The Archtis Ltd (ASX: AR9) share price is climbing today after the software security provider announced a contract renewal with the Australian Department of Defence.

At the time of writing, the archTIS share price is edging 0.6% higher to 30.7 cents.

What’s pushing the archTIS share price higher?

According to this morning’s release, the Australian Department of Defence has renewed its annual software subscription licence with archTIS’ subsidiary, Nucleus Cyber.

archTIS completed the acquisition of Nucleus Cyber in December last year for $9.75 million.

Under the deal, Nucleus Cyber will continue to provide its NC Protect product to the Defence Department. The contract value for the year-long licence is $148,866.

The NC Protect is a cybersecurity tool that allows sensitive data spread across on-premises and cloud-based platforms to be secured. In essence, it protects against breaches, data misuse and unauthorised file access enabling companies to operate without outside intrusions. This enables safe file sharing, messaging, and chat across programs such as Microsoft Office 365—SharePoint, OneDrive, Exchange and others.

With the latest contract renewal wrapped up, archTIS highlighted that this was its second licencing award from the Defence Department this year. The first, signed in September, was a $4.2 million risk reduction activity aimed at informing defence on future capability decisions and acquisitions. Spread over 3 annual licences, each value of the enterprise platform came to $760,000 per year.

In total, archTIS’ group recurring annual subscription revenue stands above $950,000 from the Defence Department.

The company noted that its recent success follows the Australian Government’s 10-year defence budget. A detailed plan that will seek to invest $15 billion on defence information management and cybersecurity.

What did management say?

archTIS managing director Daniel Lai, welcomed the renewed partnership, saying:

This renewal demonstrates the strategic value of the Nucleus Cyber acquisition. It provides our customers with a range of policy enforcement products to secure and share their information assets.

The merger now means archTIS can provide award-winning products to secure our clients Microsoft business applications. The Defence renewal validates the quality and uniqueness of NC Protect. This renewal and our recent Kojensi sales strongly position archTIS as a key provider of information security products to the Australian Department of Defence.

This is an exciting time for archTIS as it continues to successfully execute our strategy to become the global leader of policy enforcement in the protection and sharing of sensitive and classified information.

More reading

• 2 top ASX tech shares to buy that are growing rapidly
• The ASX small cap with the biggest catalyst during the February reporting season
• ASX 200 up 1.2%: Bingo rockets, Rio Tinto update, Domino’s jumps
• Why Bathurst Resources, Megaport, Orocobre, & Splitit shares are dropping lower
• Why Bingo, Creso Pharma, Domino’s, & Tyro shares are zooming higher today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are some top ASX tech shares that are growing rapidly and could be worth looking into.

Here they are:

Redbubble Ltd (ASX: RBL)

Redbubble is an e-commerce business focused on selling artist-produced products like masks, stationery, wall art, phone cases and masks. It operates two websites: Redbubble.com and TeePublic.com

The Redbubble share price has fallen 7.5% since 13 January 2021, but it is still reporting high levels of growth.

The high-growth ASX tech share said in its FY21 trading update for the first quarter showed normalised marketplace revenue growth of 98% to $139.3 million, gross profit rose by 118% to $59.6 million and the earnings before interest and tax (EBIT) generation amounted to $17.2 million.

Joseph Kim from Montgomery Investment Management said: “While Redbubble has clearly been a “stay-at-home” trade, we believe the business has the opportunity to emerge a longer-term structural winner from COVID-19 should it capitalise in the recent spike in user and customer interest as a result of recent lockdown measures.”

Redbubble CEO Martin Hosking is very optimistic about the long-term future of the company. He said: “The strategic priority for the group now is to ensure we extend the market leadership we have established. We intend to invest in the customer experience to improve loyalty and retention and ensure long-term higher levels of growth. The company has the resources to undertake the anticipated investments and margin structure to ensure it can do so while remaining profitable.”

