News

• Apple crossed the $3 trillion market capitalization level for the first time ever on Monday.
• Apple’s stock price surged 3% to a high of $182.88 in Monday trades, 2 cents above the amount needed to hit the milestone.
• Shares of Apple returned 35% in 2021, outpacing the S&P 500’s return of about 27%.

Apple crossed the $3 trillion market capitalization milestone on Monday for the first time ever, just 16 months after it crossed the $2 trillion level. On both occasions, it was the first company ever to reach the milestone. 

Shares climbed 3% to a high of $182.88 in Monday’s trading session, just two cents above the $182.86 level needed to cross the valuation threshold.

At its peak on Monday, Apple gained about $90 billion in market capitalization since Friday’s close, making its one-day gain bigger than the bottom 400 stocks in the S&P 500 index. Shares of Apple returned 35% in 2021, outpacing the S&P 500’s return of about 27%.

The gains came one day after Wedbush analyst Dan Ives forecasted a strong 2022 for the company, in part driven by the potential launch of a new AR headset product later in the year. 

Apple became the first US company to reach a $1 trillion and $2 trillion market capitalization in August 2018 and August 2020, respectively. 

Over the past two years, strong demand for Apple’s iPhone 12 and 13 models has driven record revenue and profits. Trailing 12-month revenues hit $365 million as of September 30, for year-over-year growth of 33%.

Ives expects the gains for Apple to continue, having set a bull-case scenario price target of $225, representing potential upside of 27% from Friday’s close. Potential drivers of those gains include a growing Services business and easing supply chain pressures heading into 2022, he said

• Nike stock is Guggenheim’s “best idea” for 2022 amid its push into the metaverse.
• Guggenheim’s Robert Drbul said he’s closely watching Nike’s digital strategy.
• The analyst also raised his EPS estimates for the company and said it’s the leader in athletic apparel.

Nike stock is headed for new highs this year, thanks in part to its push into the metaverse, according to a Wall Street analyst.

Guggenheim’s Robert Drbul dubbed the athletic-apparel retailer his “best idea” for 2022 in a December 31 note, saying Nike “is rapidly embarking on the next era of its company history,” which he expects to be “digitally led.”

“The brand commands dominant market share, which we expect will grow materially from here as digital scales further, new product innovation remains robust, and heavy investment behind key growth drivers continues,” he wrote

Drbul maintained a buy rating and a price target of $195 on Nike stock, which was down 1.8% Monday after gaining 18% in 2021.

He said the company is “the leader in the athletic apparel industry,” and raised his earnings per share estimates for 2023 to $4.85 from $4.50 and for 2024 to $5.70 from $5.27. 

Drbul said he’s closely watching Nike’s evolving digital strategy and its engagement in the metaverse, a digital world where people interact. “What would any outlook for 2022 be without mention of the Metaverse?” he said. 

Insider reported previously that Nike has been pushing into the future internet, called both Web 3.0 and the metaverse. Its push has included video games, the creation of a metaverse studio, and even a promised line of digital sneakers called CryptoKicks.

In December, the Beaverton, Oregon-based company announced its acquisition of influential digital sneaker-maker RTFKT, which had previously received a $33 million valuation in a funding round led by Andreessen Horowitz.

The metaverse shot into the mainstream in 2021 when the company formerly known as Facebook rebranded to Meta. The concept has struggled to land on a single definition, and prominent people, such as Tesla’s Elon Musk, have snubbed the idea altogether.

Even so, many see non-fungible tokens, aka NFTs, as the key to unlocking this digital world where avatars of individuals can shop, play video games, build worlds, buy land, and more. 

Latitude will try to cross-sell personal and car loans to Humm’s 2.7 million customers if it succeeds in buying the former Flexigroup’s credit card and buy now, pay later businesses under a $335 million offer that suggests the merger and acquisition boom will continue in 2022.

The Ahmed Fahour-led Latitude, which listed on the ASX last year, is seeking scale to take on Afterpay and Zip in a crowded buy now, pay later market that has fallen out of favour with sharemarket investors.

Latitude plans to fold its LatitudePay product, which charges retailers rather than customers, under Humm and its associated bundll brand, which have struggled to win the same sort of traction with merchants and consumers as Afterpay or Zip.

Mr Fahour said 80 per cent of Latitude’s personal loans come from cross-selling to customers who use its instalment payment products, and buying Humm will allow it to double its potential customer base.

He said getting bigger is important and would distinguish Latitude from a long-tail of under-scale buy now, pay later providers.

