ASX small-cap shares can have great growth potential if they're exposed to other countries beyond Australia. I'm going to outline two ASX stocks that I really like.
If a $1 billion business grows to $2 billion, it has doubled. If a $200 million business rises to $1 billion it has gone up 5 times. A small business isn't guaranteed to go up, but the good ones have lots of growth potential.
I think both of these ASX stocks are exciting.
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Airtasker Ltd (ASX: ART)
Airtasker runs a platform that connects people who need work with people willing to do that work. Tasks include removalists, furniture assembly, plumbing, pest removal, painting, accounting and photography.
The business has built a strong position in Australia, and it has growth ambitions in the US and UK.
It has reached profitability, which could be a catalyst for the business. The FY24 first-half result saw positive free cash flow of $0.1 million (up $4.7 million), positive operating cash flow of $1.4 million (up $7.6 million) and positive earnings before interest, tax, depreciation and amortisation (EBITDA) of $2 million (up $7.1 million).
In Australia, a media-for-equity partnership with Seven West Media Ltd (ASX: SWM) enabled Airtasker to build a "trusted household brand name and scale network effects in Australia."
Airtasker's partnership with Channel 4 in the UK provides Airtasker with $6.7 million in advertising media power. In HY24, the business saw a 30% jump in posted tasks in the UK. I think there's great potential for the ASX stock in the UK in the coming years.
It's expecting its sales funnel and operating efficiency to improve and deliver further positive impacts as consumer demand returns to growth.
I think global expansion is promising for the company, particularly if it can identify other local media partnerships.
Step One Clothing Ltd (ASX: STP)
Step One describes itself as a leading direct-to-consumer online retailer for innerwear. The idea is that the products are high-quality, organically grown and certified and sustainably manufactured.
It has operations in Australia, the UK and the US, the recent growth has been impressive internationally. If it can continue to achieve double-digit growth, then the future looks very bright.
Total revenue rose 25.5% to $45 million, with 38% growth of UK revenue to $14.6 million and 256% growth of US revenue to $4.1 million. The gross profit margin improved from 80.7% to 81.2%.
Overall HY24 EBITDA grew 35.6% to $10.1 million and HY24 net profit after tax (NPAT) grew 34.7% to $7.1 million. It's a great sign that profit rose faster than revenue.
The company is looking to do a number of things, including growing the women's line, expanding partnerships with retailers and organisations, expanding its distribution of the women's lines to the UK and improving its products and services for customers.
