The ASX small-cap stock FINEOS Corporation Holdings PLC (ASX: FCL) could be an exciting opportunity, even though it has already risen by more than 100% over the last year, as the chart below shows.
FINEOS describes itself as a global software company that provides software to the employees benefits and life, accident, and health industry. It provides a number of products, including new business, billing, claims, absence, and policy administration. It aims to provide operational efficiencies, increased effectiveness, and excellent customer care.
The company is recovering from its fall in 2022, and it's now delivering very pleasing growth.
The ASX small-cap stock is growing
In the three months to September 2025, the business noted that revenue growth, in combination with platform and operational efficiency gains, continues to support expectations of positive free cash flow in FY25.
Positive free cash flow is a significant milestone for any business, but particularly for a software business, because with its digital business model, it can lead to a ramping up of margins.
In the 2025 year to date, its cash receipts were up 8.8% compared to the same period in FY24.
The business also highlighted that its North American business pipeline remains strong, which I believe is a very positive sign for the company's future growth, as North America is a suitable market for the ASX small-cap stock to continue expanding in.
With that 2025 third-quarter update, the CEO and founder, Michael Kelly, said:
Our performance continues to highlight the strategic importance of the FINEOS Platform with another North American client committing to transitioning to our SaaS-based FINEOS Claims solution. While quarterly cash receipts are lower compared to the pcp, year-to-date receipts have increased by 8.8% compared to FY24, reflecting the growing contribution of Annual Recurring Revenue (ARR) to our overall revenue mix.
Strengthening profit margins
In August, the company reported a number of positives in the 2025 half-year result, including a strengthening of the gross profit margin to 76.6%, up from 73.6%. This helped operating profit (EBITDA) improve by 80.1%, with the EBITDA margin improving to 19.6%, up from 11.3%.
If the company can continue growing its revenue, then I believe the profit margins could rise materially, as we've already seen with the EBTIDA margin from the HY25 result.
It's expecting to hit an EBITDA margin of 25% in FY27 and 40% in FY29. By FY29, the ASX small-cap stock's gross profit margin is predicted to reach 80%, according to the company. Its profit margins are partly expected to rise thanks to keeping a control on cost growth.
This is definitely one business to watch, among others.