“We will become one of the largest, non-mortgage consumer companies in Australia and New Zealand, much bigger than anyone apart from the major banks,” Mr Fahour told The Australian Financial Review.

The bid for Humm’s instalment funding and payment offering along with its credit card book is being considered by Humm’s board. While most of the focus since Humm rebranded from Flexigroup in 2020 has been on buy now, pay later, the credit card business – which operates under the humm90 brand – accounted for two-thirds of Humm’s cash profit of $69 million in 2021.

Latitude is proposing to buy Humm’s consumer finance operations for $300 million in shares, diversifying its shareholder base, and $35 million in cash. It said, “definitive transaction documents” should be signed by the end of January.

M&A boom

Humm’s commercial business, which provides asset financing to SMEs in competition with major banks, will not be part of the deal and will remain a standalone listed company.

The offer continues the merger and acquisition boom that has seen dozens of companies use strong share prices to acquire competitors over the past year. Latitude’s share price, however, has fallen by around 24 per cent since it listed last April with a $2.6 billion valuation.

One payments analyst said the low-ball bid pointed to the fading of the buy now, pay later sector, which has been savaged on the sharemarket since November. Afterpay fell 10 per cent on Thursday alone as sentiment towards global technology stocks soured.

“Humm and Latitude have both been badly caught out by the BNPL hype which has taken focus away from their core businesses, and now the whole BNPL sector is collapsing, they are caught out very badly,” said Grant Halverson, managing director at McLean Roche.

Humm shares have underperformed despite widespread interest in Afterpay and Zip, as investors have worried about a lack of scale and the costs of chasing bigger competitors abroad.

Humm has extensive operations in Ireland and is planning an expansion into Canada. Latitude said before Christmas it wanted to expand its buy now, pay later operations, including in Asia. It has a partnership with Harvey Norman stores in Singapore and Malaysia. Mr Fahour said he is keen on expanding into Singapore and Canada.

Profit centre

Latitude makes about two-thirds of its profit by providing interest-free instalment products for large retail items funded by merchants. One-third of its profit comes from cross-selling interest-bearing consumer and auto loans to this customer base. Mr Fahour said the deal will help Latitude sell more interest-bearing products to Humm customers.

Humm and Latitude differ from Afterpay, which mostly focuses on small retail items with purchases averaging about $200. Humm and Latitude focus on offering interest-free terms on larger items, such as household furniture and electrical goods. Humm is a big financier of solar panels.

Latitude’s proposal equates to 68¢ per Humm share based on a $2 Latitude share price. Latitude closed at $1.96 on Wednesday, and rose 1.8 per cent to $2 on Thursday. Humm shares recovered morning losses to end 2.2 per cent higher at 91.5¢ amid a bloodbath among buy now, pay later stocks.

Humm’s consumer business has $1.8 billion in loans. The deal will create a combined group with more than $8 billion in loans, and more than 5 million customers and 70,000 merchants.

Humm chairman Christine Christian said the board believes “the Latitude proposal is potentially attractive to Humm shareholders and warrants due diligence and detailed negotiation”. A non-binding heads of agreement provides exclusivity until the end of January.

Humm CEO part of the deal

Humm CEO Rebecca James will be invited to lead the combined group’s buy now, pay later business and is understood to be keen to join the combined company.

Mr Fahour said Humm’s consumer business “is highly accretive” to Latitude shareholders and the company expected annualised synergies of $100 million in the 2023 full-year.

He said a pro rata distribution of Latitude scrip to Humm shareholders would allow Latitude to increase its free float, and along with the merged group’s inclusion in the S&P/ASX 200 Index, this would create more liquidity for what has been an illiquid stock.

The group would look to form partnerships with banks to provide buy now, pay later products for their customers.

“We don’t compete with the banks on mortgages and deposits which is the bulk of their assets, but Latitude and Humm can provide services to banks in this area of consumer finance, which is enhanced by the bringing together of these two organisations,” he said.

Last year, Humm struck a joint venture with a subsidiary of Westpac in New Zealand to allow the bank to use Humm’s bundll product to attract new customers.

If the deal proceeds, Humm said its commercial business, which offers broker-originated SME lending and made a cash net profit of $22.3 million in 2021, would remain a standalone ASX-listed business. Humm said its board believes the commercial business “has significant organic and strategic growth potential” operating independently.

Humm said in a statement there is “no assurance any binding agreement will be reached or that a transaction will occur”. But Latitude seemed more bullish that the deal will get done, saying both parties were aiming to close the deal before June 30.

