ASX growth shares can be a great place to find opportunities that can deliver great performance.
Compounding is a really powerful financial tool that companies can use to deliver stronger results over time. If $100 grows by 10% per annum, it’s a $10 rise in year one. In ten years, that $100 has grown to around $260 and the next 10% rise will add $26.
We can’t say for sure which businesses are going to deliver good returns, for many years, but I like these two a lot right now.
Airtasker Ltd (ASX: ART)
Airtasker describes itself as the world’s most trusted marketplace to buy and sell local services – it connects people who need work done, with people who want to work. We’re talking about things like removalists, home clean, furniture assembly, deliveries and many other categories.
Not only does it have a good market position in Australia, but it also has a small but growing presence in the UK and the US.
In FY23, gross marketplace volume (GMV) rose 33.7% to $253.5 million and revenue increased 40.4% to $44.2 million, while net cash outflows reduced by 23.9% year on year. Within those financials, UK GMV jumped 34.5% to £3.7 million and the number of US posted tasks rose by 158%.
In the first quarter of FY24, Airtasker reached positive operating cash flow and positive EBITDA (EBITDA explained), with Airtasker marketplace revenue growth of 10.5% for the quarter. The company said it’s on track for positive free cashflow for the full FY24.
I think it could become a very profitable ASX growth share, with its extremely high gross profit margin of more than 90%.
RPMGlobal Holdings Ltd (ASX: RUL)
This company is an ASX tech growth share that predominately provides software to mining businesses around the world.
Some of its clients include BHP Group Ltd (ASX: BHP), South32 Ltd (ASX: S32), Mineral Resources Ltd (ASX: MIN), Fortescue Ltd (ASX: FMG) and Yancoal Australia Ltd (ASX: YAL).
FY23 saw strong growth, with total revenue increasing by 18% and net profit rising by $7.8 million to $3.7 million.
Software is an increasingly important element of a business’ operations, which is why I think RPMGlobal’s role for miners will grow further. It helps that software can generate high profit margins, enabling strong bottom line growth, if revenue can keep increasing. It’s also investing in its ESG offering.
In FY24, the company is expecting total revenue to grow between 11.8% to 16.9%, to between $110 million to $115 million. Underlying profit before tax could rise by between 79.3% to 95.6% to a range of $16.5 million to $18 million.
I think this ASX small cap growth share is one to watch.
