Are these small cap ASX tech shares the next Altium and Appen?

Could these small cap tech shares be the next Altium Limited (ASX:ALU) and Appen Ltd (ASX:APX)?

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It wasn't that long ago that market darlings Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX) were small cap shares flying under the radar of most investors.

Today they are multi-billion-dollar tech companies and have provided incredible returns for their early investors.

Whilst not all up and coming tech companies will be as successful as Altium or Appen, three small cap tech shares that I think are well worth watching very closely are listed below:

LiveTiles Ltd (ASX: LVT)

LiveTiles is a digital workplace platform provider which has been a strong performer once again in FY 2019. During the first half the company posted a 232% increase in annualised recurring revenue (ARR) to $22.9 million. The good news for investors is that this strong growth is expected to continue thanks to the engagement of a specialist sales force, ongoing high-impact campaigns, and joint-marketing initiatives with tech giant Microsoft. Management is targeting an ARR of $100 million by the end of June 2021.

Megaport Ltd (ASX: MP1)

Megaport is a provider of elastic interconnection services across data centres globally. This service allows its users to increase and decrease their available bandwidth in response to their own demand requirements. Which means that its users don't need to be tied to fixed service levels on long-term and expensive contracts and can just use what they need when they need it. In the first half of FY 2019 the company posted a 70% lift in monthly recurring revenue (MRR). I expect more of the same in the second half and beyond thanks to the ongoing migration to cloud infrastructure by enterprises.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a medical technology company which provides software that uses AI imaging algorithms to assist in the early detection of breast cancer. Demand for its offering has remained strong this year, with the company this week reporting ARR growth of 86% in FY 2019. This was driven by the increasing adoption of its software, which led to its share of the U.S. breast screening market increasing to 7.1%. Due to the quality of its product, the expansion of its salesforce, and favourable regulatory changes, I believe this strong run could continue over the coming years.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia owns shares of Altium and Appen Ltd. The Motley Fool Australia has recommended MEGAPORT 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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