As the earnings season unfolds, attention turns to several small to mid-sized ASX companies that are anticipated to deliver robust performance. Investors and market analysts are keenly observing the expected results of these companies, which have shown significant promise. Here’s an in-depth look at two notable ASX growth stocks that are anticipated to outperform expectations:
Life360 Inc (ASX: 360)
Life360 Inc, a prominent player in the location technology sector, is gearing up to release its second-quarter results soon. The company's performance in this quarter is projected to include a revenue of US$88.9 million and adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of US$6.5 million. These forecasts exceed the consensus estimates, which are US$85.4 million in revenue and US$2 million in EBITDA.
Life360’s monthly active users are expected to hit 69.6 million, surpassing the consensus estimate of 67.4 million. Additionally, the number of paying circles—groups of users paying for the company’s premium services—is anticipated to reach 2.01 million, exceeding the forecast of 1.94 million.
Several key aspects will be closely watched in Life360’s upcoming report:
- Subscription Growth Outlook: Analysts will be looking at the growth trajectory of subscriptions for the latter half of 2024. This follows a period of strong performance in the second quarter, where the company saw impressive momentum in acquiring new subscribers.
- Advertising Revenue and Margins: There will be a focus on the company’s advertising revenue outlook, including expectations for top-line growth and profit margins. Additionally, details on how Life360 is monetizing its user base through advertising will be scrutinized.
- Long-Term Margin and Growth Plans: Insights into the company's long-term margin framework will be important. This includes any commentary on achieving statutory EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) profitability in FY25 while continuing to invest in long-term growth initiatives.
IDP Education Ltd (ASX: IEL)
IDP Education Ltd, a leading company in language testing and student placement services, is also expected to report strong earnings results. For FY 2024, the forecast includes revenue of $1,030.7 million and net profit after tax of $153.1 million. These figures are above the consensus estimates of $1,028.8 million in revenue and $149.6 million in net profit, indicating a solid performance.
The anticipated earnings are likely to support a dividend payout higher than initially expected, with a projected dividend of 39.7 cents per share compared to the consensus estimate of 38.2 cents.
Several critical elements will be observed in IDP Education’s earnings report:
- Indicators for Student Placement Business: Attention will be given to how regulatory changes in Australia, Canada, and the UK are affecting the student placement business. Analysts will look for indications of potential market share gains and any offsetting factors related to market softness.
- IELTS Volume and Recovery Outlook: Insights into the expected volume of IELTS (International English Language Testing System) tests and the outlook for recovery will be important, especially given the recent regulatory uncertainties impacting students from regions such as India and South Asia.
- Cost Management and Efficiency: Analysts will evaluate the company's cost reduction strategies and their impact on operational efficiency. This includes how well the company is implementing its cost reduction program for FY25 and whether these initiatives are affecting its operational footprint.
Life360 Inc and IDP Education Ltd stand out as promising candidates for strong performance during the current earnings season. These companies are anticipated to deliver results that exceed market expectations, making them key points of interest for investors looking to capitalize on potential growth. As these companies continue to perform well, they represent valuable opportunities in the ASX market.