There are some high quality ASX tech shares that I’d buy that could make good returns if they are successful with their long term goals.
Redbubble Ltd (ASX: RBL)
Redbubble is an e-commerce business that has two online platforms/websites called Redbubble and TeePublic. It’s a business that allows artists to sell goods like wall art, clothing, masks and phone cases.
The Redbubble share price has gone up significantly over the past year with the company generating enormous revenue and EBITDA (EBITDA explained) growth.
The online artist marketplace company’s revenue rose by 36% to $349 million.
In FY20 it had 511,000 selling artists, up 51%. Artist earnings were up 35% to $67 million. Unique customers were up 30% to 6.8 million. Repeat sales accounted for 40% of marketplace revenue. It launched 16 new products in FY20, including face masks in April 2020. Redbubble’s app sales grew by 159% in FY20, representing 12.6% of its total marketplace revenue.
Gross profit rose by 42% to $134 million and operating EBITDA (click here to learn what EBITDA means) jumped by 141% to $15.3 million.
The ASX tech share showed that the growth is continuing into FY21. In the first quarter of FY21 it revealed that marketplace revenue soared 116% to $147.5 million. Gross profit grew even faster, rising by 149% to $64.5 million.
It might be far too bullish to assume that revenue can grow by triple digits for the whole of FY21. However, if Redbubble can continue to grow its market share then it could hold onto this growth (and more).
Altium Limited (ASX: ALU)
It’s common for even the best of businesses to go through a rough patch. Even Apple has had its wobbles.
Altium is not as strong as a business as Apple, but they’re both in the technology sector. The Altium share price has dropped heavily over the past year, but I think there’s a good chance it’s just the current environment that is making things difficult for Altium (and probably the whole industry).
The ASX tech share recently gave an update for the FY21 half year result that said its revenue was down 3%. That’s quite the disappointing turn after the last few years of consistent growth.
If Altium can still go on to achieve market domination in the coming years, then this could prove to be an opportunity. When/if things are turning round later this year then the Altium share price will probably quickly reflect that.
I believe that there are various elements of Altium’s business that are very attractive – long term growth of EBITDA margins, no debt, a strong cash balance, a growing dividend, determined leadership and a long term focus. But there’s a long way to go for Altium to get back strong profit growth and it’s still not exactly cheap.
Instead of Altium, I suggest getting a free Rask account and accessing our full stock reports. Click this link to join for free and access our analyst reports.