It would be the second major acquisition for Latitude since its listing; it bought personal lender Symple for $200 million in August.

Symple and Humm use the same lending platform, known as Q2 Cloud Lending, which Latitude has also adopted.

Latitude is being advised by Jarden, King & Wood Mallesons and KPMG. Humm is being advised by Flagstaff Partners and Minter Ellison.

The offer comes as Afterpay is waiting for approval from the Bank of Spain – expected this month – to allow it to be acquired by US payments giant Block, formerly known as Square.

The deal is the latest in a wave of consolidation in personal lending, with National Australia Bank acquiring Citigroup’s consumer business for $1.2 billion in August, and ASX-listed MoneyMe buying personal lender SocietyOne in the week before Christmas.

• The e-commerce unicorn has pocketed $458 million in funding thanks to a round led by Tiger Global.
• The raise bumped ROKT’s value up to $2.75 billion, making it Australia’s third most valuable tech company.
• The raise sets a new record for the largest single venture capital raise in Australian history.

Rokt, the e-commerce marketing startup helmed by former Jetstar boss Bruce Buchanan, has raised an eye-watering $458 million and is now worth $2.75 billion, making it the third most-valuable privately owned Australian tech company. 

The raise, which was led by US capital giant Tiger Global, sets a new record for the largest single venture capital raise in Australian history, outpacing the $350 million pocketed by the Queensland-based simPRO just last month.

After securing unicorn status in July this year, Buchanan said this would close the book on future private share issuances until it goes public in the US in 2023. 

He said the company expects to round out the year with $230 million in revenue, up from the $100 million it pocketed last year that fell shy of its forecasts as a result of hurt businesses reeling from pandemic shockwaves in the travel and entertainment sectors. 

According to reports, ROKT has enjoyed an annual growth rate of 65% over the last five years, which Buchanan is confident can be maintained at a rate of at least 50%, despite major plans to scale. 

“Customers are demanding a more relevant e-commerce experience and businesses need to ensure they have the right economics to be able to grow,” he said.

“Our technology solves these two problems by optimising every element of the transaction moment, both for relevancy and value for each individual customer, enabling digital businesses to remove irrelevant clutter and double their profitability.”

Another booster for the company’s forecasted revenue, Buchanan said, has been Apple’s newly-introduced privacy changes, which have forced businesses to get the most out of their own data.

“That means businesses like ourselves that help first-party [data] companies like Ticketmaster use their own data in a smarter way, have really flourished,” Buchanan said. 

“This world of handing your data out to a lot of third-party players and not knowing where it goes is disappearing very quickly. Yet marketers still want to reach audiences, and the number of channels is less and less all the time.”

Rokt has fostered serious investor interest in the Asia-Pacific region since it was founded in 2012. 

Buchanan said the firm will now turn to drumming up interest in the US ahead of its IPO after securing backing from US players like Wellington Management, Whale Rock Capital Management, and Pavilion Capital.

He said their involvement in Friday’s raise should help others better understand the way ROKT works in the US market, both leading up to and after its IPO. 

“We wanted to do one big final round to get our shareholders aligned to US capital markets,” he said. 

The startup plans to use the cash to go on an acquisition spree, with a focus on usurping smaller e-commerce competitors operating in foreign markets, and may have a lead on industries and customer demographics where ROKT is weaker. 

It will also invest heavily in research and development, along with building out its staff — which already employs some 400 people — to more than 550 people next year. 

The company has spent much of the year a dark horse, after a flurry of mid-year rumours tipped it for a public offering as early as this year. 

ROKT ranks among the top three most valuable Australian tech darlings, behind Canva and Airwallex, which in September bagged $55 billion and $5.5 billion valuations respectively.

• Global meal delivery company Marley Spoon is acquiring Melbourne food company Chefgood for $21 million
• With Australia its biggest market, the company saw a 70% jump in sales in 2020.
• It comes as VCs eye up the growing hospitality startup space.

Marley Spoon is buying Melbourne-based meal delivery company Chefgood for $21 million as it seeks to rebuild its stake in the Australian market. 

In a statement, it said Chefgood was operating at a $26 million net revenue run rate that had seen a 137% increase year on year.

The acquisition expected to be completed next month.

The second-biggest player in the $500 million meal kit delivery sector, Australia was Marley Spoon’s strongest market in 2020, with sales jumping 70% as consumers experimented with alternatives to eating out and groceries during the pandemic.

