10 fastest-growing tech companies
Growth-stock investors grapple every day with the Donald Rumsfeld conundrum. The former U.S. secretary of defense was talking about the absence of weapons of mass destruction in Iraq when he said: "There are known knowns, there are things we know we know. We also know there are known unknowns, that is to say we know there are some things we do not know. But there are also unknown unknowns, the ones we don't know we don't know."
Rummy nailed it: That's tech growth investing, defined.
Consider, for instance, the way the market evaluates Apple (AAPL), one of the great growth stories of all time. We know that it dominates the market for mobile computing. We know it faces challenges from the loss of Steve Jobs. We know it is building a bagel-shaped campus in Cupertino, Calif. The known unknowns are when it will introduce the next iPhone or iPad or a TV. How much of a threat is Windows 8 to the tablet business? Can Tim Cook really fill Jobs' shoes?
And then we get to the juicy part. The unknown unknowns. We can't tell you what those are, but they are what really drive stocks. Did anyone see the iPad coming? Did you really think the App Store would change the face of the software industry? The crucial question for investors is how much weight to give to unimaginable things.
That leap of faith drives Forbes' annual list of the nation's fastest-growing tech companies. Apple made the list, of course, but it's not No. 1. Still, its No. 2 ranking is an astonishing feat for a company of its size.
Forbes combed more than 5,000 publicly traded technology companies, looking for profitable enterprises with an annual revenue of $150 million or more and a market capitalization of at least $500 million. To make the cut, a company needed sales growth of at least 10% in each of the past three years and over the latest 12 months. The companies are ranked on their three-year average sales growth rates.
Click through the following slide show (published May 7) for a closer look at the top 10. And go to Forbes.com for the complete list of the 25 fastest-growing tech companies in the United States.
Business: Online photo services
Sales (previous 12 months): $473 million
Sales growth (previous 12 months): 54%
Sales growth (3-year average): 30%
Estimated earnings-per-share growth: 19%
Shutterfly (SFLY) provides an online service that helps people share, print and preserve their digital photographs. In addition, customers can create professionally bound photo books, greeting cards, stationery, personalized calendars and other photo-centric objects.
Business: Information technology
Sales (previous 12 months): $6.1 billion
Sales growth (previous 12 months): 33%
Sales growth (3-year average): 31%
Estimated earnings-per-share growth: 20%
Cognizant Technology Solutions (CTSH) provides custom information technology, consulting and outsourcing services.
The company is benefiting from corporate mandates to cut expenses during the recession as well as the increased importance of technology in the workplace.
Business: Network gear
Sales (previous 12 months): $745 million
Sales growth (previous 12 months): 24%
Sales growth (3-year average): 31%
Estimated earnings-per-share growth: 20%
Riverbed Technology (RVBD) has developed solutions to address problems associated with information technology. Its flagship Steelhead products enable its business customers to improve the performance of their applications and ease access to data across wide area networks by increasing transmission speeds.
Business: Wireless equipment
Sales (previous 12 months): $465 million
Sales growth (previous 12 months): 44%
Sales growth (3-year average): 31%
Estimated earnings-per-share growth: 25%
Aruba Networks (ARUN) connects local and remote users to corporate information resources via distributed enterprise networks. Its portfolio of campus, branch office, teleworker and mobile solutions simplifies operations and provides secure access to all corporate applications and services regardless of a user's device or network.
Business: E-commerce software
Sales (previous 12 months): $169 million
Sales growth (previous 12 months): 28%
Sales growth (3-year average): 32%
Estimated earnings-per-share growth: 20%
Ebix (EBIX) is an international supplier of software and e-commerce services to the insurance industry. With more than 30 offices across the United States, Australia, Singapore, New Zealand, Canada, China, Japan and India, Ebix powers multiple exchanges worldwide that are used to conduct $100 billion in insurance business annually.
Business: Data centers
Sales (previous 12 months): $1.7 billion
Sales growth (previous 12 months): 27%
Sales growth (3-year average): 32%
Estimated earnings-per-share growth: 23%
Equinix (EQIX) connects businesses with partners and customers around the world through a global platform of high-performance data centers.
Platform Equinix helps more than 4,000 enterprises, including 690 network service providers, grow their businesses, improve application performance and protect their digital assets.
Business: Health-care services
Sales (previous 12 months): $351 million
Sales growth (previous 12 months): 34%
Sales growth (3-year average): 33%
Estimated earnings-per-share growth: 30%
Athenahealth (ATHN) provides cloud-based business and clinical services based on proprietary practices and electronic health-record software. It features a continuously updated payer knowledge base and integrated back-office service operations. It has clients in 46 states and the District of Columbia.
In 2012, Massachusetts Institute of Technology's Technology Review Magazine named Athenahealth one of the 50 most innovative companies in the world.
Business: Business software
Sales (previous 12 months): $337 million
Sales growth (previous 12 months): 37%
Sales growth (3-year average): 40%
Estimated earnings-per-share growth: 37%
Qlik Technologies (QLIK) sells software solutions that deliver data analysis and reporting solutions. QlikTech's software platform, QlikView, combines enterprise-class analytics and search functionality. Customers include middle-market customers as well as large enterprises such as Autodesk (ADSK), Kraft Foods (KFT) and Nasdaq OMX Group (NDAQ).
Business: Computer hardware and software
Sales (previous 12 months): $142 billion
Sales growth (previous 12 months): 63%
Sales growth (3-year average): 43%
Estimated earnings-per-share growth: 18%
Apple (AAPL) designs, manufactures and markets such products as the iPod, iPad and iPhone. It also sells a range of related software, services, peripherals, networking solutions and third-party digital content and applications.
Business: Social networking
Sales (previous 12 months): $522 million
Sales growth (previous 12 months): 115%
Sales growth (3-year average): 89%
Estimated earnings-per-share growth: 60%
Founded in 2003, LinkedIn (LNKD) operates the world's largest professional network on the Internet, with more than 150 million members in 200 countries and territories.
Its platform provides members with solutions, including applications and tools, to search and connect and communicate with business contacts, learn about career opportunities, join industry groups, research organizations and share information.
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