There are some exciting ASX tech shares that look like solid contenders for the next decade.
Businesses that are growing fast and have the capability of delivering good margins have the potential to achieve attractive profit growth and solid returns. That’s the idea, anyway.
I think that the tech sector has good advantages. That’s why I really like these names:
Xero Limited (ASX: XRO)
Accounting software business Xero may be one of the very best companies on the ASX.
There are lots of things to like about it.
It has a loyal and growing global subscriber base.
Xero has recurring monthly revenue, providing good cashflow and revenue visibility.
The company has a very high gross profit margin (87.1% in the HY22 result).
An increasing average revenue per user (ARPU).
The Xero share price has dropped by 33% since the start of 2022. It’s not exactly cheap, but I think it’s attractive for the long-term with a Xero share price under $100, particularly if ARPU and subscriber numbers keep rising.
I think that the New Zealand market, Xero’s oldest market, has shown with long-term double-digit growth that good growth can continue in places like Australia and the UK for a long time.
Temple & Webster Group Ltd (ASX: TPW)
Temple & Webster is one of the most promising ASX tech shares, in my opinion.
It sells an extensive array of homewares and furniture. It’s like the Australian Amazon of home items.
But it’s also expanding into areas like home improvement and commercial customers.
One of the most promising things for me is the increasing revenue per active customer, while active customers continue to increase. This is an attractive combination.
There is the tailwind of more retail being done online, partly as the more digital-savvy younger generations enter peak purchasing age.
The ASX tech share is also investing for growth so that it can become the most significant player, online or offline. The company is investing in several technologies to provide a better service for customers, including an interior design service.
In 2022 so far, the Temple & Webster share price has fallen by 45%.
Airtasker Ltd (ASX: ART)
Airtasker is an ASX tech share where it offers a platform for people to list tasks that need doing and Airtaskers/workers can offer to do the work.
The business has an enormous potential market because of the wide array of services. It’s the type of business that can benefit from building a market presence. The more people that go to use it for listing tasks, the more potentials workers it will attract, which can then attract more people to list tasks on the site and so on.
Airtasker has a very high gross profit margin of more than 90%. That means a lot of new revenue turns into gross profit, which can then be spent on advertising and other growth initiatives.
The company is investing for growth in the UK and USA, which are both much bigger potential markets than Australia.
