On Tuesday the Redbubble Ltd (ASX: RBL) share price was among the worst performers on the Australian share market.

The ecommerce company’s shares crashed 18% lower to $5.67.

Why did the Redbubble share price crash lower?

Investors were selling Redbubble shares following the release of its half year results.

For the six months ended 31 December, Redbubble reported a 96% increase in marketplace revenue to $352.8 million and a 118% lift in gross profit to $144 million.

This ultimately led to the company posting earnings before interest and tax (EBIT) of $41.8 million, which was up from a loss of $1.9 million in the prior corresponding period.

While this is of course meteoric growth, it fell short of the market’s expectations due to weaker than expected gross margins and higher customer acquisition costs.

Goldman Sachs commented: “RBL has released its 1H21 result which beat our forecasts on revenues but missed on costs (lower Gross Margin and higher paid acquisition).”

The broker notes that gross margins fell from 43.7% in the first quarter to 38.7% in the second. Whereas customer acquisition costs as a percentage of revenue rose from 10.2% in the first quarter to 14.2% in the second quarter.

Is this a buying opportunity?

Although Goldman was disappointed with many aspects of its result, it sees the weakness in the Redbubble share price as a buying opportunity. Especially given how its investment thesis remains unchanged.

It explained: “While this was disappointing, our investment thesis remains unchanged: large global addressable market, e-Commerce trends that should be broadly supportive of online demand remaining robust, a strong balance sheet (net cash > A$120m by end of FY21E) and a new CEO who we believe could focus the business more sharply on driving new customer growth, improving repeat transactions, accelerating product roll-outs and investment in data analytics, in line with the company’s stated focus areas.”

In addition, the broker believes the Redbubble share price is attractive relative to its peer group.

As a result, Goldman Sachs has put a buy rating and $7.15 price target on its shares.

Based on the latest Redbubble share price, this price target implies potential upside of almost 26% over the next 12 months.

More reading

• 3 things you might have missed from the Redbubble (ASX:RBL) result
• ASX 200 rises 0.7%, Redbubble sinks, BHP dividend jumps
• Why ARB, Domain, Redbubble, & Treasury Wine shares are sinking today
• Redbubble (ASX:RBL) share price sinks 13% despite strong H1 FY21 results
• Got money to invest? Here are 3 ASX shares to buy

Motley Fool contributor James Mickleboro 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 Westpac Banking Corp (ASX: WBC) share price will be in the spotlight this morning after it posted a $1.97 billion quarterly cash profit.

The big bank’s result reaffirms the recovery in the sector as the December quarter profit was up on the 2HFY20 quarterly average of $808 million.

Westpac’s statutory net profit was also sharply higher at $1.7 billion compared to the average $550 million in its second half.

The real highlight in Westpac’s results

But Westpac managed to do something its peers have so far been unable to – that is to lift profit margin!

The bank’s net interest margin (the difference between the cost of debt and how much the bank can charge for loans) expanded 3 basis points (bps) to 2.06%.

The NIM for Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd. (ASX: NAB) fell in their latest earnings reports. Australia and New Zealand Banking GrpLtd (ASX: ANZ) has yet to release its update and is the last of the big four to do so.

Westpac pulls on growth levers

Coming back to Westpac’s profit recovery, it’s not only margins that is driving earnings. The bank recorded an impairment benefit of $501 million in the period as the COVID-19 shock receded.

ASX banks were forced to squirrel away extra cash to buffer from the possibility of widespread loan defaults due to the pandemic.

The economic impact of COVID weren’t as severe as originally feared and every dollar that the banks release from provisions and impairments will flow straight back to the bottom line.

Less stress on the Westpac share price

Westpac reported that total stressed assets on its balance sheet fell 15bps, with almost all industry segments improving.

The number of mortgagees that are behind payments by 90 days or more have also fell 6bps to 146bps.

Meanwhile, the bank’s core earnings grew 28% in the period, although it was up a more modest 3% if one-off items were excluded.

