I believe the tech sector is a great place to look for long term investment options. This is particularly the case at the mid cap side of the sector, where there are a number of companies which could grow materially in the future.
Two that I would consider buying are listed below. Here's why I'm a fan:
ELMO Software Ltd (ASX: ELO)
The first ASX tech share to look at is ELMO Software. It is a growing cloud-based human resources and payroll software company which provides a unified platform to streamline a wide range of processes. It recently released its full year results and revealed annualised recurring revenue (ARR) of $55.1 million and statutory revenue of $50.1 million. This was a 19.7% and 25% year on year increase, respectively, which I thought was very strong given the pandemic.
The good news is that management is confident this strong form can continue in FY 2021. It has provided guidance for ARR of between $65 million and $70 million this financial year. This represents year on year growth of 18% to 27%. However, it is worth noting that this guidance is purely organic and is likely to be boosted greatly by acquisitions. ELMO has a cash balance of $140 million that it intends to deploy for acquisitions in the near future. Looking further ahead, I believe the company has a massive opportunity in new geographies for its jurisdiction agnostic platform.
Nearmap Ltd (ASX: NEA)
Another ASX tech share to consider buying is this aerial imagery technology and location data company. Over the last few years Nearmap has been growing its recurring revenues at a strong rate thanks to increasing demand for its services in both the ANZ and North American markets.
And while its growth has slowed in FY 2020 because of some large churn events, I'm confident that it will accelerate again once the coronavirus crisis passes. Especially given its material opportunity in a highly fragmented market and its high quality product offering. This has been bolstered by an artificial intelligence product which looks like it has the potential to be a game changer. Overall, I think Nearmap shares would be great long term options.
