Are these small 2 ASX growth shares now at compelling value?

RPMGlobal and Frontier Digital Ventures may be down but not out

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Key points

  • Here are two ASX growth shares that have seen significant share price declines
  • RPMGlobal is expanding its software offering, while growing its profitability
  • Frontier Digital Ventures’ portfolio of companies is growing revenue and generating positive EBITDA

There has been a significant sell-off of many ASX growth shares over the last few months. Could they now be opportunities?

A company isn’t automatically better value if its share price drops, but these two ASX shares are planning growth for the long term. Let’s take a look:

RPMGlobal Holdings Ltd (ASX: RUL)

RPMGlobal describes itself as a global leader in mining software solutions, advisory services and professional development for the mining industry. The idea is that RPMGlobal can enable clients to extract more value at every stage of the mining lifecycle.

Major clients include Rio Tinto Limited (ASX: RIO), BHP Group Ltd (ASX: BHP), South32 Ltd (ASX: S32) and Fortescue Metals Group Limited (ASX: FMG).

The software business has been making acquisitions to improve its offering to clients, in areas like environmental consultancy and emissions reporting.

While the RPMGlobal share price has declined by more than 25% since the start of 2022, its financial metrics are steadily improving.

Its annual recurring revenue (ARR) is growing as it signs more customers onto software subscriptions and now sits at $27.9 million. The FY22 half-year operating profit rose $3.9 million to $2.1 million, while net profit after tax (NPAT) increased $8.3 million to $1.9 million.

The company is expecting a ‘real’ lift in software sales once mining countries open their borders. The ASX growth share said that it’s best to sell software to global companies in person.

It points out that mining companies are accelerating the move to cloud solutions, so RPMGlobal believes it’s well-positioned to benefit from this structural change.

Frontier Digital Ventures Ltd (ASX: FDV)

Frontier Digital Ventures describes itself as a leading owner and operator of online marketplace businesses in fast-growing emerging markets. Those regions are Asia, Latin America, Middle East and North Africa. Its portfolio consists of 16 companies in 20 markets.

Over the last six months, the Frontier Digital Ventures share price has fallen by 40%.

However, the company’s quarterly revenue continues to climb on a rapid basis and it’s now seeing positive earnings before interest, tax, depreciation and amortisation (EBITDA).

In the quarter for the three months to March 2022, Frontier Digital Ventures’ share of revenue was $20.2 million, up 83% year on year. The ASX growth share’s quarterly portfolio EBITDA was a positive $0.7 million, it was the third consecutive quarter of positive EBITDA, with 12 of the operating companies seeing positive EBITDA.

The Frontier Digital Ventures founder and CEO Shaun Di Gregorio said:

Building on the strength of our online marketplace leadership positions, we continue to invest in our operating companies to accelerate their transaction capabilities and drive organic growth.

Our strong underlying marketplace business model combined with developing our transactional capabilities represents a compelling value creation opportunity for FDV’s shareholders. FDV remains in an enviable position with an attractive earnings growth profile and strong balance sheet.

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Frontier Digital Ventures Ltd and RPMGlobal Holdings. The Motley Fool Australia has recommended Frontier Digital Ventures Ltd and RPMGlobal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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