Improving outlook for ASX banks

The net impact of these tailwinds has bolstered Westpac’s CET1 ratio by 74bps to 11.9%. That’s above the banking regulator’s “unquestionably strong” benchmark.

There were no hints on dividends as this is only a quarterly update. The bank will report its half year results in May and will unveil its dividend decision then.

But don’t get too use to getting these quarterlies from Westpac. The COVID scare has passed in the bank’s view and it will return to past practice of not releasing quarterly earnings. This could be the biggest negative in the earnings announcement, in my view.

More reading

• Bank of Queensland (ASX:BOQ) shares hit a 52-week high today
• ASX 200 rises 0.7%, Redbubble sinks, BHP dividend jumps
• Here’s why the CBA (ASX:CBA) share price is underperforming today
• The NAB (ASX:NAB) share price is up after 47% profit growth in Q1
• ASX 200 up 0.5%: BHP impresses, NAB rises, Zip rockets

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenlau.

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 EBOS Group Ltd (ASX: EBO) share price is on watch this morning following the company’s half-year results release.

What could move the EBOS share price?

EBOS is the largest and most diversified Australasian marketer, wholesaler and distributor of healthcare, medical and pharmaceutical products

This morning, the Kiwi healthcare group provided an update on its performance to 31 December 2020 (1H 2021). EBOS reported “strong momentum” throughout the period with another record result highlighted by double-digit earnings growth.

The EBOS share price will be one to watch today after the company reported group revenue for the half was up 6.3% to $4.7 billion. Underlying earnings before interest and tax (EBIT) also jumped 11.5% to $147.8 million in a strong half for the company.

Statutory net profit after tax (NPAT) surged 13.7% higher to $92.9 million while underlying NPAT was up 14.2% to $94.3 million.

In good news for shareholders, underlying earnings per share (EPS) was up 12.7% to 57.8 cents in 1H 2021. The EBOS share price is also worth watching after the company increased its interim dividend by 13.3% to 42.5 cents.

Based on yesterday’s closing share price of $27.00, that represents a ~3.1% per annum dividend yield.

EBOS reported “very strong” performance across its healthcare and animal care business segments. Healthcare’s underlying EBIT jumped 11.2% with animal care EBIT up 25.6% for the half.

Operating cash flow surged 33.0% higher to $98.7 million, underpinned by strong group performance.

EBOS completed the acquisition of CH2’s vet distribution business for $9 million to boost its market position while also expanding its medical devices business with the recent Cryomed acquisition.

EBOS has continued to increase earnings across both its healthcare and animal care segments in recent years.

Foolish takeaway

The EBOS share price will be one to watch in early trade this morning after a record result for the Kiwi healthcare group. 

Double-digit earnings growth and broadly strong group performance, combined with a 13.3% interim dividend increase, make EBOS worth keeping an eye on today.

More reading

• Coles (ASX:COL) share price on watch following half year update
• Why the Hub24 (ASX:HUB) share price will be on watch today
• Why the Fletcher Building (ASX:FBU) share price could shoot higher today
• Bikeexchange (ASX:BEX) CEO Mark Watkins on the risks and opportunities ahead
• 3 outstanding ASX growth shares to buy today

Motley Fool contributor Ken Hall 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 Coles Group Ltd (ASX: COL) share price will be one to watch on Wednesday.

This follows the release of its half year results this morning.

How did Coles perform in the first half?

Coles was a positive performer during the first half of FY 2021 and delivered strong top and bottom line growth.

For the six months ended 31 December, the supermarket giant reported an 8% increase in revenue to $20,569 million. This comprised Supermarket sales of $17,800 million (up 7.3%), Liquor sales of $1,946 million (up 15.1%), and Express sales of $632 million (up 10.5%).

Management advised that this growth was driven by successful channel and trading plan execution and increased demand for in-home consumption associated with COVID-19.

