There are some ASX tech shares that could be worth watching in 2021.
The next 12 months could be another interesting period with COVID-19 still impacting the world.
Here are those ASX tech share ideas:
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is an electronic donation business. This year has seen accelerated growth during COVID-19 conditions of social distancing and restrictions. The main client base of Pushpay is large and medium US churches. Pushpay's technology allows the churches to stay connected with the congregation, one of the tools it offers is a livestreaming service.
In the current financial year, Pushpay is looking to more than double its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to a range of US$54 million to US$58 million.
The combined offering from Pushpay and Church Community Builder (called ChurchStaq) is proving popular with clients as it offers all of the relevant tools under a single product.
Over the long-term Pushpay is aiming to grow its annual revenue to US$1 billion, with an aim to significantly increase its market share.
Pushpay expects "significant operating leverage to accrue as operating revenue continues to increase, while growth in total operating expenses remains low." The company reported in its 2021 interim result that its gross profit margin grew from 65% to 68% and the EBITDAF margin went up from 17% to 31%.
The ASX tech share is now looking to expand with smaller churches across the US.
Fund manager Ben Griffiths from Eley Griffiths wrote about Pushpay: "Over the last 12 months it has become clear Pushpay is at an inflection point for both Fund cashflow and earnings. Under the stewardship of CEO Bruce Gordon, Pushpay has transitioned from a founder-led investment phase into an optimize/monetization phase. What is more surprising is the very conservative nature of the accounts (a rarity in small cap tech, outside Iress Ltd (ASX: IRE). We believe the next few years for Pushpay will be rewarding and that COVID-19 will accelerate the already entrenched trend to digital giving/engagement from cash."
At the current Pushpay share price it's valued at 25x FY23's estimated earnings.
EML Payments Ltd (ASX: EML)
This ASX tech share has a number of different payment services for clients to use. EML Payments has general purpose reloadable offerings such as gaming payouts with white label gaming cards, salary packaging cards, commission payouts and rewards programs. EML Payments also offers physical gift cards, shopping centre gift cards and digital gift cards. Finally, it offers virtual account numbers.
A couple of months ago EML Payments gave an update for the first quarter of FY21 which showed strong growth and improving trading conditions. Historically, the first quarter is the weakest quarter of the year.
In that first quarter, EML Payments said its gross debit volume (GDV) was $4.85 billion, which was up 51% compared to the prior corresponding period and 20% higher than the prior quarter, being the fourth quarter of FY20.
The growth in GDV helped EML generate revenue of $40.6 million, which represented growth of 75% compared to the prior corresponding period and up 20% compared to the fourth quarter of FY20.
In terms of profitability, EML generated $10 million of EBITDA in the FY21 first quarter, up 215% compared to the prior corresponding period and up 69% compared to the FY20 fourth quarter.
Gift and incentive volumes recovered significantly in the first quarter after the COVID-19 impacts, general purpose reloadable volumes grew significantly and virtual account numbers recovered to pre-COVID levels.
