As well as being home to countless blue chip shares, the Australian share market is home to a good number of promising small caps.
Three small cap shares that could be worth adding to your watchlist are listed below. Here's what you need to know about them:
Damstra Holdings Ltd (ASX: DTC)
The first small cap to watch is Damstra. It is a growing integrated workplace management solutions provider. Its cloud-based workplace management platform is used by businesses globally to track, manage, and protect their workers and assets. Demand has been growing strongly in recent years and has continued in FY 2021. For example, during the first half of FY 2021, the company reported a 29.6% increase in revenue to $13.3 million. Given that management estimates that its total addressable market will be worth US$20 billion by 2022, it still has a very long runway for growth.
Nitro Software Ltd (ASX: NTO)
Another small cap to watch is Nitro Software. It is a growing software company driving digital transformation in businesses around the world across multiple industries. Nitro's key solution is the Nitro Productivity Suite. This provides integrated PDF productivity and electronic signature tools to customers via a software-as-a-service and desktop-based software solution. Demand for its offering was stronger than expected in FY 2020, leading to Nitro reporting a 64% increase in annualised recurring revenue (ARR) to $27.7 million. Positively, similarly strong growth is expected in FY 2021. Management's guidance for the year ahead is ARR in the range of $39 million to $42 million. This will mean year on year growth of 41% to 51.6%.
Universal Store Holdings Limited (ASX: UNI)
Another small cap to watch is Universal Store. It is a fashion retailer aiming to deliver a frequently changing and carefully curated selection of on-trend products. It has been a very strong performer during the pandemic. For example, during the first half of FY 2021, Universal Store reported a 23.3% increase in sales to $118 million and a 63.6% increase in underlying net profit after tax to $21.1 million. It then followed this up with an equally strong third quarter update. Looking ahead, the company appears well-positioned for growth thanks to the popularity of its stores, its growing online business, and its expansion plans. In respect to the latter, management sees opportunities to double its store footprint in the future.
