This weekend could be a handy time to look into some quality, growth-focused ASX shares.
Businesses that are growing their revenue and profit margins give themselves a good chance of growing the bottom line and hopefully producing returns for shareholders.
These two companies could be ones to watch:
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is a leading ASX tech share in the electronic donation space. It is facilitating the digitalisation of large and medium churches in the US. It provides donation tools for its customers and, bolstered by the acquired Church Community Builder, offers church management tools.
The business is both growing revenue and its profit margins as more people shift to digital donations.
FY21 saw processing volume rise 39% to US$6.9 billion, with operating revenue increasing 40% to US$179.1 million. The gross profit margin increased from 65% to 68%, whilst total operating expenses as a percentage of operating revenue improved 11 percentage points, from 47% to 36%. Net profit jumped 95% to US$31.2 million. Operating cashflow increased 145% to US$57.6 million.
Pushpay says it expects operating leverage to accrue as operating revenue continues to increase, whilst growth in total operating expenses remains low.
The ASX share recently acquired Resi Media, to add to its streaming solutions for the Pushpay product suite. This acquisition cost US$150 million.
Management said this acquisition accelerates front book growth, adding a further stream of high growth and high margin software as a service (SaaS) revenue.
The Pushpay share price is currently valued at 29x FY23's estimated earnings according to Commsec.
EML Payments Ltd (ASX: EML)
EML Payments is another business in the payments space. It has a few different business segments.
There's the general purpose reloadable division – this has uses like salary packaging and gaming payouts. It has gift and incentive, which is used for things like shopping centre gift cards and consumer incentives. Finally, there's virtual account numbers, with use cases like commercial payments and buy now, pay later.
It's benefiting from the shift to digital payments. FY21 saw gross debit volume (GDV) increase 42% to $19.7 billion, with revenue rising 60% to $194.2 million. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 65% to $53.5 million.
Regarding the Central Bank of Ireland (CBI) concerns, the ASX share said it's working constructively with CBI and has responded in significant detail on all matters, and has provided CBI with a detailed remediation plan addressing the concerns raised. EML expects the remediation plan to be substantively complete by the end of the 2021 calendar year, with the remaining items remediated by the end of March 2022.
In FY22, EML is expecting its underlying EBITDA to rise by at least 8.4%, to a range of $58 million to $65 million.
According to Commsec, the EML share price is valued at 29x FY23's estimated earnings.
