Despite the ongoing economic uncertainty created by the COVID-19 pandemic, there are many ASX technology companies that are growing rapidly to meet the demands of an evolving workforce. One such company is cloud-based communications platform developer Whispir Ltd (ASX: WSP). The Whispir share price has soared recently – up close to 90% since the beginning of July – after the company reported strong results for the June quarter.
The quarter brought record growth in net new customers, with the total number of customers increasing by 72 to 630 by 30 June. Annualised recurring revenues jumped 35.7% year on year to $42.2 million, while cash receipts were up 36.5% to $11.3 million. Prudent cost-cutting also meant that net cash used in operating activities was just $0.1 million during the quarter.
These were excellent results in challenging market conditions, and meant the company was on track to meet all of the key FY20 financial metrics outlined in its 2019 prospectus.
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What does Whispir do?
Whispir is a software-as-a-service (SaaS) company that develops integrated communications platforms for corporate clients. It provides a central platform from which its customers can create customisable templates for email, web and social media communications, as well as manage workflows and drive insightful reporting.
The company has adapted its product offering to meet the unique demands businesses have faced during COVID-19. It has developed templates clients can use to keep their stakeholders updated on their operations throughout the pandemic. It has now also rolled out additional templates designed to manage return-to-work scenarios as lockdown restrictions ease across the country.
As an example, the company reported that one of its clients, Mt Buller Ski Resort, had been using Whispir's platform and its communications templates to manage its contact tracing requirements.
Why I think the Whispir share price is a buy
Despite the recent rally in the Whispir share price, it remains a relatively small company with a market capitalisation of just over $400 million. The underlying business is still gathering momentum, with net new customer numbers increasing quarter on quarter.
A high proportion of its annualised revenues are also coming from recurring sources. These more reliable income streams give the company greater freedom to manage expenditures and budget more accurately.
Whispir also has a healthy balance sheet, with cash and equivalents totalling $15.2 million as at 30 June 2020. This means it has the cash on hand to pursue expansion opportunities, as well as ride out any short-term market volatility.
In my view, all this means that the Whispir share price is well-positioned to deliver sustainable growth over the longer term.
Alongside other under-the-radar ASX software companies like Objective Corporation Limited (ASX: OCL) and MNF Group Ltd (ASX: MNF), Whispir is shaping up as one of the success stories to come out of the COVID-19 'new normal'.
