The S&P/ASX 200 Index (ASX: XJO) and All Ordinaries Index (ASX: XAO) have seen a significant improvement recently following a series of challenging sessions this month. With the United States tech sell off largely behind us, October could be shaping up as an opportunistic month for ASX tech shares.
2 ASX tech shares to watch in October
1. Selfwealth Ltd (ASX: SWF)
Selfwealth is Australia's first peer-to-peer investing platform with a simple, flat-fee brokerage fee. The company charges $9.50 per trade on the ASX regardless of position size. Its unique product and quality customer service has seen revenues soar 313% to $8.6 million in FY20 with a 235% increase in active traders to 46,445 and an improved cash burn of $147,000 down from $3.4 million in FY19. The company has seen a sharp increase in active traders through the pandemic and sees itself as a young brand developing into one of Australia's most trusted investment platforms.
Selfwealth will launch US trading in the December quarter. The US market is the most popular international market with Australian investors and the company intends to maintain its highly-competitive fee structure. I believe the announcement and commencement of US trading could be the catalyst to take the Selfwealth share price to the next level. While Selfwealth is a smaller company relative to most household ASX tech shares, it could become a leader in the investing space.
2. Tyro Payments Ltd (ASX: TYR)
EFTPOs provider Tyro Payments has had a challenging year amidst COVID-19. Its FY20 results highlight a 15% increase in transaction value to $20.1 billion, 11% increase in merchants to 32,176 and 11% increase in total revenue to $210.7 million. It finished FY20 with an earnings before interest, taxes, depreciation and amortisation (EBITDA) loss of $4.4 million compared to the $8.6 million loss in FY19. The company maintains a strong liquidity position of $188.3 million in cash.
Tyro has expanded its product offerings to include e-commerce transactions, telehealth transactions such as Medicare benefits and Alipay. Tyro is also involved in banking operations providing SMEs cash advances, deposit accounts and term deposit facilities. Its banking operations saw a 38.1% increase in revenue to $1.8 million and gross profits of $1.3 million.
Tyro has been providing the market with weekly transaction value updates to provide transparency as to the impact of COVID-19. I believe the anticipated relaxation of lockdown measures in Victoria and reopening of borders could see a significant improvement in Tyro's transaction volumes. The company's strong cash position, product verticals and anticipated transaction volume recovery could be a catalyst for a strong share price performance moving into October. I believe the Tyro share price deserves a place on any ASX tech share watchlist.