While the company grew 50% in the 2020 December quarter, thanks in part to its partnership with Woolworths, the company has struggled to maintain momentum this year. 

The company experienced notable growth in the first quarter of 2021 but witnessed a significant 22% per cent drop in share prices in July of 2021. 

In September Woolworth’s venture capital arm W23 sold its 9.9% equity stake in Marley Spoon for $54 million. 

In a statement Marley Spoon said the acquisition would give the company a “foothold in a growing and complementary category” that would allow them to “leverage its operational, digital and customer assets, providing synergies for both companies.” 

The addition rounds out the global company’s portfolio of brands including Martha Stewart & Marley Spoon and Dinnerly, and means it can gain a greater foothold in the growing food delivery sector. 

Rolf Weber, Australia managing director of Marley Spoon said he was looking forward to working with Chefgood founder and CEO Michelle Sievwright and the company’s wider team to grow the brand and better serve Marley Spoon customers.

“We are very excited to be partnering with Michelle and the Chefgood team since we share the same vision of making our customers’ lives easier with easy, tasty and high-quality meal solutions,” Weber said.

The sale comes amid an acceleration in growth for start-ups servicing the food and hospitality industry. 

Melbourne-based mobile food ordering platform Mr Yum pocketed $89 million in a Series A funding round in late November, the third-largest raise in Australian history. 

The eye watering raise for the mobile ordering platform, which streamlines customer ordering processes, is indicative of growing VC interest in hospitality and food ventures as customer behaviour continues to be transformed by the pandemic. 

Pre-COVID, just 100 restaurants in Australia used the platform for in-house and takeaway ordering. Now, the company says it has some 1,500 venues using its services.

Restaurant supplier marketplace FoodByUs achieved a $10 million series A raise in mid-November led by Macquarie Capital, with support from Base Capital and New York marketplace investor F J Labs.  

It told Business Insider Australia that despite the strains on the restaurant industry during the pandemic, the company saw its annual sales increase by more than 600% since 2019.

Similarly Providoor, a premium meal delivery service now operating across Sydney, regional NSW, Melbourne and Canberra, has seen $70 million in sales since launching in mid-2020, and recently announced it is looking to raise capital to further expand in 2022. 

Marley Spoon’s shares surged 18% following the announcement on Tuesday.

• Afterpay shareholders have given the all-clear to a $39 billion merger deal with Block.
• Now all that stands in the way of the deal is pending regulatory approval from Spain’s central bank.
• Afterpay chair Elana Rubin said both companies are of the mind that Spanish regulatory approval is all but sealed.

Afterpay executives are confident the Bank of Spain will give regulatory approval to Block’s $39 billion takeover of Afterpay, after shareholders of the buy now, pay later giant threw their overwhelming support behind the deal.

In the lead up to its annual general meeting on Tuesday morning, the results of a proxy vote revealed that 86.35% of the Afterpay shareholders stood in favour of the deal, well above the 75% threshold required to get the merger over the line. 

Of the total votes tallied, 99.79% supported what is likely to become Australia’s largest ever takeover deal, while just 0.05% were against it, and 0.16 were left open. 

The vote comes just over a month after shareholders at Jack Dorsey’s Block, formerly Square, gave the thumbs up to issuing stock to complete the purchase. 

All that stands in the way of the deal is pending regulatory approval from the Bank of Spain, which is needed now after Afterpay’s Clearpay, based in Britain, bought Spanish BNPL outfit Pagantis in August last year for about $79 million. 

Afterpay chair Elana Rubin said both companies believe Spanish regulatory approval is all but sealed, and that the merger could still be finalised in the first quarter of 2022. 

In a pre-published speech, Rubin said the Afterpay board supported the deal on the promise of major US growth, particularly through its exposure to smaller businesses. 

“The Board considers that while the future growth prospects of a standalone Afterpay are strong, we believe that the combination of Afterpay with Block will deliver an unprecedented opportunity for both companies,” Rubin said. 

Square, which was founded by Twitter CEO Jack Dorsey, reached an agreement to purchase Australian buy now, pay later (BNPL) pioneer Afterpay for $US39 billion in August. 

In a joint statement, the pair said the all-stock deal would bring Afterpay into Square’s larger stable of peer-to-peer and merchant transaction capabilities. 

The US-based Square said Afterpay’s BNPL functionality will be added to the Square Seller and Cash App ecosystems, allowing small merchants access to the increasingly popular method of payment and allowing Afterpay users to manage their payments on the existing Cash App platform.

