ASX small-cap shares are some of the most exciting investments because of the excellent compounding potential.
A business like Commonwealth Bank of Australia (ASX: CBA) may find it challenging to double its profit quickly because of how large it already is and the difficulty in expanding its market share further.
However, small businesses are much earlier on in their growth journeys and could deliver significant returns.
It's the companies growing rapidly that could be ones to watch closely. Let's look at the two with explosive growth.
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Cogstate Ltd (ASX: CGS)
This ASX small-cap share describes itself as a neuroscience technology company that's optimising brain health assessments to advance the development of new medicines and to enable earlier clinical insights in healthcare.
It provides computer-based cognitive tests across a growing list of domains and support partners for delivering electronic clinical outcome assessment solutions to replace "costly and error-prone paper assessments".
The company's offering is clearly resonating. In FY25, the company delivered year-over-year revenue growth of 22% to $53.1 million.
Pleasingly, the company's profit margins are improving, which suggests the bottom line can expand at a much faster rate than the top line over the long-term. FY25 operating profit (EBITDA) climbed by 72% to $16 million, while net profit before tax soared 96% to $13.9 million.
It also reported a strong start to FY26, with $14.1 million of new sales contracts executed since 1 July 2025, taking revenue under contract that's expected to be recognised in FY26 to $35.9 million.
The company plans to continue investing for growth, which I think bodes well for the ASX small-cap share.
Smart Parking Ltd (ASX: SPZ)
Smart Parking describes itself as a technology innovator within the parking management industry. It has offices in the UK, Denmark, Germany, Australia, New Zealand and the US.
Its managed services division operates and manages tens of thousands of car park spaces using automatic number plate recognition and licence plate recognition. It fully integrates parking, guidance, payment and analytics with other services.
The company is delivering strong growth for shareholders, with revenue rising 42% to $77.2 million, adjusted operating profit (EBITDA) climbed 47% to $20.5 million, adjusted free cash flow up 15% to $13.3 million and earnings per share (EPS) growth of 37% to 1.45 cents.
The ASX small-cap share also announced a strong start to FY26, with July 2025 showing revenue growth of 73% to $9.8 million and adjusted EBITDA surged 60% to $3 million.
The company could grow significantly thanks to a combination of winning more sites in existing markets, entering new countries and growing margins.
