Small cap ASX shares can grow quicker than larger businesses because they’re simply starting from a smaller base.
Some businesses are growing both organically and with acquisitions, combining into a fast pace of growth:
Volpara Health Technologies Ltd (ASX: VHT)
Volpara is a small cap ASX share that specialises in providing breast imaging software and practice administration. It’s increasing its capabilities in relation to patient risk with the acquisition of CRA Health.
The business has been working on making itself more scalable with digital marketing through its “smarter” use of cloud services through software systems that are easier to deploy into clinics.
FY21 saw Volpara’s full year revenue increase by 57% to NZ$19.7 million. Subscription revenue increased 99% to NZ$18.1 million, which included a 20% organic year on year increase.
The company estimates it now has at least one software product being used in the screening of approximately 32% of US women for breast cancer.
Volpara said in FY21 its annual recurring revenue (ARR) increased 55% to NZ$27.9 million and the gross profit margin improved from 86% to 91%.
The small cap ASX share continues to see a low level of customer churn, increased average revenue per user (ARPU), new customers, upselling to existing customers and potential acquisitions provide with technology for the future.
City Chic Collective Ltd (ASX: CCX)
City Chic is looking to create a ‘world of curves’ as a global retailer of plus-size clothing, footwear and accessories for women.
It now has a number of different brands and retailers in different markets. Locally, it has the City Chic business. In the UK it recently acquired the Evans business. In the US it has the Avenue business. City Chic also has online intimate brands Hips & Curves and Fox & Royal.
City Chic was already selling a large amount of products online before the pandemic, but it has accelerated further on the last 12 months. In the first six months of FY21, 42% of sales were done online.
HY21 also saw 20.8% of comparable sales growth excluding Victorian store closures. Total sales rose 13.5% to $119 million. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grew 21.8% to $23.3 million with the EBITDA margin increasing from 18.2% to 19.6%.
Statutory net profit after tax (NPAT) rose 24.8% to $13.1 million and operating cashflow increased 25.7% to $21.5 million.
Growth has continued in the first eight weeks of the second half of FY21. City Chic said it has continued to deliver “strong positive comparable sales growth”.
The small cap ASX share now is focused on a few different things.
It’s integrating Evans and the introduction of a wider range of products and lifestyles. City Chic is continuing to execute on the re-engagement strategy of the Avenue customer base. It’s looking to introduce a conservative product stream to Australia and New Zealand. City Chic is looking to expand in the UK and Europe. In Australia it’s rotating its store portfolio into new fit-outs and conversion to larger format stores.