When the deal was announced, Afterpay co-founders and co-CFOs Anthony Eisen and Nick Molnar said the deal aligns with the company’s international ambitions.

“By combining with Square, we will further accelerate our growth in the U.S. and globally, offer access to a new category of in-person merchants, and provide a broader platform of new and valuable capabilities and services to our merchants and consumers,” they said.

The pair delivered familiar remarks again on Tuesday, saying both companies shared a vision of “financial empowerment”. 

“I’m incredibly humbled that with your support we’ll soon be joining forces to further scale and shape our businesses with a shared purpose,” Molnar told Afterpay shareholders.

“Today we’re at the start of an amazing partnership and I know our team across the globe share the excitement and enthusiasm at the opportunity to come.”

Both Molnar and Eisen will join Block under the deal to work on the company’s merchant and consumer businesses, while one of the two will be appointed to the Square board.

The deal promises immediate returns for investors, with existing Afterpay investors to be granted 0.375 shares of Square Class A common stock for every unit of Afterpay they hold. Afterpay shares closed at $94.69 a piece on Monday. 

Block will offer a secondary listing on the ASX, allowing Australian-based investors to choose between shares listed on the NYSE or the domestic bourse.

Afterpay shareholders are expected to own 18.5% of the company once the deal is enacted, with an expected completion in the first quarter of the 2022 calendar year.

• More than 55% of respondents in a recent survey said they planned to use a BNPL service to cover expenses in the lead-up to Christmas.
• The findings follow other recent reports suggesting BNPL users overcommitted to the services at the expense of budgeting for other essentials.
• Treasurer Josh Frydenberg announced plans to overhaul the rules around BNPL providers last week.

More than half of Australians told a recent survey they planned to use buy now pay later (BNPL) services over the holiday period, amid a surge in use and scrutiny — and ahead of a government crack down in the new year.

The newly released poll found that 55% of respondents said they planned to use a BNPL service to cover expenses in the lead-up to Christmas, according to Credit Savvy, a credit rating start-up supported by Commonwealth Bank’s venture capital fund. 

2021 has seen an explosion in the use of BNPL services in Australia — though the sector is still dwarfed by traditional credit services, with homegrown digital payments companies Afterpay and Zip dominating the local market. 

Approximately 14% of Australian adults had made a purchase using a BNPL service in the past four weeks as of June this year — up from 11% during the same period in 2020, and an estimated $10 billion a year flows through the local platforms. 

The research also showed that a massive 76% of those surveyed had used a BNPL service in the past 12 months, with 43% citing the service as “a way to budget.” 

Paul Nicolo, managing director of Credit Savvy, said the survey’s findings reinforced wider research that shows the majority of BNPL customers are millennial and Gen Z women who use the platforms for “convenience and budgeting.”

Nicolo said its research supported wider criticism of the sector’s model, which spruiks its service as interest-free but catches customers with accumulating late fees. 

“There may be costs associated with account management, late fees and other charges which can add up quickly,” he said. 

While the sector is currently self-regulated by a code developed in February this year, companies currently do not come under the Payment System Regulation Act as designated payment systems.

Earlier this month Financial Counselling Australia (FCA) called for a review of credit law as it pertains to BNPL companies following the release of its own report that found many users were “overcommitted” to BNPL products.

The number of clients presenting with BNPL debt has exploded over the last year, the organisation said, with 61% of its counsellors reporting clients with BNPL debt are struggling to pay for other living expenses, including bills and rent.

Similar research conducted in 2020 by the Australian Securities and Investments Commission (ASIC) found around one in five BNPL users chose to repay their BNPL balances before directly purchasing essentials like food.

Nicolo said the survey suggested more reckless patterns of spending generally associated with credit cards extended to BNPL services over the holiday period. 

The survey found that 77% of those surveyed said BNPL would be the only form of credit they would use over the festive seasons, with 21% reporting they would use the service for essential groceries over the period. 

“Buy Now, Pay Later could also affect your credit score if the provider performs a credit check when you sign up, or if you miss your payments,” he said, adding that “despite the convenience, it may not be the right option for those looking to build a good credit report.”

While the majority of the survey’s respondents said they had never received late fees or charges, 29% said they had been served charges, with 77% reporting this amounted to $55 or less. 

Momentum toward an regulatory overhaul of digital payments has been steadily building this year; as early as April Commonwealth Bank CEO Matt Comyn told a parliamentary committee the government needed to force BNPL platforms to run credit checks that would provide greater transparency around customer debt, among other frameworks to properly protect their customers.

