A few small cap ASX shares have been generating quick revenue growth over the last few months.
Smaller businesses may be able to generate more returns because they are starting from a smaller size, whereas blue chips have already done a lot of their growing.
Here are two to consider:
Volpara Health Technologies Ltd (ASX: VHT)
Volpara says that it’s a health technology company, its clinical functions are used for screening clinics to provide feedback on breast density, compression, dose and quality, while its enterprise-wide practice-management software helps with productivity, compliance, reimbursement and patient tracking.
In its quarterly update for the three months to 31 December 2020 it revealed that its annual recurring revenue (ARR) increased by 20% compared to the prior corresponding period, up to NZ$20.7 million. There was rising demand for the Volpara breast health platform.
The small cap ASX share received quarterly cash receipts of NZ$4.6 million, which Volpara said was strong despite COVID-19 and the weak US dollar. Its churn was low and at that point it covered approximately 27% of women in the US. Average revenue per user (ARPU) grew 5% to US$1.22, up 5% from the second quarter of FY21.
Volpara CEO Dr Ralph Highnam said: “Our ability to identify women at high cancer risk who should have genetics testing has potential to be a game-changer and significantly increase our ARPU. Over the next few quarters, our focus will be on ramping up these genetics relationships and connections as quickly as we can.”
A few days after that quarterly announcement, the small cap ASX share announced that it was acquiring breast cancer risk assessment company CRA Health, which is based in Boston.
Volpara said that CRA Health is profitable, with ARR of over US$4 million, ARPU of around US$1.70 and coverage of around 6% of US breast screenings.
After the acquisition is complete, Volpara will have ARR of around US$17.5 million and at least one product in use in over 30% of breast screenings.
Regarding this acquisition, Dr Highnam said: “The acquisition of CRA is very significant for Volpara. CRA is a leading provider of risk assessment tools within major EHR systems and has integrations already built with the main genetics companies.”
Bubs Australia Ltd (ASX: BUB)
Bubs says that it’s a business that makes a range of premium Australian infant nutrition and goat dairy products. It has Bubs goat milk infant formula and Bubs organic grass-fed cow milk formula, along with organic baby food, cereals, toddler snacks and Vita Bubs (a range of vitamin and mineral supplements).
Whilst Bubs had a difficult first quarter of FY21, sales have rebounded significantly in the second quarter. A couple of weeks ago it revealed that group quarterly gross revenue was up 36% compared to the first quarter of FY21, to $12.8 million. However, total revenue was still down 12% on the prior year.
The small cap ASX share said that export sales to markets outside of China continue to strengthen, with sales up 194% quarter on quarter. The first shipments of Bubs infant formula and Bubs organic baby food were exported to Malaysia during the second quarter. It has signed with e-commerce platforms in the Asia region recently, including Redmart in Singapore and Lazada in Malaysia.
The corporate daigou trade is still lower than pre-COVID-19 levels, but it was up 122% compared to the first quarter of FY21.
The company boasted that it is the fastest growing infant formula manufacturer across Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Chemist Warehouse with combined retail scan sales at the checkout up 41% quarter on quarter.
Bubs infant nutrition sales in the second quarter were up 27% compared to the first quarter. Adult goat dairy revenue was up 45% quarter on quarter and China cross border e-commerce (CBEC) sales were up 45% quarter on quarter.
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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 and recommends VOLPARA FPO NZ. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended BUBS AUST FPO and VOLPARA FPO NZ. 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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