Redbubble is focused on four key initiatives. The first is artist acquisition, activation and retention. Second, Redbubble is focused on user acquisition and transaction optimisation. The third focus is customer understanding, loyalty and brand building. Finally, further physical product and fulfilment network expansion is the last focus.

Kogan.com Ltd (ASX: KGN)

Kogan.com is another e-commerce ASX tech share. It sells a large selection of products on its website including TVs, phones, computers, cameras, furniture, clothing, cars, insurance, travel, energy, internet and mobile services.

The company has been reporting continued growth in FY21, following on from FY20’s growth. FY20 saw gross sales go up 39.3% to $768.9 million, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) grew 57.6% to $49.7 million and earnings per share (EPS) went up 61.1%.

In the first four months of FY21, to the end of October, Kogan.com saw 99.8% growth of gross sales, 131.7% growth of gross profit and 268.8% growth of adjusted EBITDA. It saw strong performance from its product divisions and Kogan Marketplace. Active customers grew 61.4% year on year to 2.68 million.

Over the past four years the ASX tech share boasts of rising margins whilst investing into its platform, products and services. The EBITDA margin was 4.3% in FY17, but it had grown to 9.3% in FY20.

Mr Kogan, the founder of the company, has spoken about the benefit to the company of its growing number of people using its loyalty scheme: “The Kogan First community of members grew exceptionally during the second half, and importantly these loyal members on average purchase and save much more often than non-members, demonstrating loyalty to the platform, and also demonstrating the significant savings and other benefits available through the loyalty program.”

The ASX tech share also recently announced the acquisition of New Zealand online retailer Mighty Ape, which is a leader in gaming, toys and other entertainment categories.

In FY20, Mighty Ape is expecting to make $137.7 million of revenue, gross profit of $45.7 million and EBITDA of $14.3 million, representing year on year growth of 43.7%, 58.1% and 254.1% respectively.

At the current Kogan.com share price it’s valued at 28x FY23’s estimated earnings.

More reading

• 3 great ASX tech shares to buy
• These ASX growth shares could give your portfolio a big boost
• What’s in store for the ASX tech sector in 2021?
• What does 2021 hold for ASX retail shares?
• 2 rapidly growing ASX ecommerce shares to buy

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Investors looking for big upside ahead of the reporting season may want to look at this ASX small cap. That’s the view from Morgan Stanley.

The stock in question is the Idp Education Ltd (ASX: IEL) share price. The broker described it as having the “biggest potential catalyst”.

The thing that’s getting Morgan Stanley excited is IDP’s tie up with British Council for the International English Language Testing System (IELTS) tests.

Good results from this ASX small cap

“We expect any deal to unify IDP + British Council distribution of the IELTS test to be highly cost synergistic and have the potential to enhance pricing power,” said the broker.

“We calculated c. A$120m synergy potential back in May 2018. We expect any agreement to be a first step towards transformational unified global distribution.”

Who would have thought that COVID-19 would turn out to be a good thing for the IEL share price?

COVID not all bad for the IDP share price

The pandemic probably prompted the deal between IDP and the British Council. What’s more, the mayhem the virus has caused in the education market will leave the ASX stock with greater market power.

Morgan Stanley believes the IDP share price is well placed to benefit from the COVID recovery too. Firstly, there is significant pent-up student demand, while universities around the world are cutting distribution capabilities to reduce costs due to financial stress.

Overseas student agents are themselves being squeezed with many of these businesses making next to no income. It’s logical to assume that IDP will be gaining market share as international student arrivals start to recover.

Buy the ASX small cap before the reporting season

But investors may not need to wait that long to see the IDP share price jump higher. Morgan Stanley believes this could happen as soon as management releases its first half earnings.

It is expecting the company to post a solid bounce in IELTS to between 75% and 80% of pre-COVID levels.

