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Are these the best small cap ASX shares to buy for FY 2021?

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If you have a risk profile that allows you to invest in small cap ASX shares, then you might want to take a look at the ones listed below.

I believe these small cap ASX shares are arguably the best on offer at this side of the market right now. Here’s why I think they could be future stars of the ASX:

Bigtincan Holdings Ltd (ASX: BTH)

The first small cap ASX share to consider buying is Bigtincan. It is a fast-growing sales enablement platform provider. Management notes that the company’s platform pairs functionality with a highly intuitive user interface to provide an advanced content management system, document automation, internal communications, and a fully integrated modern learning management system.

This ultimately helps users deliver a better customer experience and empowers sales and marketing teams to drive improved business results. Demand for its offering continues to grow from blue chip companies and underpinned very strong recurring revenue growth in FY 2020. Over the 12 months, Bigtincan delivered a 53% increase annualised recurring revenue (ARR) to $35.8 million.

ELMO Software Ltd (ASX: ELO)

Another small cap ASX share which I think has a lot of potential is ELMO. It is a cloud-based human resources and payroll software company that provides a unified platform that streamlines a wide range of processes.

As with Bigtincan, ELMO was a positive performer in FY 2020 despite the pandemic. It reported a 19.7% increase in ARR to $55.1 million. FY 2021 looks set to be a similarly strong year, with management expecting to grow its ARR organically by 18% to 27%. Though, it is worth noting that this guidance doesn’t include potential acquisitions. ELMO had a cash balance of almost $140 million at the end of FY 2020. The majority of this is likely to be deployed on value accretive acquisitions in the near term.

Whispir (ASX: WSP)

A final small cap to look at is Whispir. It is a leading workflow communications platform provider which allows organisations to deliver actionable two-way interactions at scale using automated multi-channel communication workflows. 

As with the others, Whispir was a very strong performer in FY 2020. For the 12 months ended 30 June 2020, it posted a 25.5% increase in revenue to $39.1 million and ARR growth of 34% to $42.2 million. This compares to its prospectus forecast of $37.8 million and $42 million, respectively. The good news is that this is still only scratching at the surface of its massive global market opportunity. Management estimates that the workflow communications platform as a service market could be worth US$8 billion per year by 2024.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

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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 and recommends BIGTINCAN FPO, Elmo Software, and Whispir Ltd. The Motley Fool Australia has recommended BIGTINCAN FPO, Elmo Software, and Whispir Ltd. 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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