Last week, Treasurer Josh Frydenberg announced plans to overhaul the rules around BNPL providers, along with cryptocurrencies and digital wallets, which also currently operate largely outside of government regulation.

Based on the findings of Treasury’s recent Payments System Review, the government said it would abandon a one-size-fits-all approach to the Act, and will consult with Australia’s major buy now pay later players next year to develop a better system.

• Woolworth’s chief executive Brad Banducci has warned of persistent supply chain problems leading up to Christmas.
• “Everyone’s been very sensible so far, but there are some risks for customers that if they shop too late, they might not get that very special, triple smoked ham,” he said.
• Woolworths, like many other retailers, has been hit on all fronts through its supply chain over the past six months.

The head of supermarket giant Woolworths has encouraged shoppers to hit the shops early to get all the products they need for Christmas, warning that COVID-fuelled supply chain issues could mean some products might be in short supply by the end of the year.

Brad Banducci, Woolworths’ chief executive, told investors on Tuesday that persistent supply chain and COVID disruptions at the major retailer over the first half of the financial year had put unprecedented strain on the business, prompting a $220 million cost blowout.

Shares in the major retailer plunged 8 per cent as Mr Banducci detailed a number of unexpected expenses across the business, including direct COVID safe costs incurred in warehouses and stores, and a number of indirect costs such as higher fuel prices and an inability to perform key upgrades across its supply chain due to record consumer demand.

Due to these issues, the executive said shoppers should get in stores sooner rather than later to prepare for Christmas due to risks that some products could be unavailable by December 25.

“Everyone’s been very sensible so far, but there are some risks for customers that if they shop too late, they might not get that very special, triple smoked ham,” he said. “We really are running out of most of our key Christmas detail lines in Big W.“

“We try to make sure we’ve got enough, and we will have alternatives for consumers, but in the next few weeks, if there’s something really special you want from one of our stores, I would encourage consumers to buy it earlier rather than later.”

Woolworths, like many other retailers, has been hit on all fronts through its supply chain over the past six months, as the highly infectious Delta stain of COVID caused a number of the company’s warehouses and stores to shut for days on end as full teams of staff members were forced to self-isolate.

Risk of infection is still causing the company’s warehouses to operate under capacity. In addition to this, the business is also feeling “enormous pressure” due to the current shortage of shipping pallets, Mr Banducci said, though he was optimistic this would not cause any stock shortages in store.

“We are continuing to communicate as effectively as we can on this issue with the pallet pool operators, but there is a lot of pressure there in the system and I wouldn’t try to gild the lily on that one,” he said.

Chip shortages have also delayed some in-store and warehouse upgrades, he said. However, the current shortage of key fuel additive AdBlue has not caused issues for the supermarket just yet, though Mr Banducci expects it to be a “New Year’s issue”.

Woolworths first-half results, due to be formally released in February, will also include a $35 to $40 million Christmas bonus payment to the company’s workforce.

Overall, sales in the supermarkets division have increased 3 per cent across the first half to date, however, this was driven entirely by the business’ online division, which is less profitable than its bricks and mortar operations, further weakening earnings.

All in all, these additional costs will see the retailer’s first-half earnings at its supermarkets division come in between $1.19 billion and $1.22 billion, a notable drop on the $1.32 billion in earnings recorded in the first half of the 2021 financial year.

These costs are expected to significantly reduce in the second half, Mr Banducci said, though the executive warned that some supply chain constraints could persist into January if demand stays high.

• Amazon’s re/Start initiative was one of the earliest tech training initiatives to arrive in Australia and has a 90% graduate placement rate with employers like Accenture, NAB and Tafe NSW among.
• One year in, Skill Finder is another and has attracted widespread support from industry leaders like Canva and Atlassian.
• Other firms are trying capitalise on the labour shortage as an emerging market, offering targeted upskilling programs to various government agencies and corporations.

As the Australian labour market struggles with a crippling tech worker shortage, the industry is trying to plug the gaping hole with training initiatives of their own.

Just last week, some of Australia’s biggest tech startups told the market that they were struggling to fill specialist tech roles. 

Culture AMP, the workplace survey startup valued at $2.05 billion, said it has some 100 roles to fill, while Employment Hero, a HR tech startup, said it had 50 jobs going. 

Legacy businesses like Telstra, meanwhile, are even worse off, as they try to fill 1,000 tech roles with a fickle talent pool, many of whom are intent on heading to more “future” focused tech roles. 

