ASX growth shares can be great opportunities because of their ability to deliver excellent compounding of their financials.
Businesses that are growing revenue and net profit quickly can mean their underlying value is also increasing quickly.
The two companies I'll highlight are delivering strong growth and whose futures I'm bullish about.
Image source: Getty Images
Temple & Webster Group Ltd (ASX: TPW)
Temple & Webster is the largest online homewares and furniture retailer in Australia. It sells over 200,000 products, though a significant majority of them are sent directly by suppliers, which enables the business to sell more products than it otherwise could. Plus, it means Temple & Webster's operating model is capital-light.
The FY25 result showed excellent numbers for the business, with revenue growth of 20.7% to $600.7 million, operating profit (EBITDA) growing 43.2% to $18.8 million (with an EBITDA margin of 3.1%), and net profit after tax (NPAT) surging 532.8% to $11.3 million.
Excitingly, revenue between 1 July 2025 and 11 August 2025 was up 28% year over year, and the EBITDA margin is expected to be between 3% and 5%.
As the ASX growth share wins over more customers from digitalisation and further marketing, I think it can achieve stronger profit margins.
With how the business is using technology to offer customers a better shopping experience and lower costs with more interactions done through AI-powered chat, I think it's a top business to watch.
I believe the business could become much larger as it builds towards $1 billion of annual sales, partially driven by the growth of its home improvement segment.
TechnologyOne (ASX: TNE)
This technology business provides software for various organisations, including government, councils, universities, and so on.
The company is growing strongly thanks to its existing loyal customer base which regularly pay more for the software thanks to TechnologyOne continuing to invest in upgrading the offering for subscribers. It aims to deliver 15% revenue growth from its existing client base each year, which would allow the business to double in size every five years.
Plus, the ASX growth share is regularly winning new clients, with a big push to expand in the UK, which has the potential to deliver significant earnings as the years go by.
Due to the nature of software economics, the business is able to deliver higher profit margins as it becomes larger. The company is expecting its profit margin to increase for the foreseeable future, enabling the bottom line to rise faster than revenue.
I think the business has a very compelling future and is one to watch, though it's not as cheap as it was a year ago.