Coles also revealed gross margin benefits associated with strategic sourcing and supply chain initiatives. These offset the impact of lower fuel commission income and increased administration expenses.

This led to the company’s earnings before interest and tax (EBIT) increasing 12.1% to $1,020 million. Management advised that Supermarkets EBIT increased 14.4%, Liquor EBIT jumped 36.8%, and Express EBIT rose 14.3%.

On the bottom line, Coles’ net profit increased 14.5% over the prior corresponding period to $560 million.

Also coming in strong was the company’s cash flow. Net cash flow before financing activities increased by $365 million to $1,229 million and its cash realisation ratio came in at 120%.

In light of its positive performance, the Coles board elected to increase its fully franked interim dividend by 10% to 33 cents per share.

How does this compare to expectations?

The company appears to have outperformed the market’s expectations during the half, which could bode well for the Coles share price today.

According to a note out of Goldman Sachs, it was expecting group sales of $20,585.9 million and underlying net profit after tax to $540.4 million.

The broker was, however, forecasting an interim dividend of 34 cents per share. So Coles fell a touch short on that.

Management commentary

Coles’ CEO, Steven Cain, was pleased with the half and the progress the company is making with its refreshed strategy.

He said: “We have now delivered the first 18 months of our refreshed strategy whilst ensuring that we support our team members, customers, suppliers and community partners through a volatile and unpredictable COVID-19 year.”

“In the half we have made significant progress in our Own Brand product development, online operations and supply chain automation. Whilst COVID-19 will continue to present challenges it will also continue to present opportunities for change. With a strong balance sheet and team, Coles is well placed to continue delivering on our vision of becoming the most trusted retailer in Australia and grow long-term shareholder value,” he added.

Outlook

Coles provided a very cautious outlook statement, which could potentially weigh on the Coles share price today. It notes that it is about to cycle very strong sales growth from a year earlier.

Management explained: “Depending on COVID-19, vaccine roll out and efficacy, and other factors, sales in the supermarket sector may moderate significantly or even decline in the second half of FY21 and into FY22. Coles will be cycling elevated sales from COVID-19 in Supermarkets late in the third quarter, for the remainder of the second half, and most of FY22.”

The company also provided an update on the performance of its businesses since the end of the half.

It advised that Supermarkets comparable sales growth has continued to moderate and in the first six weeks of the third quarter was 3.3%.

As for Liquor, its sales remained elevated for the first six weeks of the third quarter with comparable sales growth of 12.5%. Management notes that the business is currently cycling the impact of the bushfires in the prior corresponding period.

What else?

Another thing that could potentially weigh on the Coles share price today was its gross operating capital expenditure guidance. Management advised that it has increased its guidance to approximately $1.1 billion from $1 billion. Though, this is for a good reason.

It explained that the additional funds will be used to invest in opportunities that have arisen out of COVID-19 including Coles Local acceleration, ecommerce, and operational efficiencies in stores such as the customer packing benches.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• The latest ASX shares upgraded by brokers to “buy” during the reporting season
• ASX 200 Weekly Wrap: ASX cools on earnings reality check
• 5 things to watch on the ASX 200 next week
• How big will the ASX bank dividends be in 2021 and beyond?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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Hub24 Ltd (ASX: HUB) shares will be on watch this morning after the company updated the market late yesterday about its proposed takeover offer to Easton Investments Ltd (ASX: EAS). At Tuesday’s market close, the Hub24 share price finished the day 2% lower at $26.32.

Hub24’s tabled offer

The Hub24 share price could be on the move today after the company advised its takeover offer will expire soon. Hub24 updated the ASX about its intentions in the final hour of trade yesterday.

According to its release, Hub24 advised that it will not be extending its off-market takeover offer past 7:00 pm on 22 February 2021.

Last month, the company put forward its offer to Easton shareholders in a bid to acquire one out of every three ordinary shares. The cash consideration offered to Easton shareholders stood at $1.20 per Easton share.

