If your risk profile allows for it, then having a little exposure to the small side of the market could be a good thing for a balanced portfolio.
After all, you only have to look at how companies like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) have gone from being small caps flying under the radar to multi-billion dollar industry giants in just a few short years.
But which ASX small cap shares should you look at? Here are two to become better acquainted with:
The first small cap to look at is IntelliHR. It is a cloud-based human resources and people management platform provider that has been growing at a solid rate over the last 12 months.
For example, IntelliHR recently released its second quarter update and revealed a $0.5 million or 23% quarter on quarter increase in its Annual Recurring Revenue (ARR) to $2.9 million. Management advised that this strong growth was achieved thanks to the addition of a record 24 new paying customers. This increased its total contracted customers to 151, which was 26% higher than the first quarter.
According to a recent presentation, the company’s global addressable market is in excess of $38 billion. This gives it a significant runway for growth over the next decade and beyond.
Whispir is a software-as-a-service communications workflow platform provider. Its popular platform automates communications between organisations and people. This enables users to improve their communications through automated workflows to ensure stakeholders receive accurate, timely, useful, and actionable insights.
An example of this is the government using Whispir’s platform during the height of the COVID-19 pandemic. This included interactive two-way messages and real-time updates to sufferers and those who had been in the close contact with someone with COVID-19, as well as daily communications with those in self-isolation.
Whispir’s has been a very positive performer in FY 2021. The company recently released its second quarter update and revealed ARR growth of 29.2% to $47.4 million. Management advised that this was driven by ongoing demand for communications software to automate processes and improve stakeholder engagement.
The good news is that this represents less than 1% of an overall market opportunity which is estimated to be worth US$8 billion per year by 2024.
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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 Whispir Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia has recommended Whispir Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.