The small end of the Australian share market is home to a number of companies with the potential to grow materially in the future.

Three that investors might want to get better acquainted with are listed below. Here’s why they should be on your watchlist:

Audinate Group Limited (ASX: AD8)

Audinate is a leading digital audio-visual networking technologies provider. The key product in its arsenal is its popular Dante audio over IP networking solution. This solution is used across a number of industries and is the clear industry leader. For example, the number of Dante enabled products manufactured by its customers is eight times greater than its nearest rival. This puts the company in a great position to benefit from increasing demand once the pandemic passes. In fact, this demand is already showing, with Audinate reporting its highest ever quarterly revenue last week.

Serko Ltd (ASX: SKO)

Serko is an online travel booking and expense management provider. Its two key products are the Zeno Travel and Zeno Expense platforms. Serko’s Zeno Travel provides AI-powered end-to-end travel itineraries, cost control and travel policy compliance to corporate customers. Whereas Zeno Expense allows businesses to automate and streamline their expense administration function, identify out-of-policy expense claims, and prevent fraud. Given its exposure to travel markets, it will come as no surprise to learn that demand has fallen heavily during the pandemic. However, with travel markets beginning to recover, Serko has also reported improvements in its performance. Another positive is that a significant deal with travel giant Booking.com could be a game-changer once trading conditions return to normal.

Universal Store Holdings Limited (ASX: UNI)

Universal Store is a fashion retailer aiming to deliver a frequently changing and carefully curated selection of on-trend products to the fashion focused customer. Unlike the others, it has been a particularly positive performer during the pandemic. For example, during the first half of FY 2021, Universal Store reported a 23.3% increase in sales to $118 million and a 63.6% increase in underlying net profit after tax to $21.1 million. Positively, it is expecting a strong second half and bumper full year profit result. Looking further ahead, the company has opportunities to expand its footprint meaningfully over the next decade to drive further growth. As things stand, management has identified up to 60 new store sites. This compares to the 65 stores it was operating from during the first half.

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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 Serko Ltd. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO. The Motley Fool Australia has recommended Serko 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The world’s largest audio streaming platform, Spotify (NYSE: SPOT), saw its stock price decline by more than 10% at one point in the last week amid announcements for new audio features from Apple (NASDAQ: AAPL) and Facebook (NASDAQ: FB). Since some of these new products are targeted at the podcasting space, investors seem to be worried that the potential added competition could hurt Spotify.

But before Spotify shareholders rush to the exits, it’s worth examining whether this is truly important news, or simply investing noise. Let’s take a closer look at what was announced and whether it might actually have an effect.

Impending competition

Before diving into why Spotify might be well-positioned to deal with these competitive threats, it’s important to understand what the threats actually are. Earlier this week, Facebook announced that it will be introducing several new audio features to its platform. Some of these include short sound bites to share with friends, podcasts, and a live audio product for open discussions.

Although most of these are designed to be social features, Facebook’s podcasting product would be a direct competitor to Spotify. With 2.8 billion total monthly active users, it’s understandable that investors would fret at the idea of Facebook joining the audio space. But there was more seemingly bad news that followed. 

A few days after the Facebook news dropped, Apple had its spring event, where it announced an array of new products. Alongside new iterations of the iMac and iPad, the company announced that it’s revamping its podcast app for the first time in several years and even building a podcast subscription. Although Apple didn’t mention any details about possible pricing, the subscription would unlock additional content like ad-free shows and the ability for listeners to support their favorite podcasts financially. 

The updated version would allow podcast creators to set their own pricing and even dictate what additional content their listeners get access to. While this subscription would unlock some new monetization strategies for creators within the Apple Podcasts app, participating podcasts would not have to be exclusive on Apple.  

What does this mean for Spotify?

Though it’s clear that competition in the audio space is heating up, some of the announcements will ultimately benefit Spotify as well. Each of these new announcements has the same end goal: boosting the number of listeners on the respective platforms. Regardless of where the end-user listens, Spotify still owns the majority of podcast distribution thanks to its acquisitions of podcasting specialists Anchor and Megaphone.

According to Spotify, Anchor accounts for more than 70% of new podcasts on its platform. While it’s impossible to tell what that data looks like on other platforms, Anchor distributes podcasts everywhere, so it’s probably fair to assume the data is similar across most apps. So while redirecting the listeners to other apps could potentially hurt Spotify’s subscription revenue, the revenue it generates from Anchor and Megaphone would likely grow as more and more advertisers seek the larger podcasting audience. 

