ASX tech shares have taken a big hit in 2022. Plenty of them are down 50% or more this year. I think this could be one of the best times to invest in technology.
For the last few years, many technology businesses have had sky-high valuations. But, higher interest rates have really taken a sledgehammer to their share prices.
I don’t think that every tech business should be worth 50% less just because interest rates have gone up a few percentage points.
In my opinion, the below two ASX tech share names are too good to ignore.
Airtasker Ltd (ASX: ART)
Airtasker operates an online marketplace for local services. It connects people and businesses who need work done with people who want to work. Examples include furniture assembly, removalists, bookkeeping, photography and many more.
Despite disruptions from COVID, the business reported solid growth in FY22. Revenue rose 18.4% to $31.5 million.
FY22 international gross marketplace volume (GMV) soared 120.5% year on year to reach an annualised run rate of $9.5 million in May 2022. US posted tasks grew 49% quarter on quarter in the FY22 fourth quarter – this is promising because the US is a huge market.
Airtasker’s fourth quarter revenue rose 30.6% to $9 million in the fourth quarter. This could signal a solid year in FY23.
With a growing market share, geographic expansion and a strong gross profit margin, I think this ASX tech share could be very profitable in five years from now. It’s one of the ASX tech shares I’m watching the closest.
Volpara Health Technologies Ltd (ASX: VHT)
Volpara is a very different business to Airtasker, but it has a lot to like about it, and some similarities in terms of international growth and margins.
This business makes software to “save families from cancer.” Volpara says that health providers “use Volpara to better understand cancer risk, empower patients in personal care decisions, and guide recommendations about additional imaging, genetic testing, and other interventions.” Its software is also used by healthcare organisations to streamline operations and provide “key performance insights”.
It’s used in over 2,000 facilities by more than 5,000 technologists, helping conduct more than three million cancer risk assessments each year.
Volpara has built up a market share of more than a third of US women who are screened for breast cancer.
There are three exciting avenues for revenue growth for this ASX tech share. First, it can increase its average revenue per user (ARPU) as it aims to sell more of its software offerings to healthcare providers. Second, it can expand geographically, as it’s largely focused on the US at the moment. Finally, it can grow its presence in lung cancer screening, which the company believes could also be a very promising area of growth.
It has a gross profit margin of around 90%, so growth in revenue is very helpful for its profitability. Management have their eyes set on reaching cashflow breakeven so it can fund its own growth.