Easton directors unanimously urged its shareholders to accept the takeover offer from Hub24, in the absence of a superior offer.

It’s worth noting that Hub24 currently holds a 29.3% interest in Easton. Each of Easton’s directors accepted the takeover offer, which represented 3,411,206 shares or 9.1% of all Easton shares.

Quick take on Hub24

Established in 2007, Hub24 is a fintech company that provides investment and superannuation portfolio administration services. The group’s platform offers a range of investment management options, including transaction and reporting solutions. These allow advisors to efficiently manage their clients’ wealth portfolios and provide value-added services. 

Hub24 share price snapshot

Over the last 12 months, the Hub24 share price has accelerated, delivering gains of more than 140%. During March 2020, Hub24 shares fell to a 52-week low of $5.98 before zooming higher. Just last week, the company’s shares reached an all-time high of $27.80 and are now within striking distance of breaking that new record again.

Based on the current Hub24 share price, the company commands a market capitalisation of around $1.76 billion.

More reading

• What’s with the Hub24 (ASX:HUB) share price today?
• Why BHP, Estia Health, HUB24, & South32 shares are dropping lower
• 5 things to watch on the ASX 200 on Friday
• The latest ASX stocks to be upgraded by brokers to “buy” today
• 5 things to watch on the ASX 200 on Wednesday

Aaron Teboneras 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 Fletcher Building Limited (ASX: FBU) share price will be in focus on Wednesday following the release of its half year results.

In early trade in New Zealand, the company’s NZX-listed shares are up 3%.

How did Fletcher Building perform in the first half?

For the six months ended 31 December, Fletcher Building reported a 1% increase in revenue over the prior corresponding period to NZ$3,987 million.

Positively, things were much better for the building products company’s earnings.

It reported earnings before interest and tax (EBIT) growth of 47% to NZ$323 million. And on the bottom line, Fletcher Building reported a 48% jump in net profit after tax to NZ$121 million.

Management advised that this improvement in its profitability was the result of initiatives undertaken to improve operating disciplines and efficiencies.

The company’s operating cash flows were also strong and came in at NZ$428 million. This allowed the Fletcher Building board to declare an interim dividend of 12 NZ cents per share.

Management commentary

Fletcher Building’s Chief Executive, Ross Taylor, commented: “Our strong HY21 results reflect good progress made on our strategy to drive consistent performance and growth. The improved earnings and profitability are the outcome of initiatives undertaken over the past three years to improve operating disciplines and efficiencies across the Group.”

The Chief Executive revealed that trading conditions have been mixed but stable.

He explained: “We have seen a broadly stable market environment. Growth in the New Zealand residential sector has been offset by softer demand in Commercial and mixed conditions in infrastructure in both New Zealand and Australia.”

“In all businesses, we have remained focused on executing our strategy, especially improving the underlying disciplines and efficiencies of our operations. The sustainable improvement in margins was achieved through pricing disciplines; targeted share gains; consolidation and automation of manufacturing and supply chains; and a more efficient overhead cost base,” he added.

Outlook

Management appears confident there will be more of the same in the second half.

Mr Taylor said: “Current indicators point to core volumes in NZ and Australia remaining at present levels through the second half, with robust demand for Residential housing in NZ. This market outlook assumes no material impact from COVID-19.”

It has provided FY 2021 EBIT before significant items guidance of NZ$610 million to NZ$660 million. This compares very favourably to EBIT before significant items of NZ$160 million in FY 2020.

More reading

• Wilson Asset Management (WAM) thinks these 2 ASX shares are a buy

Motley Fool contributor James Mickleboro 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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Last week on Tuesday 9 February, Bikeexchange Ltd (ASX: BEX) listed on the ASX for the first time.

The company reaches 29 million consumers each year. It provides a global online cycling marketplace, allowing brands, retailers and distributors to connect with their customers worldwide.

