Revenue up 169%: 2 ASX tech shares showing explosive growth

Growth stocks have roared back the past few weeks. Here is a couple that Cyan fund managers think can go even further.

| More on:
A man and a woman sitting in a technology-related work environment high five each other while the man wears headphones around his neck and the woman sits in front of a laptop.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX growth shares have made something of a comeback in the past couple of months.

But many experts are still warning investors to buy those companies with solid numbers behind them rather than speculative pre-revenue businesses. 

With this in mind, here are a couple of ASX shares that Cyan Investment Management holds that are growing spectacularly:

Melbourne games studio keeps churning out the hits

Cyan has been a longtime fan of electronic games developer Playside Studios Ltd (ASX: PLY).

After seeing the share price freefall 60% from February to June, the fund was pleased to finally see the unaudited full-year results last month.

"In FY22, Playside grew revenues 169% to $29 million, expanded its team considerably and has a spate of exciting game releases and milestones across FY23," said the Cyan portfolio managers in a memo to clients this week.

"And, importantly, has a very strong balance sheet backed by almost $38 million in net cash."

The ASX tech share has risen a stunning 54% since the June trough. But even after that, cash forms 33% of its market capitalisation.

"The business continues to expand with a newly formed publishing division announced in late July."

While the Melbourne company is not widely covered, both analysts surveyed on CMC Markets currently recommend Playside shares as a strong buy.

Cashing in on big-name clients jumping on a structural trend

Marketing technology provider XPON Technologies Group Ltd (ASX: XPN) is not exactly a household name yet.

But Cyan portfolio managers Dean Fergie and Graeme Carson are confident that it is serving in a space exactly where the business world is heading.

"We see this marketing technology business as a great way to gain exposure to the structural shift towards a requirement for businesses to build first-party (company-owned) data for digital marketing," read their memo.

"The material move away from personal privacy threats such as website tracking 3rd party cookies continues to accelerate as Microsoft Corporation, Google and Apple Inc — along with independent providers like Brave, Firefox and Opera — tighten their browser security systems."

Similar to Playside, Xpon shares halved in value this year until its June trough. Last month, Cyan welcomed its fourth-quarter financials.

"The most recent quarterly cash flow statement confirmed our confidence showing revenue growth of 134% year-on-year."

The Xpon share price has rocketed 55% since June.

The company only listed in December, which was, in retrospect, terrible timing for a high-growth tech stock.

The Cyan team reckons it can only look upwards and onwards from here, armed with a stable of big-name clients.

"Xpon already delivers ARR [annualised recurring revenue] of $16 million (+78% YoY) and expects significant organic growth going forward," read the memo.

"A relative newcomer to the ASX, we expect it to garner [the] attention of investors as revenue builds and new clients are signed up, adding to existing enterprise clients such as Domino's Pizza Enterprises Ltd (ASX: DMP), Flight Centre Travel Group Ltd (ASX: FLT) and Super Retail Group Ltd (ASX: SUL)."

Motley Fool contributor Tony Yoo has positions in Microsoft. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Microsoft, and Super Retail Group Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended Super Retail Group Limited. The Motley Fool Australia has recommended Apple, Dominos Pizza Enterprises Limited, and Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Growth Shares

A group of friends cheer around a smart phone.
Growth Shares

5 ASX growth shares rated as buys this month

Analysts have put buy ratings on these stocks. Let's see why they could be good options for growth investors.

Read more »

a man with a wide, eager smile on his face holds up three fingers.
Growth Shares

3 reasons this ASX growth stock is a top buy

Goldman Sachs thinks this stock could generate big returns.

Read more »

A man stands with arms crossed in front of a giant shadow of a body builder representing ASX small-cap stocks.
Growth Shares

3 of the best growth-focused ASX shares to buy in July

These ASX stocks look like potential market-beaters to me.

Read more »

happy investor, share price rise, increase, up
Growth Shares

These top ASX 200 growth shares could rise 20% to 45%

These growth stocks have been named as buys by brokers and tipped to rise strongly.

Read more »

Five young people sit in a row having fun and interacting with their mobile phones.
Growth Shares

5 ASX growth shares that could rise 10% to 40%

Brokers have put buy ratings on these stocks recently. Let's see what they are expecting from them.

Read more »

A man sees some good news on his phone and gives a little cheer.
Growth Shares

5 top ASX growth shares that could rise ~10% to 25%

Analysts are tipping big returns from these growth stocks.

Read more »

A woman shows her phone screen and points up.
Growth Shares

I'd buy these 2 top ASX growth shares in a heartbeat

Here are two stocks I’m bullish about.

Read more »

A man pulls a shocked expression with mouth wide open as he holds up his laptop.
Growth Shares

3 fantastic ASX growth shares to buy in July

Analysts are feeling very bullish about these stocks. But why?

Read more »