Salary reductions to lower the group’s cost base will also contribute to its bottom line and the broker highlighted the potential deep impact of MD student placement volumes of 25% to 30% as another positive.

What the IDP share price is really worth

“In short, we see less of a 2H EBIT skew vs market expectations and expect a positive reaction to the result,” added Morgan Stanley.

The broker is recommending the IDP share price as “overweight” (which means “buy”) with a 12-month price target of $24 a share.

More reading

• Leading brokers name 3 ASX shares to buy today
• 3 stellar ASX shares to buy in January
• 4 of the best ASX shares to buy in 2021
• Why AVITA, IDP Education, Over the Wire, & Viva Energy shares are dropping lower

Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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At lunch on Tuesday the S&P/ASX 200 Index (ASX: XJO) is on course to record a strong gain. The benchmark index is currently up 1.2% to 6,741.9 points.

Here’s what is happening on the market today:

Bingo rockets on takeover approach.

The Bingo Industries Ltd (ASX: BIN) share price is rocketing higher on Tuesday. Investors have been fighting to get hold of the waste management company’s shares after it confirmed the receipt of a takeover approach. BINGO revealed that it has received an unsolicited, highly conditional, non-binding, indicative proposal from funds advised by CPE Capital. The indicative cash price currently offered to BINGO shareholders under the proposal is $3.50 per share.

Rio Tinto update.

The Rio Tinto Limited (ASX: RIO) share price is pushing higher today after releasing its four quarter and full year production update. According to the release, the mining giant’s Pilbara iron ore production came in 3% higher for the quarter to 86Mt, bringing its full year production to 333.4Mt. The latter was up 2% on the prior corresponding period despite negative impacts from Cyclone Damien in the first quarter and COVID-19 disruptions. Rio Tinto is aiming for iron ore shipments of up to 340Mt in FY 2021.

Domino’s jumps.

The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price is jumping higher today after being upgraded by a leading broker. According to a note out of Macquarie, its analysts have upgraded the pizza chain operator’s shares to an outperform rating with a $90.30 price target. Macquarie believes Domino’s is winning market share from its rivals and is well placed for further growth in the coming years.

Best and worst ASX 200 performers.

The best performer on the ASX 200 index today has been the BINGO share price with its 21% gain. This follows the receipt of a takeover approach. The Megaport Ltd (ASX: MP1) share price is the worst performer with a 3% decline. Investors have been selling the global elastic Interconnection services provider’s shares following the release of its second quarter update.

More reading

• Why Bathurst Resources, Megaport, Orocobre, & Splitit shares are dropping lower
• Why Bingo, Creso Pharma, Domino’s, & Tyro shares are zooming higher today
• Why the Megaport (ASX:MP1) share price is sliding lower today
• Why the Rio Tinto (ASX:RIO) share price will be on watch today
• 5 things to watch on the ASX 200 on Tuesday

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited and MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to bounce back strongly from Monday’s decline. At the time of writing, the benchmark index is up 1.1% to 6,736.5 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

Bathurst Resources Ltd (ASX: BRL)

The Bathurst Resources share price is down 12% to 6.8 cents. This may have been driven by profit taking after some strong gains in recent trading days. In fact, its gains were so strong it prompted a price query by the ASX. The company believes the strong rise its share price was driven by favourable movements in the Hard Coking Coal Premium Low Vol benchmark. It notes that this increased from US$102/tonne to US$124.50/tonne over the last week.  

Megaport Ltd (ASX: MP1)

The Megaport share price has fallen over 2.5% to $12.65 following the release of its second quarter update. The global elastic interconnection services provider reported a 10% increase in underlying monthly recurring revenue (MRR) quarter on quarter to $6.3 million. This brought its quarterly revenue to $18.7 million. It appears as though some investors were expecting stronger growth from Megaport.

