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2 fast-growing small cap ASX shares to watch

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As well as being home to blue chip shares like Telstra Corporation Ltd (ASX: TLS) and Wesfarmers Ltd (ASX: WES), the Australian share market hosts a good number of promising small caps.

Two small cap ASX shares that you might want to put on your watchlist are listed below. Here’s what you need to know about them:

MNF Group Ltd (ASX: MNF)

The first small cap ASX share to look at is MNF Group. It is a leading provider of Voice over Internet Protocol (VoIP) technology to businesses and consumers. This technology allows users to make telephone calls over the internet.

MNF has been growing its recurring revenue at a solid rate in recent years and this has continued in FY 2021. Earlier this week the company released its half year results and delivered a 15% increase in recurring revenue to $55.7 million.

Another positive was its Net Revenue Retention (NRR) metric. MNF revealed that its NRR rate across its top 10 customers was 115%. This means that the company is not only retaining these customers, they are spending more.

Looking ahead, the company’s future looks very positive thanks to structural tailwinds and its expansion into Asia. In respect to the latter, MNF is close to launching in Singapore and has its eyes on a further six markets in the region.

Morgan Stanley remains positive on the company. Earlier this week its analysts reaffirmed their overweight rating and $6.30 price target on its shares.

Volpara Health Technologies Ltd (ASX: VHT)

Another small cap to look at is Volpara. It is the New Zealand-based healthcare technology company behind the VolparaEnterprise software solution. This product is a cost-effective, mission-critical tool that helps clinics deliver the highest-quality breast imaging services.

In addition to this, the company has been developing and acquiring an increasing number of add-on solutions that work with VolparaEnterprise. These add-ons are expected to support an increase in its average revenue per user (ARPU) metric in the future. In fact, the whole suite is estimated to be around US$10 per user, which is materially more than its current ARPU of US$1.22.

Combined with market share growth, this could underpin significant revenue growth in the future.

One broker that is a fan of Volpara is Morgans. Earlier this month the broker put an add rating and $1.92 price target on its shares.

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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 VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended MNF Group Limited and Telstra Limited. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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