3 exciting small cap ASX shares to watch this month

If your risk profile allows it, I believe having a little exposure to small cap shares can be a good thing for a portfolio.

You only need to look at the outperformance of the Small Ordinaries over the last three years to see how small cap shares could have boosted your portfolio’s returns.

During this time the small cap index has put on a gain of over 24% compared to a gain of 13% by the benchmark ASX 200.

With that in mind, here are three small cap shares that I think are worth keeping a close eye on:

Audinate Group Limited (ASX: AD8)

Audinate is digital audio company that develops hardware and software solutions for the professional audio-visual industry. Audinate caught my eye in FY 2018 when strong demand for its products led to it growing its full year revenue by a sizeable 30% to $19.7 million. The good news is that FY 2019 has started even stronger. The company recently reported a massive 51% increase in first quarter cash collections to $6.8 million.

ELMO Software Ltd (ASX: ELO)

Another small cap tech share that has had a strong start to FY 2019 is ELMO Software. The leading provider of cloud-based human resources and payroll software solutions delivered an impressive result in FY 2018 and looks set to build on it this year. It recently advised that its first quarter cash receipts had risen 91% on the prior corresponding period to $10.3 million. While this growth is impressive, the company is still only scratching at the surface of its market opportunity. This could make it one to watch this month and in 2019.

LiveTiles Ltd (ASX: LVT)

LiveTiles is a provider of a digital workplace platform which provides businesses with ways to increase collaboration and efficiency amongst their employees. Last year it grew annualised recurring revenues by 275% to $15 million thanks partly to its partnership with Microsoft. FY 2019 has also started strongly due in part to the successful appointment of N3 as its sales and marketing force.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ELMOSFTWRE FPO. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO. The Motley Fool Australia has recommended ELMOSFTWRE FPO. 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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