Motley Fool Australia

Are these small cap ASX tech shares the next Afterpay, Altium, or Appen?

ASX growth shares

Over the last couple of years Afterpay Touch Group Ltd (ASX: APT), Altium Limited (ASX: ALU), and Appen Ltd (ASX: APX) have gone from being small cap tech shares flying under the radar to multi-billion-dollar market darlings.

As you might expect, this has led to their shares generating significant returns for their lucky shareholders.

With that in mind, I thought I would take a look at a few up and coming tech shares with strong growth potential which I feel are worth adding to your watchlist. They are as follows:

LiveTiles Ltd (ASX: LVT)

LiveTiles is a digital workplace platform provider which I think has strong growth potential. Its software gives its users tools to easily create dashboards, employee portals, and corporate intranets that can be further enhanced by artificial intelligence and analytics features. LiveTiles has been experiencing increasingly strong demand for its offering, which has led to its annualised recurring revenue (ARR) more than tripling during the first three quarters of FY 2019 to $34.5 million. I believe this has put the company in a position to achieve its target of 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. Its increasingly popular service allows its users to increase and decrease their available bandwidth in response to their own demand requirements. This means that they 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. Thanks to the ongoing migration to cloud infrastructure by enterprises, Megaport has seen demand for its services rise strongly. This led to Megaport reporting a 7% increase in customer numbers to 1,367 and a 15% lift in monthly recurring revenue (MRR) to $3.11 million during the last quarter. I believe the company is well-positioned to continue growing at a strong rate for many years to come thanks to the cloud computing boom.

Xref Ltd (ASX: XF1)

Xref is a Sydney-based human resources technology company that allows prospective employers to seamlessly and professionally conduct pre-employment reference checks on suitable candidates via an online candidate-referencing system. It counts the likes of Bunnings, Nearmap Ltd (ASX: NEA), Qantas Airways Limited (ASX: QAN) and Westpac Banking Corp (ASX: WBC) as customers. I’ve been impressed with the strong sales growth it has achieved in FY 2019 and believe it is well worth keeping a close eye on. Especially after it reported that its client acquisition costs and average revenue per account have recently aligned, meaning its cash flow break-even point is now on the horizon.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of MEGAPORT FPO. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO, 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.

Related Articles…