Sarah Travers
In the perpetual debate between growth and value stocks, investors often seek the holy grail of companies that achieve both robust growth and profitability. While this may seem elusive, a select few tech companies have managed to strike this delicate balance, demonstrating remarkable revenue expansion while maintaining solid profits. Here, we delve into four such standout companies: CrowdStrike, Duolingo, Shift4 Payments, and AppLovin.
CrowdStrike: Leading the Charge in Cybersecurity
CrowdStrike, a cloud-based cybersecurity platform, has witnessed a surge in revenue propelled by both existing customer expansion and new acquisitions. Offering a plethora of products termed “modules,” the company has seen a notable uptick in customers subscribing to additional modules, driving revenue growth.
Fiscal 2024 saw revenue exceeding $3 billion, marking a substantial 36% year-over-year increase. With a projected 30% growth outlook for fiscal 2025, CrowdStrike maintains a formidable position in the cybersecurity landscape, distinguished by its profitability.
Duolingo: Accelerating Language Learning
The language learning app Duolingo has experienced an exponential rise in paid subscribers, culminating in a staggering 44% revenue increase in 2023. With over 6.6 million paid subscribers by the end of the year, Duolingo’s growth trajectory remains impressive.
Forecasting revenue approaching $718 million for 2024, the company anticipates sustaining its robust growth momentum, solidifying its position as a leader in language education while maintaining profitability.
Shift4 Payments: Revolutionizing Fintech
Shift4 Payments, an often-overlooked player in the fintech arena, has garnered attention for its exceptional growth and profitability. Despite falling just shy of the 30% growth mark in 2023, the company’s fourth-quarter revenue surge and projected growth for 2024 signal its continued expansion.
With a focus on serving large venues and events, Shift4 Payments has witnessed a remarkable increase in payment volume, positioning itself as a formidable competitor in the fintech sector. Trading at a modest price-to-sales ratio, the company presents an enticing investment opportunity amid its impressive growth trajectory.
AppLovin: Powering App Monetization
AppLovin, with its portfolio of first-party apps and monetization software, has demonstrated remarkable growth in its software-platform revenue. With a staggering 46% increase in software revenue in 2023, reaching $1.8 billion, the company’s growth trajectory is undeniable.
Despite revenue stagnation in its app business, AppLovin’s software segment’s exponential growth has propelled profitability, with free cash flow surpassing $1 billion in 2023. Positioned for further growth in 2024, the company’s market valuation suggests it remains an attractive investment option.
Navigating the Future
In the dynamic landscape of technology stocks, companies that achieve both substantial growth and profitability are a rare breed. CrowdStrike, Duolingo, Shift4 Payments, and AppLovin stand out as examples of this dual achievement, with each company demonstrating robust revenue expansion alongside solid profitability.
While investors may be drawn to different aspects of these companies, whether it be cybersecurity, language learning, fintech, or app monetization, their collective success underscores the potential for sustainable growth within the tech sector. As the market continues to evolve, these companies offer compelling investment opportunities for those seeking growth coupled with profitability in their portfolios.
