There are some high-quality ASX tech shares that I’d love to buy with $5,000.
Technology businesses have some inherent advantages when it comes to the business world. Rapid growth with rising profit margins is something I like to look for.
These two ASX tech shares are ones I’ve got my eyes on:
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is a digital donation business for churches in the US.
It’s steadily growing its market share of donations. COVID-19 caused a significant rise in usage of its services, but the company is observing that there has been a permanent shift in digital adoption by churches and donators alike.
Not only does Pushpay provide donation processing, but it also has church management software that was improved by its Church Community Builder acquisition. Clients are apparently loving the combined offering.
The acquisition of video streaming business Resi Media will hopefully add even more functionality to Pushpay’s offering.
Revenue and margins are growing quickly for the ASX tech share. In FY21 it saw operating revenue climb 40%. The gross profit margin increased from 65% to 68%. The EBITDAF margin (EBITDA explained, the F stands for foreign currency) increased from 22% to 34% over the year. This helped EBITDAF soar 133% to US$58.9 million.
Pushpay is expecting more growth in FY22 and beyond. The Catholic sector is one area where Pushpay plans to grow. International regions could be further growth areas.
Redbubble Ltd (ASX: RBL)
Redbubble is another ASX tech share which is rapidly growing.
It’s an e-commerce business that sells products with artist designs on them.
FY21 saw marketplace revenue rose by 58% to $553 million and gross profit increased by 66% to $223 million.
Redbubble had a strong year, particularly with the millions of masks that it sold. Excluding mask sales, Redbubble is expecting slight growth in FY22. But starting from the second half of FY22, Redbubble is expecting a return to year on year growth consistent with meeting its medium-term aspirations.
The ASX tech share is aiming for $1.25 billion of marketplace revenue with a gross profit margin of between 40% to 42% by the 2024 calendar year and an EBITDA margin of between 13% to 18%.
Redbubble says that there is a large global e-commerce market opportunity that is worth pursuing. It is going to invest heavily in its marketing, core systems and processes. During this period, the EBITDA margin is expected to be relatively low, but positive.
