Here are 3 ASX tech shares that could be a buying opportunity in February 2021. One of those ideas is Pushpay Holdings Ltd (ASX:PPH).
The post 3 ASX tech shares to buy in February 2021 appeared first on The Motley Fool Australia. –
Plenty of ASX tech shares are delivering high levels of growth. Some of them could be worth looking into for February 2021.
Here are some of those businesses that may be worth watching:
Redbubble Ltd (ASX: RBL)
Redbubble is an ASX tech share that’s focused on building its position as one of the world’s leading places for selling artist-produced goods. Independent artists sell everyday products like apparel, stationery, housewares, bags, wall art and so on.
Redbubble is focused on four key initiatives. The first is artist acquisition, activation and retention. Second, Redbubble is focused on user acquisition and transaction optimisation. The third focus is customer understanding, loyalty and brand building. Finally, further physical product and fulfilment network expansion is the last focus.
In the first quarter of FY21, Redbubble’s earnings benefited from a positive adjustment relating to delivery times. Excluding that positive adjustment, in the first quarter Redbubble saw marketplace revenue (paid) of $139.3 million, up 98%. Gross profit (paid) was $59.6 million, up 118%. Finally, earnings before interest and tax (EBIT) generated by Redbubble was $17.2 million.
Joseph Kim from Montgomery Investment Management said about the ASX tech share: “While Redbubble has clearly been a “stay-at-home” trade, we believe the business has the opportunity to emerge a longer-term structural winner from COVID-19 should it capitalise in the recent spike in user and customer interest as a result of recent lockdown measures.”
Kogan.com Ltd (ASX: KGN)
Kogan.com is another ASX tech share that continues to benefit from high levels of online shopping by consumers.
On Friday, the company delivered a business update for the first half of FY21.
Including the Mighty Ape acquisition, Kogan.com saw gross sales rise 96%, gross profit went up 120%, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) grew by more than 175% and EBITDA went up by more than 140%.
Kogan.com finished the 2020 calendar year with just over 3 million customers. Mighty Ape had another 719,000 customers itself.
Technology businesses can benefit from economies of scale and achieve higher profit margins. In FY17, Kogan.com’s EBITDA margin was 4.3%, it rose to 6.3% in FY18, climbed to 6.9% in FY19 and grew to 9.3% in FY20.
The company is proud of its growing membership base as well. Mr Kogan, the founder of the company, spoke about the benefit to the company of its growing number of people using its loyalty scheme at the FY20 result: “The Kogan First community of members grew exceptionally during the second half, and importantly these loyal members on average purchase and save much more often than non-members, demonstrating loyalty to the platform, and also demonstrating the significant savings and other benefits available through the loyalty program.”
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is an ASX tech share that essentially services the US faith sector, particularly large and medium US churches.
It provides a donor management system, including donor tools, finance tools and a custom community app, as well a church management system.
Pushpay also owns Church Community Builder, which provides a software as a service (SaaS) church management system predominately in the US and other jurisdictions. It provides a platform that churches use to connect and communicate with their community members, record member service history, track online giving and perform a range of administrative functions.
One of the useful features of Pushpay’s technology is that it offers a livestreaming service so that the congregation can continue to stay connected with the church, despite everything that’s going on with COVID-19 and the related restrictions.
Pushpay continues to boast of growing operating leverage – its expense growth remains low but operating income is rising much faster. In the FY21 half-year result Pushpay announced that its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin had improved from 17% to 31%.
Pushpay recently upgraded its EBTIDAF guidance, it’s now expecting EBITDAF to be in a range of US$56 million to US$60 million.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd and PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.