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3 great ASX tech shares to buy

There are some wonderful ASX tech shares that could be worth buying. One of them is donation business Pushpay Holdings Ltd (ASX:PPH).
The post 3 great ASX tech shares to buy appeared first on Motley Fool Australia. –

ASX tech shares

There are some high-performing ASX tech shares out there that have been identified as buys.

Motley Fool Pro still believe each of these ASX tech shares could be worth buying:

Xero Limited (ASX: XRO)

Xero is a cloud accounting software business with headquarters in New Zealand. It is now a multinational company with market-leading positions in Australia and New Zealand. Its market share in the UK is also rapidly growing as it adds more subscribers which pay a monthly fee to Xero.

The Xero share price has gone up 48% in 2020 so far.

The ASX tech share revealed continuing growth in its FY20 result. Total subscribers increased 26% to 2.285 million. Operating revenue went up 30% to NZ$718 million and earnings before interest, tax, depreciation and amortisation (EBITDA) – excluding impairments – rose 52% to NZ$139.2 million. In the UK, subscribers grew by 32% to 613,000 with revenue growing by 54%. Xero increased its free cash flow generation by 320% to NZ$27.1 million.

One of the main things that the Pro team was pleased about the FY20 result was that North American subscribers grew by 24% to 241,000.

It’s still rated as a buy by the Motley Fool Pro service. The Pro team said the FY20 result demonstrated the runway Xero still has and they like how it’s moving to become a platform service, though Xero’s SME customer base may be impacted because of COVID-19 effects. However, this may be offset by potential customers realising the benefits of cloud products.

Altium Limited (ASX: ALU)

Altium is an electronic PCB design software business. It has various software offerings, such as Altium Designer, some of which is targeted at small engineer outfits and other software is designed for large multinational teams.

On Altium’s ‘about’ page, it tells investors a number of things. Altium says it has a strong track record in engineering development and engineering excellence, it has global diversified earnings (comprised of 48% Americas, 32% Europe, 14% Emerging Markets and 7% Asia Pacific), it’s committed to being the market leader and it’s well positioned for future growth because at the heart of intelligent systems are electronics and PCBs.

In terms of the balance sheet, Altium says it’s committed to growing the dividend each year and it’s debt free.

The ASX tech share is focused on growing its cloud offering to subscribers called Altium 365. Indeed, the company recently made an announcement saying that it was pivoting its organisational structure towards the cloud.

Altium’s growth has been stunted by COVID-19 impacts, however Pro still rate the business as a buy for long-term growth-focused investors and believes it still has a good growth runway ahead.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is an ASX tech share that facilitates digital donations, particularly for the US large and medium church sector.

It has a long-term goal of reaching US$1 billion revenue from the US faith sector. The current COVID-19 conditions have seen an acceleration in the adoption of Pushpay’s technology. Pushpay management believe that its new offering called ChurchStaq – which is the combined offering of Pushpay and Church Community Builder – is proving very popular with users.

In the recent FY21 half-year result, Pushpay revealed that its total processing volume went up by 48% to US$3.2 billion. This helped Pushpay’s operating revenue grow by 53% to US$85.6 million and it pushed the earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) higher by 177% to US$26.7 million.  

Pushpay management were keen to point out the scalability of the business with its improving profit margins. The gross margin expanded from 65% to 68% whilst the EBITDAF margin surged from 17% at 30 September 2019 to 31% at 30 September 2020.

The Pro team still rates Pushpay a buy. The Pushpay share price has gone up 105% in 2020.

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Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX and Xero. The Motley Fool Australia has recommended PUSHPAY FPO NZX. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 3 great ASX tech shares to buy appeared first on Motley Fool Australia.

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