Orocobre Limited (ASX: ORE)

The Orocobre share price is down 1.5% to $5.04. This may be due to profit taking after a very strong gain by the lithium miner’s shares over the last few months. Prior to today, the Orocobre share price had doubled in value since the start of November. A rebound in the lithium price and an increasingly positive outlook for the battery making ingredient were behind this rise.

Splitit Ltd (ASX: SPT)

The Splitit share price is down 5% to $1.43 despite there being no news out of the buy now pay later provider. But as with Orocobre, the Splitit share price has been on form recently, which could have led to some profit taking today. Thanks largely to its deal with Google in Japan, the Splitit share price was up 30% in the space of a month prior to today.

More reading

• Why the Megaport (ASX:MP1) share price is sliding lower today
• Why Beach, Orocobre, Premier Investments, & QBE shares are dropping lower
• The Whispir (ASX:WSP) share price is 30% lower than its 52-week high
• ASX 200 rises 0.4%
• Could this be why Afterpay (ASX:APT) and other BNPL shares are soaring today?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) is back on form on Tuesday and charging higher. In late morning trade, the benchmark index is up a solid 1% to 6,730.4 points.

Four shares that are climbing more than most today are listed below. Here’s why they are zooming higher:

Bingo Industries Ltd (ASX: BIN)

The BINGO share price has surged 21.5% higher to $3.33 after a much-speculated takeover approach was made for the waste management company. This morning BINGO revealed that it has received an unsolicited, highly conditional, non-binding, indicative proposal from funds advised by CPE Capital. The indicative cash price currently offered to BINGO shareholders under the proposal is $3.50 per share.

Creso Pharma Ltd (ASX: CPH)

The Creso share price is up 9% to 24 cents following the release of another sales update. According to the release, the cannabis company has received a repeat order from Virbac Switzerland for its leading range of animal health products anibidiol. Combined with other recent orders, management expects this to lead to revenue of almost $1.1 million for the first half of FY 2021.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The Domino’s share price has jumped 6% to $88.12. This appears to have been driven by a broker note out of Macquarie this morning. According to the note, the broker has upgraded the pizza chain operator’s shares to an outperform rating with a $90.30 price target. It believes the company is winning market share from its rivals and feels it is well placed for growth.

Tyro Payments Ltd (ASX: TYR)

The Tyro share price has stormed almost 17% higher to $2.71. Investors have been buying the company’s shares after it responded to a short seller attack this morning. Tyro stated that Viceroy Research’s claims are false. This includes the allegation that 50% of Tyro’s payment terminals had been bricked by a software update.

More reading

• Why the Tyro (ASX:TYR) share price is rocketing 17% higher today
• Why the Creso Pharma (ASX:CPH) share price is smoking the market today
• 3 ASX 200 shares that keep growing their dividends
• Risk vs uncertainty: why one is a lot worse
• Why the Tyro (ASX:TYR) share price is on watch today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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With Joe Biden due to take office this week, many investors are wondering what this could mean for ASX shares. Ahead of his inauguration Biden has revealed a $1.9 trillion coronavirus relief plan aimed at combating the pandemic and the economic crisis it has triggered.

In the short term, this additional fiscal stimulus should help bolster the battered US economy, but it has also impacted global share markets. Prices of commodities used in infrastructure projects have rallied since Biden announced the package, while technology stocks have struggled. 

A splurge of issuance in the government bond market is expected, alongside higher inflation. This could prompt the Federal Reserve to increase interest rates earlier than expected.

In the US, there has been a rotation away from the tech sector into economically sensitive sectors such as small caps and value stocks. The rollout of the coronavirus vaccine combined with additional government stimulus is expected to lift sectors which were hit hardest by the pandemic.

Longer term, the Biden administration is expected to increase spending on infrastructure and clean energy. So which ASX shares are set to benefit? 

Clean energy 

Biden is proposing a $1.7 trillion federal investment in green technologies and wants the US to reach zero net emissions by 2050.

