It's nearly April 2022. Could some of the leading ASX tech shares be contenders to consider next month?
Technology businesses have the capability of achieving good profit margins and pleasing growth.
These two ASX tech shares may be ones to consider in April:
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Adore Beauty Group Ltd (ASX: ABY)
Adore Beauty is the leading online retailer of beauty products in Australia. It sells thousands of products from hundreds of brands. It's scaling quickly in the $1.3 billion online beauty and personal care category, which is itself growing quickly.
In its FY22 half-year result, the company reported that revenue grew by 18% to $113.1 million and the gross profit margin increased by 0.6 percentage points to 33.1%.
The company is re-investing in strategic initiatives to drive sustainable, long-term growth. The success of this investing is coming through in the growth of customers. Active customers rose 13% year on year to 876,000, while returning customers surged 56%.
One focus is its content engagement strategy and loyalty, supporting engagement and retention. It's investing in its "owned" channels with media and content that support customers' discovery and fulfilment, such as podcasts. This reduces the reliance on competitive paid channels, which are showing "price volatility".
However, the Adore Beauty share price has fallen almost 50% in 2022.
Morgan Stanley currently rates the ASX tech share as a buy, with a price target of $4.
VanEck Video Gaming and Esports ETF (ASX: ESPO)
This is an exchange-traded fund (ETF) that gives investors exposure to the global video gaming and e-sports industry.
It is globally-focused with several countries having a weighting of over 1%: the US (42.6%), Japan (22.7%), China (18%), Singapore (4%), South Korea (3.9%), France (2.9%), Sweden (2.2%), Taiwan (2.1%), and Poland (1.5%).
However, there are gaming audiences and billions of players worldwide, not just where the businesses are listed. There are now reportedly more than 2.7 billion active gamers worldwide. E-sports is now achieving huge audiences, comparable to the size of the Olympics and FIFA World Cup.
Readers may have heard of some of the game makers in the ASX tech share's portfolio: Tencent, Nintendo, Activision Blizzard, Electronic Arts, Bandai Namco, Zynga, Take-Two Interactive, and Ubisoft. There are a total of 26 positions in the portfolio.
Between 2016 and 2023, global games revenue is expected to double to around US$200 billion. Since 2015, video gaming has achieved average annual revenue growth of 12%.
By 2023, the competitive video gaming audience is expected to reach 646 million people globally, driven in part by the rising population of digital natives. VanEck said that with an active, engaged and relatively young demographic, the stage is set for sustainable long-term growth for the global video gaming sector.
The ETF has an annual management fee of 0.55%.
