There are some strong ASX tech shares available to Aussie investors that could be worth considering.
The following businesses are growing revenue and profit quickly:
Temple & Webster Group Ltd (ASX: TPW)
Temple & Webster is one of Australia’s leading online retailers of furniture and homewares. It runs a ‘drop-shipping’ model where products are sent directly to customers by suppliers, enabling faster delivery times and reducing the need to hold inventory, allowing for a larger product range. The company also has a private label range which is sourced from overseas suppliers.
The ASX tech share recently announced its FY21 half-year result where it said that revenue for the six months to 31 December 2020 went up by 118% year on year on year to $161.6 million. Its earnings before interest, tax, depreciation and amortisation (EBITDA) went up 556% to $14.8 million and it was cashflow positive for the half, ending with a cash balance of $85.7 million. Its active customers increased by 102% to 687,000.
As the company grows, it has more operating leverage to invest into parts of the business to help further growth such as data, technology, private label and marketing.
For January 2021, it said that revenue had increased by more than 100%. Management believe there are still strong tailwinds including: the ongoing adoption of online shopping due to structural and demographic shifts, an acceleration of these trends due to COVID-19, an increase in discretionary income due to travel restrictions and the continued recovery of the housing market and unemployment levels.
The Temple & Webster share price has fallen by almost 20% since 25 January 2021.
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is another ASX tech share that is reporting high levels of growth. It’s an electronic donation business mostly servicing large and medium US churches. In its FY21 half-year result it reported that its operating revenue increased by 53%. This led to even faster growth of other profit measures, all showing triple digit increases.
The FY21 half-year earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) went up by 177% to US$26.7 million, the operating cashflow went up 203% to US$27 million and the net profit after tax (NPAT) grew 107% to US$13.4 million.
Pushpay is demonstrating operating leverage with each result. Its EBITDAF margin almost doubled from 17% to 31% in the FY21 half-year result.
The company is seeing elevated levels of donations through its systems as the COVID-19 pandemic continues to heavily affect the US.
Pushpay recently upgraded its FY21 EBITDAF guidance again to a range of US$56 million to US$60 million, up from previous guidance of US$54 million to US$58 million.
The ASX tech share continues to invest for growth and is now looking to grow in the Catholic sector of the US faith sector.
At the current Pushpay share price it’s trading at 23x FY23’s estimated earnings.
Redbubble Ltd (ASX: RBL)
Redbubble is the final ASX tech share in the article. It’s an artist-produced product e-commerce business with two websites, Redbubble.com and TeePublic.com.
Joseph Kim from Montgomery Investment Management said about Redbubble: “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.”
In Redbubble’s most recent update, for the first quarter of FY21, it said that marketplace revenue had grown by 116% to $147.5 million, gross profit was up 149% to $64.5 million, it made $22.1 million of earnings before interest and tax (EBIT) and $27.1 million of operating cashflow.
At the time of the FY21 first quarter update, Redbubble CEO Martin Hosking 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.”
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More reading
- How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?
- Got money to invest? Here are 2 ASX shares to buy
- ASX stock of the day: Temple & Webster (ASX:TPW) goes from strength to strength
- Why Magellan, News Corp, REA Group, & Temple & Webster shares are racing higher
- 2 fast-growth ASX tech shares that are being sold off
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 PUSHPAY FPO NZX and Temple & Webster Group Ltd. The Motley Fool Australia has recommended PUSHPAY FPO NZX and Temple & Webster Group 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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