Biden is seeking to accelerate the deployment of clean technology throughout the economy, as well as rallying the world to take urgent and additional climate action. The Biden administration’s policy focus on clean energy could provide tailwinds to companies in the sector and accelerate the structural shift towards sustainability.

This could be good news for ASX shares such as Lynas Rare Earths Ltd (ASX: LYC). The rare earth miner produces minerals crucial to the manufacture of high-tech products. Increased demand for electric vehicles, green technologies, robotics, and consumer technologies should boost demand for rare earths.

In April 2020, Lynas was awarded a contract for the development of a heavy rare earth separation facility in the US. There are currently no such facilities outside China, and the US is looking to rebuild its rare earth processing industry to escape dependence on China.

In 2020, Trump signed an executive order to boost domestic production of rare earth metals, which are crucial in defence technologies. Lynas is helping the US secure a reliable supply. With Biden in power, however, the renewable-energy applications of rare earths could become even more important. 

Lithium miners are also likely to benefit from Biden’s green credentials. Lithium is a key ingredient in the batteries used to charge electric vehicles.

The demand for these batteries is expected to grow under Biden and Lithium miners could expect to see the benefits of this. It is expected that Biden’s green initiatives will kickstart lithium and battery projects in the US.

ASX miners in the lithium area include Vulcan Energy Resources Ltd (ASX: VUL) and Piedmont Lithium Ltd (ASX: PLL).

Piedmont Lithium signed an agreement with Tesla last September to supply the automaker with spodumene concentrate, while Vulcan has developed a world first zero-carbon lithium process.

Nickel is also a vital ingredient in lithium-ion batteries that power electric vehicles. This means nickel producers such as Western Areas Ltd (ASX: WSA) and Panoramic Resources Ltd (ASX: PAN) could also benefit under a Biden administration.

Western Areas has a portfolio of low-cost, high-grade nickel mines with an active exploration program. Panoramic Resources operates nickel mines in Western Australia and is engaged in exploration in Australia, the US, and Canada. 

Green shoots for cannabis shares

During the campaign, Biden stated his administration will pursue cannabis decriminalisation and that he supports medical cannabis legalisation.

Democratic control of the Senate also means federal cannabis reform proposals are more likely to make it to the floor of the Senate. Federal legislation in the US could push forward efforts to legalise recreational cannabis in Australia. This could be a boom for ASX cannabis shares such as Althea Group Holdings Ltd (ASX: AGH), Little Green Pharma Ltd (ASX: LGP), and Cann Group Ltd (ASX: CAN). 

Althea is already taking advantage of Canada’s cannabis 2.0 legislation with its Peak Processing facility. The company already has a growing client base of Australian medical marijuana customers. Little Green Pharma has been manufacturing Australian medical grade cannabis products since 2018 and provides a range of THC and CBD oils. Cann Group has established R&D and cultivation facilities in Australia and is looking to establish a leading position in plant genetics, breeding, cultivation, and production. 

Ethical investing on the rise

Socially responsible investing is likely to gain momentum under Biden. Although most companies are aware that being environmentally friendly and socially responsible is good for both customers and shareholders, the sector will likely receive a boost under a Biden administration.

This is because his cabinet and regulator choices look to be ESG-friendly. Further, his administration has flagged an intention to require public companies to disclose more climate-change related data, which will allow ethical investors to make more informed decisions. There are a number of ETFs listed on the ASX that give Australian investors access to the ESG sector. These include BetaShares Global Sustainability Leaders ETF (ASX: ETHI) and VanEck Vectors MSCI International Sustainability Equity ETF (ASX: ESGI). 

Biden brings new future 

The incoming Biden administration marks a distinct shift in direction for the United States. Many of Biden’s priorities are in sharp contrast to those of his predecessor. With control of Congress, Biden is in a prime position to lead the United States to a new future. This will have flow on effects for ASX shares, with investors eagerly awaiting the outcome of Biden’s policy initiatives.  

