Investors have long been debating a question: whether to choose growth stocks or value stocks.

Generally, growth stocks have the advantage of significant growth potential, but the downside may be unstable profitability, hence higher risk; while value stocks have the advantage of stable profitability and lower risk, the downside being limited growth potential.

It is widely believed that rapidly growing companies inevitably need substantial cash burn to expand market share, and only when the company reaches a certain scale can profitability be considered.

However, in reality, some companies can maintain profitability while experiencing rapid growth, although such companies are not common.

According to the Motley Fool, there are four technology companies with revenue growth rates exceeding 30% and achieving net profits, they are CrowdStrike, Duolingo, Shift4 Payments, and AppLovin.

What makes these four companies special? This article will introduce these four companies to everyone in detail.

The Leading Company in Cybersecurity: CrowdStrike（CRWD）

CrowdStrike emerged as a rising star in the cybersecurity field, founded in 2011. It has risen to become one of the top players.

CrowdStrike focuses on endpoint defense, offering SaaS software without dealing with firewalls or hardware sales.

Their top product is Falcon, a security threat intelligence platform known for being lightweight and proactive.

In Q4 of the 2024 fiscal year, CrowdStrike made $845 million in revenue, up 32.63% year-on-year, with a net profit of $54.941 million, up a whopping 212.28%, and a net profit margin of 6.5%.

Though their revenue growth rate is slowing down, it's normal as they grow bigger.

CrowdStrike turned profitable in Q1 of 2024 and has been profitable for four quarters straight, with earnings going up steadily.

Language Learning Platform: Duolingo (DUOL)

Duolingo (DUOL) is a language learning platform.

On mobile screens, the Duolingo app features a big-eyed owl as its icon, inviting users to learn over 40 languages from around the world.

What distinguishes this language-learning platform is its ability to make learning feel enjoyable rather than burdensome, with tens of millions of users integrating this addictive app into their daily routines. As of the end of 2023, Duolingo boasted 26.9 million daily active users, reflecting a remarkable 65% year-on-year surge.

Duolingo's revenue model centers on providing free language courses while leveraging revenue from advertisements and premium subscriptions. According to its Q4 2023 financial report, Duolingo recorded a revenue of $151 million, a 45% year-on-year increase, with a net profit of $12.12 million, marking a 187% year-on-year growth and a net profit margin of 8%, slightly higher than that of CrowdStrike.

Like CrowdStrike, Duolingo has recently achieved profitability, recording its first-ever profitable quarter since going public in Q2 2023 and maintaining profitability for three consecutive quarters.

The key to the company's profitability lies in an increasing number of users willing to pay for the platform. As of Q4 2023, Duolingo had 6.6 million subscription-paying users, with a subscription penetration rate increasing from 7.8% the previous year to 8.3%.

Duolingo expects continued growth in the coming year, with management forecasting full-year revenue of nearly $718 million for 2024, expecting at least a 35% year-on-year growth.

Benefiting from its rapid revenue and profit growth, Duolingo's stock price has surged by 64% over the past year.

*The stock price performance over the past year is calculated based on the closing prices from March 30, 2023, to March 27, 2024.

Financial Technology Company: Shift4 Payments (FOUR)

Shift4 Payments is a well-established financial technology company founded in 1999. However, the company didn't go public on the New York Stock Exchange until 2020.

Different from other payment companies, Shift4 focuses on serving the restaurant and hospitality industries and is expanding into the high-end sports events sector.

The company's client base includes numerous well-known casual dining chains, upscale hotel chains, large entertainment venues, and sports event-related venues, and ticketing companies.

Therefore, from a business perspective, Shift4 resembles more of a tourism concept stock, with its performance closely tied to people's travel habits; for example, during the pandemic, the company's performance may be more significantly impacted.

According to its Q4 2023 financial report, Shift4 generated a revenue of $705 million, marking a robust 31.19% year-on-year increase. However, its net profit plummeted by 50% year-on-year to $19.2 million, with a net profit margin of 2.7%, trailing behind CrowdStrike and Duolingo.

It's worth noting that Shift4's stock performance over the past year hasn't been favorable, declining by 10%. According to the Motley Fool, Shift4 is considering selling the company, but it hasn't received the desired offers yet, so investors need to pay attention to potential risks.

*The stock price performance over the past year is calculated based on the closing prices from March 30, 2023, to March 27, 2024.

Game Advertising Platform: AppLovin (APP)

AppLovin, founded in 2011, emerged as a game advertising platform and went public on the NASDAQ in 2021.

Initially serving as an advertising hub, it aided mobile game developers in user acquisition and traffic monetization. Later, it ventured into game development, making it a dual force within the mobile gaming ecosystem—both an advertising platform and a game developer.

Thus, AppLovin's revenue streams bifurcate into two: App revenue and Software platform revenue.

According to the Q4 2023 financial report, AppLovin generated a revenue of $953 million, marking a 35.73% year-on-year increase, with a net profit of $172 million, reflecting a 316.61% year-on-year growth, and a net profit margin of 18%, making it the most profitable among the four companies.

AppLovin can be seen as a turnaround stock. In 2022, its stock price plummeted significantly due to slowing revenue growth and increased losses.

However, in 2023, the management found the right direction by leveraging AI to empower its advertising platform. This not only led to rapid growth in the advertising platform business but also enhanced profitability.

Compared to the other three stocks, AppLovin had the best stock performance over the past year, with its stock rising by 359%.

The company forecasts that its Q1 2024 revenue will range between $955 million and $975 million, representing a 33.57%-36.36% year-on-year growth.

*The stock price performance over the past year is calculated based on the closing prices from March 30, 2023, to March 27, 2024.

Potential Risk:

Despite the fast growth and profitability of these four tech companies, investors should keep an eye on potential risks.

1. Growth Slowdown: There's a risk that these companies might not keep growing as fast, especially if the market gets crowded or competition heats up.

2. High Expectations: The market may have overly high expectations for the future performance of these companies. If the companies fail to meet the anticipated growth targets, it could lead to investor disappointment and a decline in stock prices.

Additional Disclosures: This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, opinions or forecasts provided herein will prove to be correct.