The number of tech shares listed on the ASX continues to grow each year.
The sector is still relatively small compared to the much larger United States market, which is home to tech giants such as Amazon and Netflix. However, there is a growing number of high-quality companies from the tech sector now listed on the ASX.
Here we examine two such tech shares I think are worth considering as possible additions to your share portfolio. They are: WiseTech Global Ltd (ASX: WTC) and Xero Limited (ASX: XRO).
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WiseTech Global
WiseTech is a leading global developer and provider of software solutions for the logistics industry. It is also a member of Australia's WAAAX cohort of tech shares .
As the global economy continues to grow, managing logistics has become more and more complex. This has enabled WiseTech to carve out a very successful and strong niche in the global logistics market. Its customer base now exceeds 15,000 and is spread across more than 150 countries.
WiseTech continues to grow at a rapid pace, in both size and scale, via organic growth and targeted acquisitions. It has made a number of acquisitions across Europe, Asia, Australasia, and the Americas since 2018.
The company downgraded its earnings forecast for FY 2020 in February to year-over-year growth of between 5% and 22%. This represented slower growth than the company has previously achieved. WiseTech was significantly impacted by the coronavirus pandemic with manufacturing and economic trade slowing considerably around the world. However, global markets are now beginning to open up which, I believe, elevates the company's future growth prospects.
Xero
Another ASX tech share I think is worth taking a closer look at is Xero. Xero is an online accounting software provider that targets small businesses. Its growth story over the past decade has been quite remarkable. Two of Xero's key differentiators are that the product is affordable and user-friendly, making it ideal for small business owners. In comparison, many of the software packages from its competitors can be expensive and more complex to use.
Xero delivered another strong set of numbers for the 12 months ending 31 March 2020. Revenue increased by 30% to NZ$718.2 million. All geographic segments including Australia, New Zealand, the United Kingdom, and North America performed strongly. Growth was driven by a 2% increase in average revenue per user. Overall subscribers also continued to grow solidly, increasing by 26% to reach 2.285 million. Due to its expanding economies of scale, Xero's gross margin also continues to improve and increased by 1.6% to reach 85.2%.
Furthermore, Xero is transitioning to become more than just a cloud accounting platform. It now offers a broad spectrum of tools and services to help manage a small business in its entirety, as opposed to only its finances.
Foolish takeaway
While the ASX 200 may not have the same sort of scale as the Nasdaq, I believe it still presents investors with many exciting opportunities to purchase tech shares poised for considerable future growth. WiseTech and Xero are two such shares that I would be happy to hold for at least the next 5 years and beyond.