 

More reading

• Why the Vulcan Energy (ASX:VUL) share price is up 4,000% in 12 months
• The Vulcan (ASX:VUL) share price is hitting new highs today. Here’s why
• Here’s why the Sayona (ASX:SYA) share price has surged 235% higher this week
• Iluka (ASX:ILU) share price surged higher on a potential $1bn+ valuation uplift
• The sector that’ll grow 480% this year, expert says

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The HUB24 Ltd (ASX: HUB) share price is pushing higher on Tuesday following the release of its second quarter and half year update.

In morning trade the investment platform provider’s shares are up 2% to $23.46.

This latest gain means the HUB24 share price is now up 97% since this time last year.

How is HUB24 performing?

HUB24’s strong form continued during the three months ended 31 December.

Its Custodial Platform Funds Under Administration (FUA) reached $22 billion at the end of the period, which was up 38.7% on the prior corresponding period. Total FUA came to $31 billion, including the $9.3 billion of non-custodial FUA from the Ord Minnett PARS acquisition.

This strong growth was driven by record platform quarterly net inflows of $1.7 billion, an increase of 36.7% on the net inflows it recorded in the same period a year earlier. This was also $360 million higher than its first quarter net inflows.

Pleasingly, the future looks positive, with HUB24’s new business pipeline continuing to grow following the signing of 24 new licensee agreements during the December quarter. These include agreements with both large boutique licensees and self-licensed practices.

Additionally, the company has recently entered into a binding agreement with IOOF Holdings Limited (ASX: IFL) to develop a range of solutions. This includes an investment and superannuation wrap platform utilising HUB24’s custody, administration and technology capabilities, and a suite of managed portfolios.

Commenting on its outlook, the company stated: “As well as continued focus on growing the current platform business and supporting our customers, the company is leveraging opportunities for further growth and diversifying into non-custody administration in line with our HUBconnect strategy. With the completion of the acquisition of the Ord Minnett PARS business, non-custodial FUA of $9.3 billion for this quarter will now be included in the company reporting.”

More reading

• The latest ASX “buy” recommendations from top brokers
• Brokers name 3 ASX shares to buy right now
• Why the Hub24 (ASX:HUB) share price could go higher

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia has recommended Hub24 Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Ecofibre Ltd (ASX: EOF) share price is on the rise today following the announcement of an exclusive distribution alliance between Ananda Health and Medisca.

Ecofibre’s Ananda Health division is the number one provider of hemp-derived cannabidiol (CBD) for retail pharmacies in the United States. The business produces nutraceutical products, topical creams and ointments.

In existence for over 30 years, Medisca is a company that is focused on compounding pharmaceutical chemical products. The business offers personalised medicine, educational training and support to its partners prescribers, pharmacists, and pharmacist technicians. Medisca has a global footprint across 55 countries including Europe, the United States, Canada, and Australia. The company supplies compounds to more than 10,000 pharmacies world-wide.

In early trade, shares in the hemp products producer are up 3.88% to $1.88.

What’s driving the Ecofibre share price?

In today’s announcement, Ecofibre advised that it has entered an exclusive distribution agreement with Medisca to roll out its products.

Under the terms of the deal, Ananda will have access to the Medisca network in the United States. This will enable the company to supply Ananda Professional products to more than 5,000 pharmacies from February 1, 2021.

The contract will be valid for 3 years, with an additional 2-year extended option. A minimum sales target will be set 6 months after the contract start date, which must be met to continue to agreement.

Ananda will have exclusive distribution access to the United States, Canada, and Australia. However, Medisca is able to dispense the products to other parts of its extensive network on a non-exclusive basis.

Management commentary

Ananda Health CEO David Neu welcomed the new partnership, saying:

This partnership is one of the most important milestones in the professionalisation of the CBD industry. This is the first time a multinational distributor will be carrying ingestible hemp-derived CBD products.