Before Apple’s announcement, eMarketer reported that Spotify was set to surpass Apple podcast listenership for the first time ever in 2021, and it’s likely safe to assume that projection still stands. Spotify has grown its position in the podcasting market not by acquiring existing listeners, but by creating new podcast listeners. A year ago, only 16% of Spotify’s total monthly active users engaged with podcast content, and today that number stands at 25%. While Apple’s and Facebook’s new announcements might garner some attention, it’s hard to see Spotify’s growth within its existing user base stopping anytime soon.

Is this the time to buy? 

Ever since its inception in 2006, Spotify has endured bumps in the road and heavy competition, and all along the way, it continued to grow its user base. Though these recent announcements could mean increased competition, Spotify has proved itself to be the dominant platform in audio with more than 345 million total monthly active users. 

With its stock now off more than 20% from its highs and trading at its lowest revenue multiple in the last nine months, this strikes me as a good opportunity for long-term investors to add shares. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Ryan Henderson owns shares of Spotify Technology. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple, Facebook, and Spotify Technology and recommends the following options: short March 2023 $130 calls on Apple and long March 2023 $120 calls on Apple. The Motley Fool Australia has recommended Apple and Facebook. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Cirralto Ltd (ASX: CRO) share price is slipping in opening trade after the company released its third-quarter update this morning. In what could be a tug of war between the bulls and bears, the Cirralto share price is down 1.18% at the time of writing, trading at 8.4 cents.

Third-quarter highlights 

In its update for the quarter ending 31 March (3Q21), Cirralto announced a 25% increase to $294,000 in total cash receipts from customers. The company is still in the testing phase of its payments technology, which might explain the relatively lacklustre growth.

It plans to launch the payments platform on 1 May 2021.

Cirralto used this quarter to put together the pieces it needs to drive growth in the near term. This included recruiting and integrating new talent into the team, optimising operational systems and building market momentum for its Spenda software product.

The company said it had translated into a 1,088% increase in total leads from 35 in the second quarter FY21 to 416 in 3Q21. As well, there was a 121% increase in website session views between the second and third quarter. 

Cirralto is focusing on expanding the capabilities of Spenda. The software includes real-time digital business payment services, debt collection software, a dynamic POS and inventory management system. The company is currently releasing additional features to expand its addressable market and competitiveness. 

Why it could go either way for the Cirralto share price 

Cirralto’s quarterly highlights relatively stagnant growth for the richly valued, transaction services business. This quarterly reporting season has been particularly punishing for companies that have not been able to live up to expectations. 

On the flip side, Cirralto has used this quarter to ready its springboard for accelerated growth towards the end of the year.

The launch of its upgraded technology platform, increased brand awareness, previous capital raising, zero debt and increased headcount could all contribute to more growth in the future. 

More reading

• Why the Damstra (ASX:DTC) share price is jumping 9% higher today
• Spark Infrastructure (ASX:SKI) share price on watch on latest update
• Here’s why the BlueScope (ASX:BSL) share price is shooting 8% higher today
• Cleanaway (ASX:CWY) share price falls on acquisition update
• BINGO (ASX:BIN) share price charges 7% higher on takeover agreement

Motley Fool contributor Kerry Sun 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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In morning trade the Damstra Holdings Ltd (ASX: DTC) share price is jumping higher.

At the time of writing, the integrated workplace management solutions provider’s shares are up 9% to $1.21.

Why is the Damstra share price charging higher?

Investors have been buying Damstra’s shares today after it released a solid third quarter update.

According to the release, for the three months ended 31 March, Damstra recorded revenue of $6.9 million. This was up 66% on the prior corresponding period.

This strong quarter takes the company’s annualised recurring revenue (ARR) to $33 million, which is almost double what it reported a year ago.

Positively, trading conditions appear to have strengthened as the quarter progressed, leading to the company recording its highest ever monthly revenue during March.

Key drivers of this growth were its churn of under 1% and the addition of 30 new clients during the quarter. The latter brings its year to date new clients to 102. This played a role in driving its active user numbers 61% higher year on year to 689,000.

Another positive from the release was an update on the acquired Vault business. The company has identified further synergies and has upgraded its target to $6 million.

