There are some wonderful ASX growth shares that may be worth owning for the long-term.
These businesses are ones that are seeing double digit growth of their revenue and may be able to achieve long-term profit growth.
With that in mind, these are two ASX growth shares that are worth knowing about:
VanEck Video Gaming and Esports ETF (ASX: ESPO)
There is ongoing double digit growth for this industry as more people play video games and watch it for entertainment.
VanEck – the ETF provider – says that video gaming has achieved 12% average annual growth since 2015. E-sports is growing even faster, with revenue growth of 28% per annum since 2015.
The competitive video gaming audience is expected to reach 646 million people globally in 2023, driven in part by the rising population of digital natives. E-sports is considered the world’s fastest growing sport, with the top tournaments getting crowds similar to World Cup football and the Olympic Games.
E-sports has created new potential revenue streams for the companies involved including game publisher fees, media rights, merchandise, ticket sales and advertising.
Some of the businesses involved includes: Nvidia, Advanced Micro Devices, Tencent, Sea, Netease, Activision Blizzard, Nintendo, Take-Two Interactive Software, Unity Software and Roblox. It has a total of 26 names in the portfolio, but the 10 names I just mentioned make up more than 60% of the overall portfolio.
This ASX growth share comes with an annual management fee of 0.55%. The index that this ETF tracks has seen average returns per annum of 30.2% over the last five years.
ELMO Software Ltd (ASX: ELO)
ELMO Software is a technology business that offers services relating to HR, payroll and expense management.
It’s currently rated as a buy by the broker Morgan Stanley, with a price target of $7.80. That’s a potential upside of 50% over the next year, if the broker is right.
The business is growing revenue very quickly. In the first quarter of FY22, annualised recurring revenue (ARR) grew 61% to $88.5 million, with organic ARR growth of 35%. Revenue increased 52% to $20.7 million.
ELMO says that it has strong momentum with a positive macroeconomic backdrop and with small and medium sized businesses continuing to adopt cloud-based solutions to manage a flexible workforce.
The ASX growth share boasts of a number of positive factors with its software as a service (SaaS) model with a high level of recurring subscription revenue, high customer retention, a high level of organic growth and expansion strategies.
In FY22 it’s aiming to break through $100 million of ARR. Guidance for FY22 ARR is between $105 million to $111 million, which would be year on year growth of 25% to 33%. It’s also expecting to achieve positive earnings before interest, tax, depreciation and amortisation (EBITDA) of between $1 million to $6 million.
The company thinks that there is a $12.8 billion opportunity across small business and mid-market in the UK and ANZ.