Australia’s tech worker shortage is an issue Amazon was one of the earliest to try and tend to in the Australian market with the launch of its AWS re/Start program. 

Since its Australian arrival in 2020, Amazon’s AWS told Business Insider Australia has so far seen surging course completions, adding to the 200,000 graduates certified by the firm’s upskilling efforts.

At a global level — AWS wasn’t able to provide Australia-specific figures — 90% of the program’s graduates went on to land tech-focused roles, with the likes of Accenture and Deloitte, NAB, Westpac, and Tafe NSW among their employers. 

Andrew Sklar, leader of AWS training and certification, said the Australian labour market has responded well to the initiative, where some businesses are now being offered up talent from a broader range of “non-traditional backgrounds”. 

“In Australia and New Zealand, we started with one cohort in Sydney in 2020, and in the last year we have expanded with cohorts in Adelaide, Melbourne, Auckland, and Christchurch,” Sklar said. 

“Globally, we’ve tripled the scale of the program this year, and we will continue to invest in scaling the program next year.”

According to the findings of recent research from Deloitte Access Economics, pandemic-induced border closures shut the door on 30% of the tech skilled temporary migrants expected to arrive in Australia through the 2019-20 financial year, compared to the year before. 

As a result, the firm estimates that Australia will need to upskill an extra 200,000 tech workers over the next few years. 

Research from AlphaBeta released earlier in the year put the shortage at closer to 6.5 million “newly-skilled” and “reskilled” digital workers by 2025 in order to meet future demand. 

As Amazon works to scale its training initiatives, others are emerging, too. One year after launch, Adobe’s Skill Finder initiative has seen more than 75,000 course completions on various topics including cloud computing, data analysis, security and UX, among others.

Like Amazon’s re/Start initiative, Skill Finder — which pocketed a $2.7 million grant from the federal government to expand on its offering and reach — has also managed to secure the green light from local industry leaders. In part, because they played a role in its design.

Among its backers are Canva, which in September scored a $55 billion valuation, and Microsoft; along with leading software providers MYOB, IBM, and SAP. 

Atlassian’s head of global policy and regulatory affairs, David Masters, and Accenture CEO Peter Burns, each said the program has helped to fill a gap stretched rapidly by the onset of the pandemic.

“Demand for innovation and technology skills are at an all-time high,” Burns said. “Accenture is proud to be involved in initiatives [like] Skill Finder which ensure all Australians have the ability to upskill in areas such as cloud, security, intelligent operations and automation.”

Jane Hume, minister for superannuation, financial services and the digital economy, lauded her government’s investment, too. She said that other programs like it are likely to play a crucial role in getting “around 60%” of the Australian workforce retrained to meet tech demand.

And Australian tech companies could soon see a flood of them. While the industry’s leading educational initiatives have so far been made available to the public, other companies are spending millions of dollars on inward-facing training initiatives that have the same industry-wide recognition, and are looking to capitalise on the tech worker shortage as an emerging market.

Among them is Ernst & Young’s “Skills Foundry”, which promises to focus not just on meeting current demand, but that of the “future workforce” as well. Adam Canwell, global lead of the firm’s leadership services, told Business Insider Australia that the program has seen major interest from government agencies and various other corners of the market.

He said what most employers are now realising is that they can’t simply “buy their way out of” the tech worker shortage. Instead, they have to train their way out of it. The firm is now trying to cater to what has become a bloated global appetite for doing so, in a way universities can’t.

“What we’re looking to do is define the big building blocks of future capability — whether that’s data, UX design — and then create a curriculum which is kind of at the next level of detail,” Canwell said. 

“So under every significant capability that we’re trying to invest in, we create badges which are attached to specific skills, which are then externally accredited. So if it’s a technology platform [course], we actually get accreditation with their technology provider.”

He said, in the long run, the program could see a staff member at the firm — or any number of its clients taking part in the initiative — aggregate their badges to form a very real MBA thanks to the firm’s partnership with Hult Business School in the US. 

“What we’re trying to say is for every hour that you invest in upskilling, it will help you get an external accreditation for that,” Canwell said. “So that is valid for you both as a really important person to us, but also in terms of enhancing your value on the marketplace.”

• The NSW government says big tech companies have become crucial to building out the state’s digital infrastructure as Australia reckons with a tech skills shortage.
• NSW director of ICT and digital sourcing Mark Lenzner said they’re also set to play a role in fostering a swarm of local talent.
• The remarks come in the midst of a broader tech industry drive to plug the hole left by Australia’s tech skills shortage, as companies like Amazon and Adobe introduce training programs.

