2 very exciting ASX tech shares you need to know

While readers are likely to be acquainted with tech shares such as Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO), the two listed below might be lesser known.

Here’s why these ASX shares could be future tech stars:

Life360 Inc (ASX: 360)

The first ASX tech share to look at is Life360. It operates a platform for busy families, noting that it brings them closer together by helping them better know, communicate with, and protect the people they care about most.

Its core offering is the eponymous Life360 mobile app. It is a market leading app for families with features that range from communications to driving safety and location sharing.

Its app is currently used by 28 million monthly active users globally. This is driving strong recurring revenue growth, with management expecting annualised monthly revenue to reach the high end of its guidance of US$110 million to US$120 million in 2021. This represents a 34% year on year increase.

Life360 has also just strengthened its offering with the acquisition of Jiobit for US$37 million. The addition of the wearable location device provider is very supportive of its growth strategy and opens up cross-selling opportunities.

Morgan Stanley is very positive on the company’s prospects. The broker currently has an outperform rating and $8.60 price target on its shares. It sees plenty of opportunities for the company to further monetise its huge user base.

Nitro Software Ltd (ASX: NTO)

Another ASX tech share that could have a bright future ahead of it is Nitro Software.

Nitro is a global document productivity software company driving digital transformation in organisations across multiple industries around the world. Its core solution is the Nitro Productivity Suite, which provides integrated PDF productivity, eSignature, and business intelligence tools to customers. This is through a horizontal, SaaS, and desktop-based software suite.

Management notes that its software solution is highly scalable. It serves everyone from large multinational enterprises and government agencies to small businesses and individual users. At the last count, Nitro had sold over 2.6 million licences and had 11,700 business customers across 154 countries. This includes over 68% of the Fortune 500 and three of the Fortune 10.

Demand has been growing strongly for its offering, leading to Nitro reporting a 64% increase in annualised recurring revenue (ARR) to $27.7 million in FY 2020. Pleasingly, more of the same is expected in FY 2021, with management guiding to ARR in the range of $39 million to $42 million. This will mean year on year growth of 41% to 51.6%. While this is a large number, it is still well short of its total addressable market which is estimated to be $28 billion.

Morgan Stanley is also positive on Nitro. It currently has an overweight rating and $3.70 price target on the company’s shares.

The post 2 very exciting ASX tech shares you need to know appeared first on The Motley Fool Australia.

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Motley Fool contributor 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 has recommended AFTERPAY T FPO and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Life360, Inc. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO and Xero. The Motley Fool Australia has recommended Nitro Software 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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