The ASX tech share Bravura Solutions Ltd (ASX: BVS) could be an exciting option to invest in because of its reduced valuation and outlook for profit growth. Like many other stocks, the ASX small-cap share has suffered a rapid share price drop in the last few weeks.
The chart below shows the Bravura share price has declined by 20% since mid-February 2025, despite the market seemingly loving the company's recent FY25 half-year result.
Bravura describes itself as a leading provider of software solutions for the wealth management, life insurance, and funds administration industries. It aims to provide clients with "functionally rich" solutions that enable modernisation, consolidation, and simplification. Bravura has offices in Australia, New Zealand, the UK, Europe, Africa, and Asia.
In the recent result, the company reported operating profit (EBITDA) of $23.8 million (up $15.9 million) and underlying net profit after tax (NPAT) of $11.3 million (up $13 million).
The investment team at Forager believes the ASX small-cap share is an opportunity, so let's look at why.
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Promising progress for the ASX small-cap share
After seeing the result, Forager said the tech company had shown its "continued ability to grow high-quality recurring revenue, once again upgraded guidance and locked in the return of more cash to shareholders."
Forager pointed out that while overall revenue was flat for the six-month period, recurring revenue rose 7% and now makes up more than 60% of total revenue. It's pleasing to the investment team that Bravura has been "steadily shifting toward a more predictable, higher-quality revenue and earnings base," which can help make the business more valuable.
Forager liked seeing that the 3% further upgrade to revenue expectations for FY25 led to a 14% improvement in cash operating profit (EBITDA) guidance. Sales in the Australian digital advice business, alongside UK clients' increasing demand, drove the revenue upgrade.
Some of Forager's final comments on the business included:
In the context of what has already been achieved on revenue and costs, second half expectations from management look imminently achievable, if not outright conservative.
So far, this improvement has been achieved without winning much new work. The next leg in Bravura's growth may well come from deploying its leading products into large new customers.
Bravura Solutions share price snapshot
Despite the recent decline, the ASX small-cap share has gone up by close to 60% over the past 12 months.