Management commentary

Damstra’s CEO, Christian Damstra, commented: “We are extremely pleased to see record Q3 revenues with an increase of growth accelerating to a record 66% growth level in the third quarter (versus PCP). We are now seeing a sustainable accelerating growth profile. This has been achieved due to strong organic growth in the construction, mining, and aged care sectors, underpinned by the strong cross sell of products to existing clients, in the workflow and mobility areas.”

“The Vault integration is now complete, and we are pleased to report final realised synergies of $6m, which far outstrips our original forecast of $4m. This has enabled Damstra to swiftly offset the financial impact of Vault’s previous operating cash loss business profile, as demonstrated by Damstra’s positive operating cashflows, EBITDA and increasing Gross and EBITDA margins.”

“Strategically, current, and prospective clients have responded extremely favourably to the launch of our new EPP positioning, recognising how Damstra’s product suites have evolved to work not only individually but also, critically, how they can orchestrate seamlessly into a fully unified offering. Large clients now have great confidence that we can deploy Damstra’s EPP at an enterprise level rather than be seen as a single point solution,” he concluded.

FY 2021 guidance

Damstra is now forecasting revenue of between $28.5 million and $30.5 million for FY 2021. This will be up 21.3% to 29.8% on FY 2020’s revenue of $23.5 million.

And while this is down from its previous guidance of $33 million to $35 million, the market appears to have been expecting even lower revenues after a tough first half.

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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 recommends Damstra Holdings Ltd. The Motley Fool Australia has recommended Damstra Holdings 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 Spark Infrastructure Group (ASX: SKI) share price will be one to watch when trading opens this morning. That’s because the company’s credit outlook has been downgraded by Moody’s.

At the close of trade yesterday, shares in the business were selling for $2.16. This was 0.93% higher than the previous day’s close. By comparison, the S&P/ASX 200 Index (ASX: XJO) finished 0.21% lower yesterday.

Let’s take a closer look at the news and how it could affect the Spark Infrastructure share price.

Company profile

Spark Infrastructure is an investment group that focuses on energy infrastructure. It has a stake in four projects, namely:

• 49% of SA Power Networks, the sole operator of South Australia’s electricity distribution network, supplying around 880,000 residential and commercial customers across the state.

• 49% of CitiPower and Powercor (together known as Victoria Power Networks), distributing electricity to over 1m customers in Melbourne and western Victoria.

• 15% of TransGrid, the largest high-voltage electricity transmission network in the National Energy Market, connecting generators, distributors and major users in NSW and the ACT.

• 100% of the Bomen Solar Farm north of Wagga Wagga in NSW, which is now fully operational and generating in line with expectations

Why is the Spark Infrastructure share price on watch?

In a statement to the ASX, Spark Infrastructure says Moody’s has lowered its credit outlook from Baa1 to Baa2.

According to the group, this is because of new regulatory decisions affecting SA Power Networks from 1 July 2020. As well, the company says the lower rating is also in anticipation of new regulations that will affect operations of Victoria Power Networks — coming into effect 1 July 2021.

Moody’s forecasted the decision back in March 2020, according to the statement. Spark Infrastructure says there will be “no material change” to the company’s cash flows and interest costs. It remains to be seen what effect it will have on the Spark Infrastructure share price.

Its dividend distribution guidance from 23 February 2021, of 12.5. cents per share, fully franked, is unaffected by today’s credit downgrade.

Spark Infrastructure share price snapshot

Over the past 12 months, the Spark Infrastructure share price has increased a modest 8%. Over the course of 2021, shares in the company have been relatively stable. It started the year at $2.14, peaked at $2.21 and troughed at $2.02 before reaching its current price.

Spark Infrastructure has a market capitalisation of $3.8 billion.

More reading

• Here’s why the BlueScope (ASX:BSL) share price is shooting 8% higher today
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Motley Fool contributor Marc Sidarous 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 BlueScope Steel Limited (ASX: BSL) share price is racing higher on Tuesday morning.

In early trade, the steel producer’s shares are up 8% to a 52-week high of $23.99.

Why is the BlueScope share price racing higher?

Investors have been fighting to get hold of BlueScope’s shares this morning after it provided an update on its guidance for FY 2021.

As you might have guessed from the performance of the BlueScope share price, the update was a very positive one.

According to the release, BlueScope now expects its underlying earnings before interest and tax (EBIT) for the second half to be in the range of $1 billion to $1.08 billion.

This compares very favourably to its previous guidance range of $750 million to $830 million, but remains subject to spread, FX, and market conditions.