Medisca global strategy and innovation SVP, Panagiota Danopoulos, added:

Medisca has been closely monitoring the CBD segment over the past several years and we have seen awareness and demand increase for compounding pharmacists across many geographies. To ensure that we can provide our pharmacists the best-in-class CBD product range we are very pleased to announce our exclusive distribution partnership with Ananda Health.

CBD is an exciting new category that still requires significant research and education to ensure it can help as many patients as possible. In conjunction with Ananda Health, we are very excited to be able to give our pharmacists access to the research, tools and training to improve patient outcomes.

More reading

• 5 top ASX cannabis shares in 2020

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Tyro Payments Ltd (ASX: TYR) share price has returned from its trading halt on Tuesday after responding to a short seller report.

At the time of writing, the payments company’s shares are rocketing 17% higher to $2.72.

What did the short seller claim?

Late last week Viceroy Research alleged that the Tyro payment terminal outage was far greater than it admitted and labelled the company “the most unreliable & technologically inferior fintech in Australia.”

Viceroy claimed that its research suggests that Tyro rendered useless around half of its terminals across the country via a software update. This “left businesses, including medical facilities, without any means to collect payment from customers.”

What was Tyro’s response?

This morning Tyro revealed that it has reviewed and rejected Viceroy Research’s report. It notes that the report follows a “familiar playbook used by overseas domiciled and unregistered operators seeking to generate uncertainty, so as to directly profit from or facilitate others to profit from their research.”

While the company has intentionally not commented on each individual opinion of the authors of the report, it has responded to a number of key factual misstatements, noting that these falsehoods are the foundation for many of the opinions expressed within the report.

Tyro’s responses.

The first falsehood the company tackled was the number of terminals that are offline.

“At no time have 50% of Tyro’s terminals been offline. As advised to the ASX today 15% of Tyro’s merchants remain impacted.”

Tyro also stressed that the cause of the outage was not a software patch.

“The root cause of the connectivity event has been identified as arising from an issue residing in specific versions of the terminal platform software supplied by the manufacturer of the terminals, Worldline. This issue caused valid, forward dated, certificates on the impacted terminals to be incorrectly interpreted as expired, due to the interplay of the selected expiry date and any date on or after 5 January 2021.”

Viceroy claimed that fixing the terminals would be capital intensive and cost up to $12 million to replace. Tyro has refuted this claim.

“The repair involves collecting the impacted terminals from the field and implementing an immediate software update. If the terminals were not in a disconnected state this fix would have been achieved via a remote download. There is no capital-intensive terminal repair or replacement required of the nature suggested in the Report.”

Another claim that has been refuted is the age of Tyro’s terminal fleet, which Viceroy said was over a decade old.

“Tyro terminals are exclusively Worldline manufactured and the fleet is not aged as implied in the Report, specifically: – ~60% of the fleet is 3 years old or less; – ~80% of the fleet is 5 years old or less.”

Finally, the short seller claimed that Tyro floats its operating cash flows through customer deposits. Tyro confirmed that its cash flows are audited and in compliance with Australian Accounting Standards and International Financial Reporting Standards.

“Tyro has cash and investments excluding depositor funds of $137 million as at 31 December 2020. Tyro is an Authorised Deposit-taking Institution (ADI). Deposits are generated to fund merchant loans and not to support operating cash requirements. The reporting of customer deposits in our audited Statement of Financial Position and Statement of Cash Flows is in compliance with Australian Accounting Standards and International Financial Reporting Standards.”

“The adjustments in the Report to Tyro’s cash flows include non-cash items (ie share based compensation) and furthermore to extract ‘movements in deposits’ without adding back ‘movements in loans’ is an inconsistent treatment for an ADI and will lead to an incorrect assessment of cash movements as it excludes the banking business.”

More reading

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• Tyro Payments (ASX:TYR) share price crashes 12% on short seller attack

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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