ASX tech shares could be attractive investments, according to some of Australia's leading investment brokers.
The first few months of 2022 have seen volatility pick up on the ASX amid strong inflation and the prospect of rising interest rates.
After the recent declines, brokers think these two ASX tech shares are opportunities.
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Booktopia Group Ltd (ASX: BKG)
Since the start of the 2022 calendar year, the Booktopia share price has dropped around 50%.
The company has seen revenue continue to grow, however profitability declined in the first half of FY22. It said that revenue increased by 15.5% to $130 million, while earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 49% to $4.1 million.
Booktopia explained that first-half revenue and profit were impacted by the Sydney lockdowns. Its distribution centre is located in one of the areas of Sydney that saw the most restrictive lockdowns. The company decided to limit marketing and forego sales to focus on protecting employees and comply with government regulations.
Management said that operations have largely returned to a more normal environment and the business can "now resume strong revenue growth but with a renewed focus on improving earnings" without compromising areas required to support longer-term growth.
The ASX tech share is aiming to secure a market share of the growing online book market.
It's currently rated as a buy by the broker Morgans, with a price target of $1.85. That's around 160% higher than where it is today.
Life360 Inc (ASX: 360)
Life360 operates a platform for families with features including communications, driving safety, and location sharing.
In its latest quarterly update, it said that it achieved 63% year-on-year growth in subscription revenue. Annualised monthly revenue has increased to US$166.1 million. Monthly active users increased 36% year on year to 38.3 million, an 8% increase quarter on quarter.
Average revenue per subscription (including Tile and Jiobit) increased 16% year on year, with 15% growth for the 'core' Life360 business.
However, the ASX tech share did announce that its US dual listing plans have ceased.
Management said that there were highly encouraging trial results of the Tile upsell offer, which led to a 35% uplift in Life360 subscriptions compared to the control group.
Life360 is accelerating the integration of Tile and Jiobit (tracking devices) to deliver targeted sustainable cash flow by late 2023. The company expects 2024 to be the first full year of positive cash flow.
In 2022, the tech company expects its core Life360 subscription revenue to rise more than 50%. It expects consolidated revenue to be in a range of between US$245 million to US$275 million. And it expects underlying EBITDA to be a loss of between US$32 million to US$38million.
Life360 is currently rated as a by the broke Morgan Stanley, with a price target of $8.60.
