Whilst the market was fixated on many of the high-profile companies such as WiseTech Global Limited (ASX: WTC), Afterpay Touch Group Ltd (ASX: APT) and Altium Limited (ASX: ALU), some of the small cap companies were also reporting impressive results.
Here are two that stood out for me. One is yet to make a profit, but I think it’s headed in the right direction and could be worth adding to a watch list for medium term growth investors.
Bigtincan Holdings (ASX: BTH)
Bigtincan is a SaaS business which enables sales teams to work smarter and faster. It harnesses AI to predict customer requirements and what information will be most relevant to them and the sales team. The Bigtincan Hub is the industry’s first sales enablement automation platform. For FY2018 the company reported a 42% increase in revenue to $13.1 million. However increased operating expenses led to an increase in net loss to $6.8 million. There was no explanation for the increase in operating expenses which was disappointing.
On the plus side the net cash outflow improved dramatically from $7 million in 2017 to only $1.3 million in 2018. The company has grown revenue by 110% since FY2016 and if this trend continues and management can contain operating costs, Bigtincan should be cash flow positive in FY2019. The market was largely unmoved by these results and the shares are hovering around $0.30c and could be a good buy for those looking for a medium-term growth stock.
Rhipe Ltd (ASX: RHP)
Rhipe is in a different category to Bigtincan as it’s profitable. Rhipe is in the high-growth business of cloud SaaS services and provides high margin services including licensing, business development and IT support.
The company has been a solid performer on the ASX, with the shares climbing 54% in 12 months to close on Thursday at $1.30. Also, the revenue growth has been solid, increasing by 25% to $196.6 million in FY2018 for an EBITA of $6.4 million – a 22% increase from FY2017. The company looks well positioned for growth in the Asia pacific region with 75% growth from this region.
The demand for cloud-based services, data and support is expected to continue to drive revenue growth for Rhipe in 2019 and I would expect this business to outperform the ASX200 over the medium term.
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Motley Fool contributor Matt Reynolds owns shares of BIGTINCAN FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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