There are some high-quality ASX tech shares out there on the ASX boards. A few could be interesting opportunities to look at this month.
Technology businesses have a few inherent advantages when it comes to operating models. Quite a few of them have higher-than-average profit margins.
These are two ASX tech share options that might be interesting:
Betashares Global Cybersecurity ETF (ASX: HACK)
This exchange-traded fund (ETF) is an investment that gives investors access to many of the world’s leading cybersecurity businesses. These are businesses that are both global giants as well as emerging players.
There has been a large increase in digital change by organisations and individuals, particularly since the onset of COVID-19. That has also attracted more cybercrime. There are regular attacks on organisations around the world. It has become imperative that ‘the good guys’ keep developing the best defences.
Global demand for cybersecurity services is growing. In 2017, the size of the global cybersecurity market was $137.6 billion. By 2023, it’s estimated by Statista to be just over $248 billion.
This ETF is a way to get that exposure in a globally diversified way.
It has a total of 40 positions in the portfolio. The biggest ten are: Cisco Systems, Accenture, Crowdstrike Holdings, Zscaler, Splunk, Proofpoint, Fortinet, Akamai Technologies, Fireeye and Leidos.
The ETF has been producing solid returns since inception in August 2016, with an average net return of 19.5% per annum. The last 12 months to the end of April 2021 saw a net return of 30%. Those returns are after the management cost of 0.67% per annum.
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is an ASX tech share in the payments space. Specifically, it helps large and medium churches with back-end administration tools, gives them the ability to connect with their congregation, and processes donations.
It’s the donations that are a key earner for the company. In the 12 months to 31 March 2021, Pushpay processed US$6.9 billion of donations, which was a 39% increase on the prior corresponding period.
Pushpay is expecting more growth in total processing volume, driven by continued growth in the number of customers using its donor management system, further development of its product set resulting in higher adoption and usage, and increased adoption of digital giving in its customer base.
The company decided to use scalable processes early in its development. Combined with good financial discipline, Pushpay is expecting its investments will allow even more operating leverage to be achieved as revenue grows.
That’s why its bottom line grew so much in FY21. Whilst operating revenue rose 40% to US$181.1 million in the year to March 2021, net profit after tax (NPAT) grew 95% to US$31.2 million and operating cashflow jumped 145% to US$57.6 million.
Pushpay is planning to invest into growing in the Catholic sector over the next few years and it’s also looking for acquisition opportunities with all of the cashflow that it’s generating.
At the current Pushpay share price, it’s valued at 27x FY23’s estimated earnings according to Commsec.