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Founded in 2006, AppFolio is a classic Silicon Valley success story. The software-as-a-service company started out offering property management products and then moved into legal-practice software. And over the past three years, the Santa Clara, Calif., company has produced warp-speed growth. Revenue has increased by an average rate of 34%, earnings have rocketed up 161% yearly, and the total return to shareholders has averaged 71%. Those sizzling figures are good enough to place AppFolio at No. 1 on this year’s list of Fortune’s 100 Fastest-Growing Companies.
One might imagine that a ranking of fast-growing companies would be dominated by AppFolio-type businesses—Silicon Valley tech startups made good. And, in fact, there are plenty of just such companies on the list this year. A total of 17 companies from the Bay Area made the Top 100. That includes Netflix (No. 5), which is making its 10th total appearance on the list and appears for the third straight year. The Valley’s strong showing helped California lead the way among states with 20 companies.
But this year’s list includes companies from 24 different states plus Washington D.C., and six countries outside the U.S. (To be eligible, companies must trade on a U.S. stock exchange and report results in U.S. dollars. For the full methodology, click here.) In fact, AppFolio and Netflix are the only Silicon Valley companies to make the Top 10. One of the top-performing tech companies was Brooklyn-based online marketplace Etsy (No. 8), which led the way with a three-year average return to shareholders of 92%. Paylocity (No. 9), a cloud-based payroll and HR business headquartered in Schaumberg, Ill., grew its earnings per share an average of 137% over the past three years. At No. 14, Alibaba, which is based in Hangzhou, China, and incorporated in the Cayman Islands, is the highest-placed non-U.S. company this year.
Because our methodology evaluates companies over a three-year period, the bulk of the performance results that drove this year’s rankings were accumulated before the pandemic began wreaking chaos on the global economy earlier this year. And coming into 2020, the financial sector was on a hot streak. That’s reflected in the fact that financials led the way this year with 24 companies. One of the top performers was Kinsale Capital Group (No. 7), an insurer based in Richmond, Va., which grew earnings an average of 61% annually over the past three years. The number of industrial companies jumped from 12 on our 2019 list to 21 this year, putting the sector in second place. Technology meanwhile dropped from 32 businesses in last year’s rankings down to 20—tech’s lowest total since 2015.
With some $296 billion in revenue over its past four quarters, Amazon is easily the biggest company on this year’s list. And it grew its massive sales by an average of 28% over the past three years. That incredible growth for such a gargantuan company helped the e-commerce and cloud giant make the 100 Fastest Growing Companies list for a fourth straight year, ranking No. 10.
The longest streak in our rankings, however, belongs to Patrick Industries (No. 94), which made the list for a seventh straight year. Founded in 1959 and headquartered in Elkhart, Ind., Patrick makes products and materials for manufactured housing and recreational vehicles and expanded its sales an average of 25% annually over the past three years. It’s another reminder that robust growth isn’t just a Valley phenomenon.
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