares are on watch today after the ASX tech investment group reported a 97% drop in net profit after tax.

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What did Bailador announce today?

For the half-year ended 31 December 2019, Bailador Technology posted a net profit after tax of $118 million, down from $3,804 million in 1H 2019.

The ASX tech investment group also reported a gain on financial assets of $2,435 million, down from $7,131 million in the prior corresponding period (pcp).

Net tangible assets (NTA) per share grew to $1.31 per share (pre-tax) compared to $1.16 in 1H 2019. On a post-tax basis, the group's NTA was up 10.12% to $1.21 per share.

There were some big milestones for the group throughout the first half. Bailador Technology's portfolio company, SiteMinder, raised over $100 million at a valuation above $1 billion during the half.

The group also realised cash from selling minor stakes in portfolio companies including $10 million from SiteMinder and $2 million from Straker Translations Ltd (ASX: STG).

The ASX tech investment group is worth watching after announcing a 2.5 cents per share, fully-franked dividend in today's results. That translates to a 2.3% dividend yield on yesterday's closing price of $1.10 per share.

Portfolio company revenue grew at 27% during the half with a gross margin above 70% and recurring revenue of 87%. 

72% of the Bailador portfolio is now valued from third party transactions. The portfolio consists of 10 investments with a combined revenue of $255 million.

SiteMinder makes up 58% of the Bailador portfolio's NTA and its revenue is now up 21.8 times from Bailador's entry in FY 2012. The group's other major holdings include Instacluster (12% of NTA), DocsCorp (7%) and Lendi (7%).

What's the outlook for the ASX tech investment group?

Bailador continues to value its portfolio companies conservatively relative to their earnings growth. The group's focus on Software as a Service (SaaS) and Marketplace businesses looks set to continue in FY 2020.

The ASX tech investment group has seen 27% revenue growth from the BTI portfolio companies and is looking for valuation uplift in 2020.

Bailador also flagged more potential cash realisations of portfolio company positions in the second half of the year.

Foolish takeaway

Bailador's earnings plummeted in the first-half of the year but its portfolio valuations remain solid.

The ASX tech investment group isn't the only one reporting today, with big names like Telstra Corporation Ltd (ASX: TLS) and Newcrest Mining Corporation Ltd (ASX: NCM) releasing their earnings.

Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Straker Translations. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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