The fastest-growing tech companies of 2020 look toward a post-Covid world


Zoom founder Eric Yuan speaks earlier than the Nasdaq opening bell ceremony on April 18, 2019 in New York City.

Kena Betancur | Getty Images

In a growth 12 months for know-how, a handful of U.S. software program and digital commerce companies powered by way of the pandemic with such explosive progress that their enterprise is now greater than twice as large because it was earlier than the world first knew about Covid-19.

The monetary outcomes are actually principally in for 2020, following earnings studies this week from video chat firm Zoom and cloud database vendor Snowflake. They have been two of the most important winners final 12 months, as the brand new world of distant work turned their already-popular merchandise into important companies for an rising quantity of giant and small companies.

Among publicly traded U.S. tech companies valued at $5 billion or extra, seven recorded income progress of not less than 100% final 12 months. Some of the companies report on a regular calendar 12 months, whereas others are on fiscal years, with the most recent quarter ending in January.

This 12 months is poised to look very totally different than 2020. Multiple vaccines are actually out there throughout the nation, lifting optimism that the financial system will reopen in coming months, permitting individuals to return to work and attend group gatherings. Investors are pondering what to anticipate from pandemic-fueled companies as some sense of normalcy returns.

Here are the tech companies that grew the quickest final 12 months and what they’re telling shareholders to count on in 2021.

Zoom

After income greater than doubled within the quarter that ended in April, progress solely accelerated, with gross sales greater than quadrupling in every of the following three durations in contrast with the year-earlier quarters. Zoom stated in its latest earnings report this week that the quantity of clients with 10 workers or extra jumped 470% in a 12 months to 467,100.

More startling than income progress is Zoom’s profitability. Zoom reported internet revenue for the total fiscal 12 months of $671.5 million, up greater than thirtyfold from the prior 12 months.

Zoom’s market cap soared as excessive as $162 billion in October earlier than a steep pullback in latest months to about $100 billion at Wednesday’s shut.

It’s solely pure that Zoom’s progress would average dramatically, however the firm remains to be projecting enlargement of over 40% in fiscal 2022, which ends in January.

“Although we remain optimistic on Zoom’s outlook, please note the impact and extent of the Covid-19 pandemic and people returning to in-person contact still remain largely unknown,” stated Zoom CFO Kelly Steckelberg stated on an earnings name. “Our outlook is based on our current assessment of the business environment.”

A motorcycle messenger carries a DoorDash bag throughout a supply in New York, Wednesday, Dec. 9, 2020.

Michael Nagle | Bloomberg | Getty Images

DoorDash

DoorDash was struggling earlier than the pandemic hit. The meals supply firm recorded a 2019 working loss of $616 million on $885 million in income, dropping cash on the common order.

But the sudden closure of eating places for in-person eating compelled tens of millions of eateries to enroll with DoorDash to achieve shoppers, who have been out of the blue ordering a lot of their meals by smartphone.

DoorDash’s progress was so dramatic that the corporate wound up going public in December with one of the biggest tech IPOs in historical past, elevating $3.4 billion. The enterprise mannequin additionally flipped, main the corporate to a 24% contribution margin within the fourth quarter and a narrower internet loss for the 12 months.

The firm faces a number of potential headwinds in 2021. The eventual reopening of eating places might result in a steep drop in deliveries, whereas a highly competitive market of know-how suppliers to eating places threatens to place strain on pricing.

Still, DoorDash is forecasting order quantity to extend by as much as 34% for the total 12 months. In its fourth-quarter earnings report, DoorDash stated it is not offering income steering as a result of, “we do not directly manage the business to this metric.”

Jen Van Santvoord rides her Peloton train bike at her residence on April 07, 2020 in San Anselmo, California.

Ezra Shaw | Getty Images

Peloton

The closure of gyms plus work-from-home necessities added as much as a monster 12 months for Peloton, which said last month that exercises within the December quarter quadrupled from a 12 months earlier.

Peloton’s most speedy quarter for progress was from July to September (its fiscal first quarter), when revenue jumped 232% as health hounds handled lockdowns throughout a lot of the nation. Sales greater than doubled for 3 straight quarters, and Peloton is not projecting a lot of a slowdown over the following two durations.

The larger problem is producing train cycles quick sufficient to satisfy demand.

“With many of our markets reaching record level Covid-19 cases and implementing new stay-at-home orders, we continue to see robust demand for our products,” Peloton stated in its fiscal second-quarter report in February. “As a consequence, we are carrying a substantial number of deliveries into Q3.”

Peloton stated it is investing over $100 million in air and ocean freight “to improve our order-to-delivery windows.”

Frank Slootman, CEO of Snowflake, on the day of its 2020 IPO. He is called a demanding chief, and straight shooter. “I’ve often been in board meetings at other companies and the CEO will put up a list of 10 priorities … well, that’s the same as having no priorities,” he just lately informed CNBC.