BikeExchange had raised $20 million at 26 cents per share as part of its initial public offering (IPO), and the BikeExchange share price reached 28 cents on its first day. At the time of writing, shares are up 4% in intraday trading, at 26 cents per share.

With the company now 1 week into its publicly listed status, the Motley Fool reached out to Mark Watkin, Global CEO of BikeExchange.

Read on for the full interview…

BikeExchange one week in…

What are your thoughts following the first week of trading as an ASX listed company?

We have been very excited to reach the milestone of listing on the ASX, after raising $20 million at the issue price of 26 cents. Up until this point, we had been building our global marketplace on a capital-light basis, and the IPO was an opportunity to scale and build off the strong foundations we have created over the past 13 years.

Our significant shareholders include the BikeExchange founders, Gerry Ryan (JAYCO founder) and high-quality institutional investors such as Bombora and SG Hiscock & Company.

The growth opportunity is significant for BikeExchange and the ASX listing provides a great growth platform, though the hard work starts now. We are committed to a transparent and regular dialogue with our shareholders on this journey and excited about the possibilities.

You currently operate in Australia, Europe, North America and Latin America. Are there expansion plans into Asia or elsewhere?

The business is currently focused on the significant runways we have already established in the key regions of North and South America, the EU, Australia and New Zealand. We will consider appropriate country market expansion, predominantly building in the regions we are already currently present. Such as entering more hubs/countries in Latin America.

Making the best use of the footprint we have created at this time is key and we see great opportunity to increase our market share through strategic partnerships, such as our recent partnership with Trek, one of the largest bike brands in the US and the world.

Competitive advantage

What types of ‘moats’ or barriers to entry are there with would-be competitors?

BikeExchange considers that it has a competitive advantage in being the leading bicycle marketplace in the industry. The online marketplace model is difficult to replicate and requires a lot of time and investment, creating a high barrier to entry for competition.

To put it into context, after establishing the business in Australia, BikeExchange has spent the last 6 plus years creating and scaling a single category marketplace in multiple countries to lay the foundations for the business as it is today. It is not a business model you can simply “turn the lights on” to in a new country.

Building a marketplace also requires two sides – attracting business customers and consumers. The marketplace needs to be ready to offer the right products and importantly ensure there is the breadth of choice. So you really need to get that right through building strong customer relationships with retailers and brands around the world.

Looking ahead

What’s the biggest risk for BikeExchange in the year ahead?

In the short term, the biggest risk would be global stock pressures fuelled by demand during the coronavirus pandemic. We are confident that all the hard work we did pre-COVID on enhancing the quality of our offering to the market will stand us in good stead, supported by the breadth of choice we offer to help consumers navigate the market. This is coupled with the continuation of trends favouring cycling that we have seen through FY20.

For example, site traffic increased by more than 77% and e-commerce transactions increased 154% globally on BikeExchange sites across the first half of FY21 against the previous corresponding period. While the pandemic accelerated growth in the market due to increased leisure and exercise cycling, we are seeing strong trends continue.

Having covered the risk, what’s the most significant opportunity ahead for BikeExchange?

The marketplace generated over $1.5 billion in sales leads and enquiries value, annualised from H1 FY21 – all off product listings on the sites. We see a significant opportunity to convert the number of sales leads into transactions on-site through full e-commerce, deposit payments and click and collect in the retailers.

This is one of the growth initiatives planned for the second half of FY21. We are currently running global trials around targeting and converting existing audiences on-site across multiple channels, such as Google and Facebook, with positive results.

Another focus area is growing the number of retailers on the marketplace through strategic partnerships in key regions, such as the US and Europe. We see a significant opportunity in increasing market coverage from less than 10% in both regions to 60% and 40% respectively in each market in the short-medium term.

More reading

• BikeExchange (ASX:BEX) share price jumps 23% on ASX IPO

Motley Fool contributor Bernd Struben 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 great news for growth investors is that there are a good number of quality companies on the Australian share market with strong growth potential.