Why did it upgrade its guidance?

The release explains that the company’s North Star business in the US was the main driver of this upgrade.

Management advised that Midwest benchmark HRC steel prices have risen by around US$250 per metric tonne since its original guidance was provided in February. This has resulted in stronger than expected spreads.

Also giving its performance a boost has been its Australian Steel Products business. It is also benefitting from improved realised domestic and export steel spreads. In addition, domestic despatch volumes are currently tracking ahead of the company’s expectations. This is particularly the case for higher value products in the building and construction sector.

Complementing this is its Building Products business, which is now expected to deliver an improved result over the first half. This is due mainly to expanding margins in the North America coated business driven by rapidly increasing steel prices. ASEAN earnings are also anticipated to be better than prior expectations due to higher than expected steel prices.

BlueScope’s Managing Director and CEO, Mark Vassella, said: “The business has gone from strength to strength, benefitting from strong spreads, prices and demand. All of the BlueScope team are doing an outstanding job in working to meet exceptional customer demand.”

“The performance continues to demonstrate the unique strength and value of our business model. BlueScope is a very different type of steel company and is in a compelling position to take advantage of emerging trends, such as demand for lower density and regional housing and for e-commerce and logistics infrastructure,” Mr Vassella added.

Following today’s gain, the BlueScope share price is now up 36% year to date.

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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 Cleanaway Waste Management Ltd (ASX: CWY) share price is edging lower this morning.

At the time of writing, the waste management company’s shares down almost 1% to $2.61.

Why is the Cleanaway share price edging lower?

Investors have been selling Cleanaway’s shares this morning despite the release of an update on the proposed acquisition of assets from Suez Groupe.

According to the release, the company’s previous agreement with Suez to acquire all of its Australian recycling and recovery business has now formally been terminated. However, Cleanaway has exercised its right to proceed with the binding Sydney Assets Acquisition agreement.

This will see the company acquire a portfolio of strategic post‐collection assets in Sydney from Suez Groupe for a total of $501 million.

The release explains that Cleanaway has secured new debt facilities that will enable the acquisition of these assets to be fully debt funded. The company intends to provide further information in relation to the proposed funding for the acquisition in due course.

What now?

The acquisition still remains to subject to a number of conditions. This includes a change of control of Suez S.A. occurring and various customary conditions including ACCC approval, no material adverse change, and the transfer of certain customer contracts.

Completion of the acquisition is expected to occur shortly before the completion of the takeover of Suez S.A. by Veolia.

Based on the current timeline, Cleanaway expects this will be in the second quarter of calendar year 2022. Which is approximately one year from now.

However, if the transaction between Suez and Veolia does not proceed by 31 December 2022, the agreed transaction between Suez and Cleanaway in respect of all of Suez’s Australian recycling and recovery business will be re‐enlivened.

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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 BINGO Industries Ltd (ASX: BIN) share price is charging higher on Tuesday.

At the time of writing, the waste management company’s shares are up 7% to $3.43.

Why is the BINGO share price charging higher?

This morning BINGO announced that it has entered into a Scheme Implementation Deed with Recycle and Resource Operations, an entity owned by Macquarie Infrastructure and Real Assets (MIRA), for the acquisition of all of the issued shares in BINGO pursuant to a scheme of arrangement.

According to the release, if the scheme is implemented, BINGO shareholders will receive a total cash consideration of $3.45 per share less any special dividend declared and paid to shareholders on or before the date of implementation.

As things stand, the company expects a special dividend to be in the order of $0.117 per share and fully franked, resulting in franking credits of approximately $0.05 per BINGO share.

While this takeover offer is only a modest premium to the latest BINGO share price, it is worth noting that the deal has been in the works since January. 

In fact, it represents a 26% premium to the last undisturbed closing price of the BINGO share price on 18 January of $2.74.

Alternative offer

Macquarie Infrastructure and Real Assets has also offered BINGO shareholders the option to receive a mix of cash and unlisted scrip.

This will be a total of $3.30 per share, comprising $1.32 in cash and the remainder unlisted scrip in Recycle and Resource Holdings.

Additionally, BINGO shareholders choosing for this option will be eligible for the earn-out dividend of up to $0.80 per share.

Unanimously recommended

The release explains that BINGO’s Independent Board Committee (IBC) and recommending directors unanimously recommend that shareholders vote in favour of the scheme.