CNBC

Snowflake

Only two U.S. tech IPOs final 12 months have been larger than DoorDash’s, and one was Snowflake. The firm’s cloud database know-how was taking off effectively earlier than the calendar turned to 2020, however turned much more important in the course of the pandemic for companies that wanted to trace supply-chain disruptions, drug trials and well being information.

In its fourth-quarter earnings assertion on Tuesday, Snowflake reported 117% income progress after gross sales elevated by 119% within the prior interval. Its internet loss greater than doubled to $198.9 million.

Snowflake now counts 77 clients spending greater than $1 million a 12 months on product income, up from 41 in the identical quarter a 12 months earlier.

Snowflake is much less probably than different companies on this record to face a dramatic post-Covid slowdown as a result of ongoing demand for know-how permits companies to push knowledge to the cloud and run important analyses.

The firm stated product income, which accounts for 94% of complete gross sales, will soar by 81% to 84% in fiscal 2022.

Etsy

Masks, masks and extra masks. That was the story for Etsy early within the pandemic, when there was a scarcity of medical face masks. In the second quarter, the corporate bought $346 million price of masks, accounting for 14% of market income, after Etsy inspired third-party sellers to attempt their hand and do-it-yourself masks.

Etsy took benefit of all that new site visitors to its e-commerce app by surfacing objects within the classes of homewares, crafts, attire and wonder provides. By the end of the year, solely 4% of gross sales have been coming from masks, however income nonetheless surged 129%.

Etsy stated in its fourth-quarter report that fifty% of the “mask-only” consumers within the third quarter got here again the next interval to purchase one thing else. Finance chief Rachel Glaser referred to as that “a great signal that we are retaining and converting buyers who are coming to Etsy for some of their essential purchases.”

Growth is projected to stay within the triple digits by way of the primary quarter, as Etsy informed traders to count on income enlargement of 125% to 135%. However, the corporate stated it is not offering a forecast additional into the 12 months “given the continued uncertainties facing Etsy, e-commerce at large and global macroeconomic conditions that impact consumer spending.”

Digital Turbine 12-month rally

Digital Turbine

Digital Turbine is an $8 billion firm that entered 2020 price about $600 million. The inventory value jumped almost 700% last year and has rallied one other 60% to start out 2021, buoyed by better-than-expected outcomes for the December quarter.

Founded in 1998 and primarily based in Austin, Texas, Digital Turbine is a cellular software program firm, whose merchandise are preloaded onto Android telephones bought by carriers like Verizon and AT&T. The firm makes cash by promoting advert house to recreation builders, digital music suppliers and e-retailers, which discover the digital actual property useful as a result of it places their app proper in entrance of shoppers.

Digital Turbine greater than doubled income in 2020 by partnering with giant carriers outdoors the U.S. and thru an expanded cope with Samsung that will get its know-how into much more nations. As extra individuals flip to their telephones for leisure, meals supply and purchasing, Digital Turbine will get extra alternatives to earn cash.

In its earnings report final month, Digital Turbine offered steering solely by way of the present interval, which closes on the finish of March. The firm expects income to greater than double for a third consecutive quarter.

Last week, Digital Turbine stated it is shopping for cellular recreation advert firm AdColony for $400 million.

Jack Dorsey, chief govt officer of Square Inc., second proper, excursions the ground of the New York Stock Exchange (NYSE) in New York, U.S., on Thursday, Nov. 19, 2015.

Yana Paskova | Bloomberg | Getty Images

Square

Square’s 2020 was in contrast to any of its friends: Almost half its income got here from bitcoin.

Bitcoin income on the firm climbed to $4.75 billion final 12 months from $516.5 million in 2019. Excluding bitcoin, Square’s income rose solely 17%.

“Bitcoin revenue increased primarily due to an increase in the number of active bitcoin customers, as well as growth in customer demand and bitcoin prices,” Square stated in its annual report. The firm stated that in January, greater than 1 million clients purchased bitcoin for the primary time.

Trading goes by way of Square’s Cash App, which shoppers use to ship cash digitally and to take a position. Square, which obtained its begin providing {hardware} and software program to assist small companies settle for credit score and debit playing cards, has been closely selling the Cash App and has gained a ton of traction since enabling bitcoin purchases in 2018.

Square did not present any forecasts for income or revenue. The firm stated it plans to double its salesforce in 2021 and that prices for gross sales, advertising and marketing and administrative objects will improve 41%.

While bitcoin buying and selling has been a enormous boon for Square’s prime line, it is a low-margin enterprise as a result of the corporate makes cash solely from what quantities to a transaction price. Square stated that for bitcoin income, its gross margin, or the cash left after accounting for the prices of items bought, was 3.5%. That dragged down Square’s total gross margin for the 12 months to 29% from 40% in 2019.

“In future quarters, we recognize that bitcoin revenue may fluctuate as a result of changes in customer demand or the market price of bitcoin,” Square stated in its report.

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