All investors can imagine the wealth they could have created for themselves had they purchased shares in a leading technology companies like Microsoft, Google or Technology One Limited (ASX: TNE) when they first floated.
In fact, even if you'd owned shares in the $1.8 billion Technology One for just the past decade you'd have experienced a gain of around 770% not including dividends.
Meanwhile, inclusive of dividends the compound average growth rate from owning the stock over the last 10 years has been a phenomenal 28% per annum!
While the outlook remains bright for Technology One, as the company grows larger, sustaining such high growth will naturally become more difficult.
Time to find the next winner
The following three smaller tech stocks could, in time, grow to have market capitalisations of over $1 billion and along the way provide seriously good returns for long term shareholders.
GBST Holdings Limited (ASX: GBT): Market cap $291 million
GBST is a leading software provider to the financial services industry with a focus on financial services transaction processing, asset administration and asset values.
The group's leading product is called GBST Shares. This software helps stockbrokers and clearers to manage and execute transactions with the ASX and is widely used throughout middle and back office equities system in Australia.
Over the past five financial years (FY), earnings before interest, tax, depreciation and amortisation (EBITDA) have roughly doubled from $13.7 million to $24.5 million, while the total shareholder return (TSR) has been a staggering 41.4% according to data provided by CommSec.
Class Ltd (ASX: CL1): Market cap $390 million
Having only listed in December 2015, this leading provider of administration software to self-managed super funds (SMSF) administrators is not on the radar of many investors (yet!).
With Class releasing its inaugural set of full year results as a listed company this week, now is arguably a great time to become more familiar with this stock.
Having reported a 45% increase in revenue to $22.6 million and a 71% increase in net profit after tax to $5.8 million for the 2016 financial year, its obvious that the group is enjoying strong profit growth.
With a tailwind from a growing superannuation system and the continuing popularity of operating SMSF structures, Class's growth pipeline appears very attractive.
Gentrack Group Ltd (ASX: GTK): Market cap $225 million
Gentrack has developed a suite of niche software products for the electricity, gas utilities and airport sectors.
The group's software products are described as "mission critical" and once adopted they are likely to become deeply embedded within an organisation's IT system.
At Gentrack's recent interim results, the group reported a 26% rise in revenue and a 21% jump in profit which suggests that it too is enjoying above average momentum.
