There’s a lot of volatility in the ASX share market. I think there are some really good ASX tech shares that I’d buy next week.
I think that lower prices are really useful for buying businesses with attractive outlooks.
I’m looking for technology businesses that have a large market to grow into, whilst having a service that attracts customers.
Here are two ASX tech shares that I like:
Pushpay Holdings Ltd (ASX: PPH)
The Pushpay share price has fallen by 18% since the start of the year, and 46% over the past 12 months.
Pushpay is a leader in providing donation tools for churches in the US. It has really captured a sizeable part of the market. In the first six months of its FY22, total processing volume increased from US$3.2 billion to US$3.5 billion, showing how important the business already is to the ‘US faith sector’.
Clients apparently like the offering of both donation and church management tools in one system called ChurchStaq. This is a good way of building client loyalty and making Pushpay’s service an essential, unreplaceable, part of the operations.
There has been a fundamental shift to digital giving through COVID-19, rather than cash, and it seems that this is not reversing as the US goes to a ‘new’ normal post-COVID.
Profit margins keep increasing at the ASX tech share. In HY22, the gross profit margin increased from 68% to 69%.
The company continues to open new growth avenues, with expansion into the Catholic sector. There’s also the possibility of growth into other countries.
Airtasker Ltd (ASX: ART)
The Airtasker share price has fallen 32% since the start of 2022. Its down 55% over the last 12 months.
Airtasker is a marketplace business that allows people who need work doing to connect with workers who are capable of doing that work. There is a wide range of services such as handyperson, furniture assembly, home cleaning, deliveries, gardening, business, admin and so on.
The company is seeing an acceleration of its business, particularly with the end of lockdowns. The gross marketplace volume (GMV) in the second half of FY22 is expected to be between $107 million to $110 million, up from the previous guidance of $105 million.
It’s growing really quickly. In the second quarter of FY22, there was a 39% quarter on quarter increase to $48.6 million. Weekly GMV increased to $4.5 million.
The company points to a $52 billion addressable market in Australia, with a market penetration of 0.3%, leading to $153 million of GMV in Australia in FY21. If it replicated that same 0.3% market share in the UK, it would generate $210 million of GMV. In the US, a market share of 0.3% would be GMV of $1.5 billion.
The ASX tech share has a long way to go to capture those types of numbers in the UK and USA, but it’s seeing strong growth in percentage terms and it’s investing its (strong) cash flow into more growth.
One of the most attractive things about Airtasker is its exceptionally high gross profit margin, which was more than 90% in the first half of FY22. This means most of the new revenue turns into gross profit, allowing the company to re-invest heavily for more growth.
Final thoughts on these ASX tech shares
I believe both of these businesses have very promising futures. They have strong margins, they’re seeing underlying growth, they are expanding their addressable markets and international expansion looks like a useful strategy. They are two very promising ASX growth shares in my opinion, particularly in this era of lower valuations for tech names.