Three that could be worth considering are listed below. Here’s what you need to know about these ASX growth shares:

Kogan.com Ltd (ASX: KGN)

The first ASX growth share to look at is Kogan. This ecommerce company has been tipped as a great buy and hold option due to the structural shift to online shopping and the growing popularity of its website. In addition to this, management has bolstered its offering with value accretive acquisitions recently. If these are successful, they could accelerate its growth in the coming years. Analysts at Credit Suisse are positive on the company. The broker currently has an outperform rating and $21.08 price target on its shares.

Pushpay Holdings Group Ltd (ASX: PPH)

Another ASX growth share to look at is Pushpay. It is leading donor management and community engagement platform provider with a keen focus on the faith sector. While this might appear to be a bit of a niche market, it certainly is a lucrative one. Pushpay has been winning market share over the last few years, which has underpinned stellar earnings growth. This is expected to continue in FY 2021, with management guiding to operating earnings of between US$56 million and US$60 million. This will be an increase of 123% to 139% year on year. Positively, this is still only a small slice of the overall market, which gives it a long runway for growth. Goldman Sachs is a fan of the company. The broker currently has a conviction buy rating and $2.59 price target on its shares.

ResMed Inc. (ASX: RMD)

A final ASX growth share to consider is ResMed. It is a medical device company which has a focus on sleep treatment solutions and ventilators. ResMed has been growing strongly in recent years and appears well-placed to continue this positive form in the future. This is thanks to its world-class products and the massive number of undiagnosed sleep apnoea sufferers globally. The company also has a rapidly growing digital health ecosystem, which reached over 12 million cloud connectable medical devices in 2020. This provides ResMed with strong recurring revenues and a material amount of high quality data. Morgans currently has an add rating and $30.99 price target on ResMed’s shares.

More reading

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• 2 fantastic ASX growth shares that could be market beaters
• Here’s why the Altium (ASX:ALU) share price could be a buy
• 2 of the best ASX growth shares to buy now
• 2 high quality blue chip ASX shares to buy

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 Kogan.com ltd and PUSHPAY FPO NZX. The Motley Fool Australia has recommended Kogan.com ltd, PUSHPAY FPO NZX, and ResMed Inc. 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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Over the last few weeks the buy now pay later (BNPL) industry has been an incredible place to be invested.

During this time a number of BNPL shares have recorded mouth-watering gains for their shareholders.

How are the BNPL shares performing?

Since this time last month:

• The Afterpay Ltd (ASX: APT) share price is up 16%.
• The Openpay Group Ltd (ASX: OPY) share price is up 33%.
• The Sezzle Inc (ASX: SZL) share price has gained 57%.
• The Zip Co Ltd (ASX: Z1P) share price has rocketed 143% higher.

What about the Splitit Ltd (ASX: SPT) share price?

Well, over the last 30 days the Splitit share price has not only underperformed its peers, it has also underperformed the S&P/ASX 200 Index (ASX: XJO) and its 3.8% gain.

During this time the Splitit share price has lost 10% of its value.

Why is the Splitit share price underperforming?

Splitit never really seemed to capture the imagination of investors in the same way that Afterpay and Zip did. This may be due to its different (or unusual?) choice of business model.

The BNPL industry is aiming to replace credit cards and is doing a great job at it. Credit card usage is declining as younger consumers turn away from them in their droves.

However, Splitit uses an existing credit card to turn a payment into smaller interest free instalments. This appears to be potentially missing out on arguably the most important BNPL demographic that don’t want credit cards.

What else is weighing on its shares?

Also weighing on the Splitit share price this month could be news that its co-founder, Alon Feit, has been selling down his stake.

According to a notice, between 14 January and 9 February, Mr Feit sold 13,861,730 shares through on-market trades for a total consideration of approximately $20.3 million.

However, given how Mr Feit was voted off the board along with another long time director Mark Antipof late last year, it may not be overly surprising to see him selling down his stake.

