I think these ASX small-cap shares look too good to ignore

Investors need to hear about these little-known stocks.

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The ASX small-cap share space is a great place to go hunting for opportunities that not many people have heard of.

Companies that aren't on the market's radar may be underrated and little researched.

I like businesses that are increasing revenue over the long term and working on growing their profitability.

The two companies I'm going to cover could be strong contenders to make good returns over the next five years.

Siteminder Ltd (ASX: SDR)

Siteminder says it's the world's leading open hotel commerce platform, with a key feature being the ability to open up every hotel to online commerce. Tens of thousands of hotels across 150 countries have used Siteminder to sell, market, manage and grow their business.

The world reopening after COVID-19 has been a real boost for the company, and it's growing its market share as it wins over more clients.

In FY23, total revenue increased by 30.5% to $151.4 million. Subscription revenue rose 15.9%, with fourth-quarter growth accelerating to a rise of 18.2%. Transactional revenue grew 61.2% in FY23, with the number of transaction products subscribed by customers increasing by 53% to 19,900.

Annualised recurring revenue (ARR) grew by 33.5% to $173.1 million, suggesting there could be more revenue growth to come in FY24.

Profitability is looking good for the company, with operating margins improving.

The underlying subscription gross profit margin improved by 158 basis points (1.58%) to 83.1% in FY23 and reached 84.1% in the second half of FY23. The underlying gross profit margin improved by 219 basis points (2.19%) to 34.8% in FY23 and reached 35.7% in the second half.

The ASX small-cap share is demonstrating a mix of both revenue and rising margins, which is what I want to see. This helped the underlying earnings before interest, tax, depreciation and amortisation (EBITDA) improve from a loss of $14.6 million in the first half to a loss of $7.4 million in the second half.

It's targeting organic revenue growth of 30% in the medium-term and it's expecting to be underlying EBITDA profitable and underlying free cash flow positive in the second half of FY24. I think it's getting closer to hitting an inflection point for profitability.

Lindsay Australia Ltd (ASX: LAU)

This business describes itself as an "integrated transport, logistics and rural supply company and a leading national service provider to the agriculture, horticulture and food-related industries." One of its main services is helping farmers with a variety of services to grow, package, transport and distribute their produce throughout Australia and the world.

It had a very strong performance in FY23, operating revenue increased 22.3% to $676.2 million, underlying EBITDA grew by 50.2% to $90.3 million and underlying earnings per share (EPS) increased 95.3% to 12.1 cents. It grew its full-year dividend by 53% to 4.9 cents per share.

There was increased customer demand for freight services on both road and rail, with strong volumes in both the horticultural and produce market.

When the company announced its FY23 result, it said that market dynamics remain positive, it's anticipating further industry consolidation and it's positioned to capitalise on those market opportunities after lifting its capacity.

In FY24, the business is expecting "enhanced operating efficiencies, reducing core business costs, and pursuing value-adding greenfield, transformational, or bolt-on acquisition opportunities for sustainable growth."

The Lindsay share price is 20% cheaper than it was on 20 July 2023. The ASX small-cap share is valued at just 8 times FY24's estimated earnings and it could pay a grossed-up dividend yield of 7.7% in FY24 according to Commsec.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Lindsay Australia and SiteMinder. The Motley Fool Australia has positions in and has recommended SiteMinder. The Motley Fool Australia has recommended Lindsay Australia. 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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