After making many investors wealthy last decade, technology stocks have really gone off the radar over the past couple of years.
But with interest rates nearing or even passing their peak, they might be set for a roaring revival.
Here are two ASX tech shares that the team at LSN Emerging Companies Fund loved coming out of the recent reporting season:
Improved profitability and cash flow
The Life360 Inc (ASX: 360) share price has gone gangbusters this year, rocketing 82% so far in 2023.
The company backed up the hype with an admirable showing in reporting season.
"Life360 Inc reported an excellent 1H23 result and upgraded its EBITDA guidance for FY23," LSN analysts said in a memo to clients.
"The result demonstrated ongoing strength in all key metrics, with monthly active users (MAU), paying circles and subscription revenues all improving."
The company has been executing a transformation from a cash-burning startup to a more mature cash flow positive business, in response to the stock market's changing tastes for tech shares.
"Subscription gross margins were up strongly to 88% as they benefit from price increases over the last 12 months.
"Life360 continues to manage its cost base closely with operating expenses down 6% quarter on quarter driving improved profitability and operating free cash flow."
The US tech company is a darling among professional investors at the moment.
All six analysts currently surveyed on CMC Markets rate Life360 as a strong buy.
'Highly cash flow generative'
Believe it or not, utilities software provider Hansen Technologies Limited (ASX: HSN) has been around for more than 50 years.
Over that time, it has made many acquisitions to expand. But the latest reporting season also surprised the market with a different side to the business.
"Hansen Technologies delivered a strong FY23 result with revenue and margins ahead of company guidance, whilst FY24 guidance for organic growth of 5-7% was above expectations."
The Melbourne outfit is definitely a rare example of a mature tech company.
"Hansen is highly cash flow generative and in FY23 produced another period of strong cash flow, which saw the balance sheet move into a net cash position."
But its traditional method of growth has not been forgotten either.
"Hansen has a long track record of value accretive M&A deals and have identified a range of target opportunities in the $30 million to $500 million range, which will [complement] the solid organic growth over the short to medium term."
Like Life360, the Australian company is also well liked among the professional community.
According to CMC Markets, six out of seven analysts recommend buying the tech stock.
