2 ASX growth shares predicting big growth this decade

Some ASX growth shares aiming for big growth during this decade. Those 2 stocks are Pushpay (ASX:PPH) and Altium (ASX:ALU).

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There are some ASX growth shares that have big growth goals for this decade.

Here are two examples:

Pushpay Holdings Ltd (ASX: PPH)

The Pushpay share price has fallen 22% since the US election. However, the digital donation business still has its main goal.

The ASX growth share is aiming for annual revenue of US$1 billion. This is a multiple of its recent revenue numbers. In FY20 it generated a total of US$129.8 million, which was up 32%. Pushpay’s total processing volume in FY20 was US$5 billion, up 39%. Pushpay made progress in its FY21 half-year result, with processing volume rose by 48% to US$2.2 billion and operating revenue going up 53% to US$85.6 million.

Pushpay said that it expects to see continued revenue growth as the business executes on its strategy, achieves increased efficiencies and gains further market share in the US faith sector.

The ASX growth share continues to report growing profit margins. In the half-year result it saw its gross profit margin increase from 65% to 68%. Although the gross margin is typically weaker over the second half of the year, management expects the gross margin to stabilise around the current levels over the remainder of the current financial year.

Pushpay also reported in the HY21 result that its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin increased from 17% to 31%. This partly occurred because total operating expenses, as a percentage of operating revenue, improved from 50% to 38%.

Management said it expects significant operating leverage to accrue as operating revenue continues to increase, while growth in total operating expenses remains low.  

It’s targeting a 50% market share of the medium and large church segment in the US, which is key for achieving its US$1 billion revenue goal.

According to Commsec, it’s trading at 24x FY23’s estimated earnings.

Altium Limited (ASX: ALU)

Altium is an electronics PCB software business that counts businesses like Space X, Tesla, Apple, Amazon, Google, Microsoft, Disney, Broadcom and Qualcomm as clients.

The Altium share price has fallen around 10% over the past four weeks. COVID-19 has affected its revenue growth over the past six months, which is why management think it may take a little longer – an extra six to twelve months – to reach its US$500 million revenue goal. But that’s still the goal.

The ASX growth share is aiming to reaching global market leadership of the electronic PCB software space by reaching 100,000 Altium Designer subscribers by 2025.

In FY20 the company saw its EBITDA margin climb from 38.9% to 40%, its profit before income tax increased by 12%, its cash balance rose by 16% to US$93 million and its dividend per share increased by 15% to AU$0.39 per share.

Altium recently announced that it was pivoting its organisational structure toward the cloud. It said that the successful launch and strong early adoption of its cloud product, Altium 365, led to its decision to split its cloud operations from its software business.

The company explained that it will allow the cloud business to develop in a different way, and to form a software-as-a-service-like organisational structure. One strategic benefit from this change is that is that it will allow the separation of high-volume sales from high-touch sales to support Altium’s journey to 100,000 subscribers. Executive director Sergey Kostinsky will be in charge of driving the rapid development and adoption of Altium 365.

According to Commsec, Altium is currently trading at 47x FY23’s estimated earnings.

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Tristan Harrison owns shares of Altium. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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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