More reading

• Payright (ASX:PYR) shares get speeding ticket after 32% surge
• The Cirralto (ASX:CRO) share price is hitting 52-week highs today
• What’s going on with the Zip (ASX:Z1P) share price?
• Why the Openpay (ASX:OPY) share price is up 17% and could go higher
• ASX 200 up 0.5%: BHP impresses, NAB rises, Zip rockets

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 ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why is the Splitit (ASX:SPT) share price underperforming Afterpay and Zip? appeared first on The Motley Fool Australia.

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Some of the most exciting businesses on the ASX are tech shares. They could be worth thinking about for your portfolio.

Due to the fact that many technology businesses offer an intangible product, it can mean that their gross profit margins may be very high and growth can be quicker.

Technology businesses are attracting a lot of investor intention and these two ideas could be ones to look out for:

Xero Limited (ASX: XRO)

Xero is one of the world’s largest cloud accounting software providers. Over the last decade it has taken the approach of heavily re-investing profit and cashflow back into the business to generate more long-term growth.

Over the last five years, Xero has been one of the best performing S&P/ASX 200 Index (ASX: XJO) shares. The ASX tech share has seen its share price grow by 843%. According to the ASX, it now has a market capitalisation that’s north of $19 billion.

The company has generated a lot of business growth to get this far. In the FY21 half-year result it said that it had increased its subscriber numbers by another 19% to 2.45 million.

Those subscribers come from all over the world, though Australia is still the biggest market, which saw 21% growth of subscribers to 1.01 million in the latest result. UK subscribers rose 19% to 638,000, New Zealand subscribers increased 13% to 414,000, North American subscribers went up 17% to 251,000 and rest of the world subscribers grew 37% to 136,000.

The global subscriber growth helped operating revenue rise by 21% to NZ$410 million. At 30 September 2020, its annualised monthly recurring revenue had increased to US$877.5 million.

Xero said that it was being disciplined with its financial management during the uncertain COVID-19 period, which led to “strong” growth of net profit, free cash flow and earnings before interest, tax, depreciation and amortisation (EBITDA). The NZ$71.2 million increase in operating revenue led to a NZ$49.4 million increase in free cashflow for the ASX tech share. This is helped by the fact that Xero’s gross profit margin is now 85.7%.

In a signal that Xero isn’t anywhere near finished with its growth journey, it stated that it still has ambitions for high growth and it intends to continue to innovate, invest in new products and customer growth, and respond to opportunities.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a business that provides an integrated breast health platform which helps provide feedback and also aims to help prevent advanced-stage breast cancer.

This business is another one with a very high gross profit margin. In the FY21 half-year result it reported that its gross margin was 92%. That report showed that revenue rose by 38%, subscription revenue increased 71% and gross profit increased by 43%.

At the time of the half-year result, it had NZ$19.9 million of annual recurring revenue (ARR) and approximately 27% of women in the US had a Volpara product applied on their images and data.

The ASX tech share then released its FY21 third quarter result which showed ARR had risen to NZ$20.7 million and its average revenue per user (ARPU) grew 5% to US$1.22.

A couple of weeks ago, Volpara announced it was acquiring CRA Health in the US for an upfront payment of US$18 million. This acquisition increases Volpara’s market share to over 30% of US breast screenings, it increases the ARR to NZ$26.9 million and is likely to increase the ARPU of the business as well.

Management believe that this deal has elevated the company to be a leader in personalised breast care and could spur more growth because CRA’s software is integrated with the major electronic health record (EHR) as well as with genetics companies.

More reading

• 3 of the best ASX shares you can buy right now
• 3 reasons why the Xero (ASX:XRO) share price could be a buy
• Take a look at the ASX’s new cloud ETF
• 2 extraordinary ASX shares to buy in 2021
• What’s with the Xero (ASX:XRO) share price drop today?

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 owns shares of Xero. The Motley Fool Australia has recommended 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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