The New South Wales government has admitted that collaborating with big tech multinationals will be crucial to building out the state’s digital infrastructure, as it too starts to feel the impacts of Australia’s tech skills shortage. 

Speaking on a panel at the state’s digital.nsw event on Wednesday, NSW director of ICT and digital sourcing Mark Lenzner said his team is leaning on foreign companies like Microsoft, SAP and ServiceNow to build out the state’s tech capabilities.

“Everyone is struggling for digital talent, digital skills,” Lenzner said. 

“Whilst we would love many of those out there looking for work in that area to join the New South Wales government, we are also realistic that much of that capability and capacity will come from industry,” he said. 

“And we need to be prepared to partner with industry; open our doors to doing business with industry, from whom much of that capability will come from.”

Just last week, some of Australia’s biggest tech startups told the market that they were struggling to fill specialist tech roles. 

Culture Amp, the workplace survey startup valued at $2.05 billion, said it has some 100 roles to fill, while Employment Hero, a HR tech startup, said it had 50 jobs going. 

Legacy businesses like Telstra, meanwhile, are even worse off, as they try to fill 1,000 tech roles with a fickle talent pool, many of whom are intent on heading to more future-focused tech roles.

It’s an issue Lenzner has been trying to address by shaking up procurement processes in the state since he arrived from Westpac in 2018. 

Since then, he’s established a procurement task force aimed squarely at handing out a larger volume of government contracts to the local tech industry. 

The taskforce, established last year, is expected to funnel as much as $2.1 billion into the local industry over the next few years through the government’s Digital Restart Fund.

But it has since been forced to undergo policy changes after larger, ineligible businesses were found to have misclassified their businesses in a bid to game the application process and secure government contracts they weren’t entitled to.

On Wednesday, Lenzner said tighter policy restrictions, and the help of big tech multinationals, will be crucial in making sure local contracts go to a diversified, budding local industry. 

“Once you presume that we have that local capability and it’s here, I think we need policy frameworks in government and a cultural shift in government that encourages us to move away from our tried and proven incumbent providers and try a more diverse set of suppliers,” he said.

“There are great organisations in New South Wales ready to help us. We just need to have the environment that encourages them to want to partner with us.”

Lenzer’s remarks arrive in the midst of a broader industry drive to plug the hole left by Australia’s tech skills shortage with training programs of their own.

Among the earliest to try and address the issue was Amazon, with the launch of its AWS re/Start program in 2020, which the company told Business Insider Australia has so far seen surging course completions, adding to the 200,000 graduates certified by the firm’s upskilling efforts. 

At a global level — AWS wasn’t able to provide Australia-specific figures — 90% of the program’s graduates went on to land tech-focused roles, with the likes of Accenture and Deloitte, NAB, Westpac, and Tafe NSW among their employers.

According to the findings of recent research from Deloitte Access Economics, pandemic-induced border closures shut the door on 30% of the tech skilled temporary migrants expected to arrive in Australia through the 2019-20 financial year, compared to the year before. 

As a result, the firm estimates that Australia will need to upskill an extra 200,000 tech workers over the next few years. 

As Amazon works to scale its training initiatives, others are emerging, too. One year after launch, Adobe’s Skill Finder initiative has seen more than 75,000 course completions on various topics including cloud computing, data analysis, security and UX, among others.

Like Amazon’s re/Start initiative, Skill Finder — which pocketed a $2.7 million grant from the federal government to expand on its offering and reach — has also managed to secure the green light from local industry leaders. In part, because they played a role in its design.

Among its backers are Canva, which in September scored a $55 billion valuation, and Microsoft; along with leading software providers MYOB, IBM, and SAP. 

Atlassian’s head of global policy and regulatory affairs, David Masters, and Accenture CEO Peter Burns, each said the program has helped to fill a gap stretched rapidly by the onset of the pandemic.

“Demand for innovation and technology skills are at an all-time high,” Burns said. “Accenture is proud to be involved in initiatives [like] Skill Finder which ensure all Australians have the ability to upskill in areas such as cloud, security, intelligent operations and automation.”

Jane Hume, minister for superannuation, financial services and the digital economy, lauded her government’s investment, too. She said that other programs like it are likely to play a crucial role in getting “around 60%” of the Australian workforce retrained to meet tech demand.