One of the main goals of investing is to grow your wealth over time to enjoy a comfortable retirement. To do this, it’s important to select businesses that can’t just grow steadily, but also remain resilient during tough times. Some key features include a strong franchise, a strong business model, and clear catalysts.
Some companies may hang on to a lasting trend that helps increase their income and profits. By taking advantage of these favorable winds, you can witness the strong composition of your investment portfolio that brings you one step closer to financial freedom. Such a process takes time, however, patience is a key attribute that you need to take advantage of these capital gains.
Here are two actions that can help you grow your portfolio over the next 10 years.
Okta (NASDAQ: OKTA) is a Software as a Service (SaaS) company that operates an identity management platform for businesses. Its core product, Okta Identity Cloud, helps manage stakeholder access to a variety of applications hosted by their customers. As organizations become more complex and require different access privileges for staff from different departments or with varying seniority levels, such access control becomes of vital importance to ensure a smooth workflow. .
The company has steadily increased its subscription revenue over the years, from $ 370.9 million in the fiscal year ended Jan. 31, 2019 (fiscal 2019) to $ 796.6 million during the year. Fiscal year 2021. For its second fiscal quarter 2022, revenue and Remaining Performance Obligations (RPOs) continued to grow rapidly. Revenue jumped 57% yoy to $ 316 million, of which subscription revenue grew 59% yoy, while RPO also grew 57% yoy to 2.24 billions of dollars. Okta also enjoyed a good net retention rate of 124% in dollars based on the Total Annual Contract Value (ACV).
And there could be more growth to come after Okta acquired Auth0, another identity management platform, last month. There are opportunities for cross-selling services, launching complementary products, and expanding geographic reach. Okta has identified a large total addressable market of $ 80 billion comprising workforce management and customer identity. The company’s international revenue segment saw revenue double year-over-year for the second quarter of fiscal 2022, demonstrating good traction even before Auth0 integration. Customers with over 100,000 LCAs have also doubled to 2,610 in the past nine quarters; this momentum should continue as Okta expands its range of services. There is good reason to believe that the company can continue to grow its market share and revenue for the foreseeable future.
A leader in the online payments industry, Pay Pal (NASDAQ: PYPL) operates a payment platform that connects merchants with their customers. The company has grown by leaps and bounds over the past five years, with revenue nearly doubling from $ 10.8 billion in the fiscal year ended December 31, 2016 (fiscal 2016) to $ 21.5 billion in fiscal 2020. Net income tripled in the same period from $ 1.4 billion to $ 4.2 billion, a clear demonstration of PayPal’s ability to develop its activity and improve its net margin.
The pandemic has accelerated online adoption and led to an increase in e-commerce, which has benefited online payment portals such as PayPal. For the company’s fiscal third quarter 2021, active merchant accounts increased 15% year-on-year to 416 million, while the number of payment transactions per active account also increased 10% year-on-year. These numbers are a sure sign that PayPal is not only seeing more customers, but also spending more through its platform. Total payments volume increased 26% year-over-year to $ 310 billion for the quarter and hit $ 1.2 trillion year-over-year.
These operating figures translated into stronger financial figures for the company. Net revenue increased 13% year-on-year to $ 6.2 billion, while net profit increased 6% year-on-year. Free cash flow of $ 3.9 billion was generated in the first nine months of 2021, and the company ended the quarter with nearly $ 13.3 billion in cash and short-term investments as well. that nearly $ 8 billion in total debt.
PayPal continues to improve the functionality of its platform and aims to launch a financial services application with a multitude of features, including cash management and bill payment. The app also deals with a range of retailers. The company’s digital wallet, Venmo, is the most accepted online wallet, and it also recently forged a new alliance with Amazon to enable shopping on the e-commerce giant’s website and mobile app.
With these catalysts in play, investors must be confident that PayPal can continue to grow both its user base and revenue.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.