If you are looking for 2 top ASX 200 tech companies to invest in with great growth prospects, in my opinion, you can't go past Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX).
Both have had very strong share price growth over the past 12 months, however I wouldn't let that put you off taking a stake in either of these 2 top quality companies.
Both companies are members of the WAAAX tech share consortium, alongside Xero Limited (ASX: XRO), Afterpay Ltd (ASX: APT) and WiseTech Global Ltd (ASX: WTC).
Altium
Altium has seen very strong share price growth over past 12 months, with its share price up a staggering 60% during that time.
Altium designs and utilises software which enables engineers to design printed circuit boards (PCBs) for a broad range of electronic devices, from computers to cars, and devices that that make up the 'Internet of Things'.
It continues to invest for growth in its key overseas markets of US and China. Innovation is very much key to Altium's business model, with a significant proportion of profits devoted to further research and development.
For the financial year ended 30 June 2019, Altium achieved strong revenue growth of 23% to US$171.8 million across all business units and all key regions.
Revenue guidance for FY20 given by management is in the range of US$205 million to US$215 million, while earnings before interest, tax, depreciation and amortisation (EBITDA) margin is in the range of 37% to 38%.
I believe that the growing need for electronics through the rise of smart connected devices will see continued strong demand for Altium's products over the next decade.
Appen
Appen is the global leader in providing data for use in machine learning and artificial intelligence (AI). This includes speech and natural language data, image and video data, text and alphanumeric data, and data to improve search and social media engines. It services major technology companies, automakers, and governments.
Appen continues to grow very quickly. For FY19, Appen's revenue was up 60% to $245 million, while EBITDA was up 81% to $46.3 million. The company continues to experience very high demand from many of the largest global technology firms.
Back in November 2019, Appen announced an increase to its 2019 full year earnings guidance driven by increases in monthly revenues and margins, and this lifted its share price. In particular, there is continued strong demand for its content relevance services.
One of Appen's strong competitive advantages is its well-established relationships with many of its key customers. Its customer base is highly concentrated with just a handful of customers accounting for the majority of its revenue base.
I believe Appen continues to be well placed to see continued strong growth over the next decade, due to the rapidly rising demand for AI products and machine learning markets. Appen's first mover advantage and entrenched market position mean it's in a strong position to fight off any major competitive threats.
