I’ve got my eyes on a few ASX tech shares for my portfolio in June 2021. Technology could be the best place to look for opportunities.
Technology businesses can expand really quickly. That’s one of the advantages of tech like software or e-commerce.
I think these ASX tech shares could be good long-term options:
Xero Limited (ASX: XRO)
Xero is a high-quality software business that provides cloud tools for business owners, accountants, bookkeepers, business advisors, payroll administrators and employees.
It’s not just a bookkeeping tool. Xero offers a huge range of time-saving tools for people to use. “Time is money” after all. Saving a lot of time means accountants can get more work done and business advisors have more time for doing jobs. Or more time for themselves and family.
Xero has some great underlying economics. The ASX tech share had a gross profit margin of 86% in FY21. If the business wasn’t purposefully investing for growth so much, its free cashflow would be shooting higher on revenue growth and those high gross margins.
There’s still a lot of growth that Xero can achieve in the coming years as it takes global market share. Government reporting requirements are going to effectively force businesses to adopt online accounting and reporting options like Xero. If it keeps investing to have the best product, it should keep winning and retaining clients.
Volpara Health Technologies Ltd (ASX: VHT)
Volpara is a very important business when it comes to screening for breast cancer in the US. At least one of its products are being used on around 33% of women in America. That’s a really good base for the business to build from.
One of the main ways that Volpara can grow is its average revenue per user (ARPU). This measure has been steadily growing from around $1 in FY20 to $1.40 in FY21. That’s a very useful boost considering it’s winning market share too.
The ASX tech share plans to increase ARPU by selling its Volpara Breast Health Platform as a platform, not just a product. The platform includes all of its products with the additional power of multiple integrations to make the overall suite more compelling. Most new sales are now for two or three products – representing significantly higher ARPU. Its relationship with genetics companies – partly thanks to the CRA Health acquisition – is expected to increase that further.
Volpara continues to win new customers, upsell to existing customers (with at least a 200% increase in recurring revenue for those that upgrade), it enjoys a high retention rate and it keeps looking for acquisition opportunities.
There are other tech ASX growth shares that could also make compelling investment cases at the current prices.