This is in the absence of a superior proposal and subject to an independent expert concluding (and continuing to conclude) that the scheme is fair and reasonable and in the best interests of shareholders.

Subject to those qualifications, BINGO’s recommending directors, which hold or control 31.57% of BINGO shares on issue, each intend to vote in favour of the scheme.

BINGO’s IBC Chairperson, Elizabeth Crouch, said: “The IBC is pleased to have reached unanimous agreement with MIRA on this proposal. The IBC has concluded that the Scheme is in the best interests of BINGO’s shareholders.”

“The IBC has explored a number of alternatives, including standalone value creation opportunities and alternative bidder interest. After considering future opportunities for the business, along with economic, regulatory and execution risks, the IBC has unanimously concluded that the Scheme is a compelling option which realises attractive value for our shareholders,” Ms Crouch said.

Following today’s gain, the BINGO share price is now up 38% since the start of the year. 

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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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Are you an income investor looking for alternatives to term deposits? If you are, then you might want to look at the reliable ASX dividend shares listed below.

Here’s what you need to know about these shares:

Charter Hall Social Infrastructure REIT (ASX: CQE)

Charter Hall Social Infrastructure REIT is a real estate company with a focus on high quality social infrastructure properties. These properties are ones with specialist use, low substitution risk, and very long leases.

In respect to the latter, at the end of the first half, the Charter Hall Social Infrastructure REIT reported an occupancy rate of 99.7% and a weighted average lease expiry (WALE) of 14 years.

Another positive from the release was that management reported another increase in the number of tenancies that are on fixed rent reviews to almost two-thirds. It also revealed that lease expiries within the next five years account for just 4.7% of rental income.

In light of the above, Charter Hall Social Infrastructure appears well-placed to grow its dividend consistently over the next decade.

For now, though, the company intends to pay a distribution of 15.7 cents per unit to shareholders in FY 2021. Based on the current Charter Hall Social Infrastructure share price, this represents a ~5% yield.

Rural Funds Group (ASX: RFF)

Another reliable ASX dividend share to look at is Rural Funds. It is the owner of a $1.4 billion portfolio of diversified agricultural assets, including almond and macadamia orchards, premium vineyards, water entitlements, cattle and cropping assets.

All of Rural Funds’ properties are leased to high quality and experienced tenants. And much like the Charter Hall Social Infrastructure REIT, they are on very long leases. At the end of the first half, Rural Funds reported a WALE of 11.1 years.

This, combined with built in rental increases, means the company is well-placed to grow its distribution by its target of 4% per annum over the long term.

In FY 2021, Rural Funds intends to pay an 11.28 cents per share distribution. Based on the current Rural Funds share price, this equates to a 4.7% yield.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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 MyDeal.com.au Pty Ltd (ASX: MYD) share price is on watch this morning. Investors will be eyeing off the Aussie marketplace’s shares after it reported impressive sales growth in its third-quarter trading update.

Why is the MyDeal share price on watch?

Shares in the Aussie online marketplace will be worth watching after a strong quarter ended 31 March 2021 (Q3 2021).

MyDeal reported third-quarter gross sales up 104.5% on the prior corresponding period (pcp) to $44.7 million. This means FY2021 year-to-date gross sales are now up 177.4% on the pcp to $171.4 million. For context, MyDeal reported total gross sales of $103.3 million in FY2020. 

MyDeal CEO Sean Senvirtne said, “It has been another period of significant growth for MyDeal ending the quarter with 883 thousand active customers, 1,033 active sellers and over 6 million products listed on the marketplace”.

MyDeal had previously recorded 813,764 customers in December with 930 active sellers. “A record 56.1% of all MyDeal’s transactions over the last quarter were from returning customers”, Mr Senvirtne added. 

Notably, MyDeal’s Private Label business generated $2.2 million of gross sales for the quarter after launching in 2020.

The MyDeal share price could be on the move this morning following the company’s trading update. MyDeal reported customer cash receipts of $45 million for the quarter. Operating cash outflows totalled $2.3 million including a $0.7 million investment in private label inventory, timing impacts and more staff.

There was also an update on the use of funds from the company’s October 2020 initial public offering (IPO). Estimated expenditure under the prospectus was $40.0 million but actual expenditure was reported at $12.64 million today.

Outlook

In further news that could impact the MyDeal share price this morning, the company provided an outlook through to financial year-end.

MyDeal advised that it expects high year-to-date growth to moderate despite the company reporting gross sales growth in April.

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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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