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2 ASX shares that are growing rapidly

Temple & Webster is one of the ASX shares that is growing really rapidly.
The post 2 ASX shares that are growing rapidly appeared first on The Motley Fool Australia. –

There are some ASX shares that are growing really rapidly and seeing high levels of double digit revenue growth.

Businesses that are growing revenue quickly might be able to grow profit at a fast pace over time as well.

These two ASX shares that are growing quickly:

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster describes itself as Australia’s leading pure play retailer of furniture and homewares. It has over 200,000 products on sale from hundreds of suppliers.

The business runs a drop-shipping model where products are sent directly to customers by suppliers, enabling faster delivery times and reducing the need to hold inventory, allowing for a larger product range.

Temple & Webster has a private label range which is sourced directly by the company from overseas suppliers.

The ASX share was growing quickly during 2020 as e-commerce replaced bricks and mortar retailing. However, trading has continued to exceed expectations despite the fact the comparable periods include the impact of the COVID-19 lockdowns.

FY21 third quarter revenue increased 112% year on year. Active customers reached around 750,000 at the end of the third quarter. April 2021 revenue was up more than 20% year on year, with April 2020 being the fastest growing month last year due to the nationwide lockdowns implemented during March 2020. Customers that joined up during the COVID-19 period continue to perform better than historical cohorts.

The ASX share believes there has been a permanent shift in consumer shopping behaviours, the business is looking to invest to capitalise on the once in a generation shift from offline to online shopping.

It’s going to invest heavily to capture this opportunity as more shoppers go online. The earnings before interest, tax, depreciation and amortisation (EBITDA) margin will be low during this period, though higher margins are expected in the longer-term.

Pointsbet Holdings Ltd (ASX: PBH)

Pointsbet is a corporate bookmaker with operations in Australia and the United States. It has developed a scalable cloud-based wagering platform where it offers its clients innovative sports and racing wagering products. Its offering includes fixed odds sports, fixed odds racing and ‘Pointsbetting’.

The business has continued to increase its market share and access in the US. This is translating into high levels of growth for the business.

In the third quarter of FY21, total turnover was up 236% to $905.2 million, with US turnover up 431% to $482 million.

The total gross win increased 275% to $100.5 million, with the US gross win rising 715% to $45.8 million. Pointsbet’s gross win margin improved by 1.1 percentage point to 11.1%.

The ASX share’s total net win improved 246% to $64.9 million, with the net win margin improving 0.2 percentage points to 7.2%.

Pointbet’s total number of active clients went up 169% to 285,500, with US clients rising 461% to 127,500.

Management said that the Australian trading business has seen improvement across a number of key KPIs as client behaviour shifts to the higher margin multi segment. Improvements in marketing tech tools also assisted with acquisition and retention compared to the prior corresponding period.

Pointsbet said that the performance of the Australian trading business remains an excellent blueprint for its aspirations in the US. It said that its ability to operate a growing, profitable business in the advanced and competitive Australian market, backed by continually improving product and growing brand recognition, provides confidence in the continued execution of its US strategy.

The post 2 ASX shares that are growing rapidly appeared first on The Motley Fool Australia.

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More reading

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Motley Fool contributor 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 has recommended Pointsbet Holdings Ltd and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd and Temple & Webster Group 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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