I believe there are a good number of shares at the small end of the Australian share market that have the potential to grow into much larger entities in the future.
Three small cap shares which I think ought to be on your watchlist are listed below. Here's why I think they have very promising futures:
Bigtincan Holdings Ltd (ASX: BTH)
Bigtincan is a fast-growing provider of enterprise mobility software. Its software allows businesses to increase their sales win rates, reduce costs, and improve customer satisfaction. This is achieved through improvements in mobile worker productivity. Demand for Bigtincan's software has been growing strongly in recent years and this has continued to be the case during the pandemic. As a result, the company advised remains well-placed to deliver on its 30% to 40% organic revenue growth target in FY 2020. I expect more of the same in FY 2021.
Mach7 Technologies Ltd (ASX: M7T)
Mach7 is a medical imaging data management solutions provider which offers software that helps inform diagnosis, reduce care delivery delays and costs, and improve patient outcomes. Its software is being used by healthcare institutions across the world, including in markets such as Hong Kong and Qatar. Demand for its software has been very strong in FY 2020, leading to Mach7 reporting a 158% increase in first half revenue to $9.1 million. Since then the company has announced the acquisition of Client Outlook. The acquisition of this leading provider of enterprise image viewing technology increases Mach7's total addressable market from US$0.75 billion to US$2.75 billion.
MNF Group Ltd (ASX: MNF)
A final small cap to watch is MNF Group. It specialises in Voice over Internet Protocol (VoIP) technology, which is used to convert analogue audio signals into digital data that can be sent over the internet. Demand for its services has been very strong during the pandemic. This is because as more people work or study from home, the demand for information and connectivity through technology has increased. In fact, demand has been so strong, in April MNF Group was able to reaffirm its full-year guidance for earnings before interest, tax, depreciation and amortisation (EBITDA). It expects EBITDA of between $36 million and $39 million in FY 2020, which represents 32% to 43.4% year on year growth.
