At the small end of the Australian share market, there are a number of companies with the potential to grow materially in the future.
Three standouts are listed below. Here's why they should be on your watchlist:
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Mach7 Technologies Ltd (ASX: M7T)
The first small cap ASX share to watch is Mach7. It is a medical imaging data management solutions provider that allows users to create a clear and complete view of the patient. Users then use this to help them inform diagnosis, reduce care delivery delays and costs, and improve patient outcomes.
Thanks to the quality of this software and trends such as telehealth, demand for its offering is expected to grow strongly in the future. In respect to the latter, the company notes that telehealth services are creating a need for this type of technology. According to management, the company's total addressable market is estimated to be US$2.75 billion. This gives it a long runway for growth over the next decade.
Volpara Health Technologies Ltd (ASX: VHT)
Another small cap ASX healthcare share to watch is Volpara. It is a healthcare technology company that provides software which leverages artificial intelligence imaging algorithms to help with the early detection of breast cancer. Its key solution is the VolparaEnterprise product, which is supported by add-on solutions such as VolparaDensity, VolparaDose, VolparaPressure, VolparaLive, and VolparaPositioning.
Management estimates that its whole suite of products equates to US$10 per user, which is many times greater than its current ARPU of US$1.40. Combined with further market share gains, this could support significant revenue growth in the future. Positively, management is making great progress with this. It notes that some contracts during the last quarter were achieved with an ARPU of up to US$5.65.
Whispir Ltd (ASX: WSP)
A final small cap share to watch is Whispir. It is a cloud-based communications platform that uses cutting edge technology to bring all communications channels like email, text messaging and web chatting together in one easily accessible space. This helps businesses large and small to eradicate communication inefficiencies and redundancies so their staff and clients can connect in new and productive ways.
Demand has been increasing strongly for its offering, leading to rapid recurring revenue growth in recent years. The good news, though, is that Whispir is still only scratching at the surface of its total addressable market (TAM). At the end of the third quarter, the company's annualised recurring revenue stood at $50.3 million, which was up 20.3% over the prior corresponding period. This compares to its TAM of US$4.7 billion in the just United States market.
