Extremely fast revenue growth can make a stock exciting. But if that growth isn't sustainable, or if it's not profitable, then sooner or later reality is going to rear its ugly head. The best growth stocks are capable of increasing revenue and profit at a healthy pace for decades. That's what long-term investors want to see.

In the world of cloud stocks, Atlassian (TEAM -0.54%) and Paycom Software (PAYC 1.20%) have the right attributes to deliver solid growth for many years to come. The common thread is an intense focus on efficiently winning customers, something that many subscription software companies ignore. If your time horizon is measured in years or decades, Atlassian and Paycom should be right up your alley.


Atlassian is an overnight success that's been 20 years in the making. The company's suite of collaboration, productivity, and project management tools, headlined by Jira, has been steadily gaining mindshare for years. While there are plenty of alternatives, Jira has become the de facto industry standard for bug- and issue-tracking software.

Atlassian has taken the long way to get this point. The first version of Jira debuted way back in 2002, and the company's strategy has been to make sure the product sells itself. Atlassian keeps sales and marketing spending to a minimum, instead pouring resources into research and development (R&D) to improve its products and to develop new ones. In the final six months of calendar 2022, Atlassian spent just 25% of revenue on sales and marketing while spending 63% on R&D. For many subscription software companies, those percentages are flipped.

The amazing thing about Atlassian is that the company generates impressive growth despite keeping its sales teams lean. Revenue jumped 29% year over year in the latest quarter, a far better result than many peers that spend far more drumming up new business. Growth will likely slow down this year as businesses grapple with a tough economy, but Atlassian's growth rate should bounce back once things settle down.

Atlassian isn't profitable on a GAAP basis, but it does produce plenty of free cash flow. A recent round of layoffs, which will reduce Atlassian's head count by about 5%, will help keep costs in check as the company works its way through this difficult period. Given its sales efficiency, Atlassian has the potential to become a highly profitable software company in the long run.

While Atlassian stock certainly isn't cheap, it is down significantly from its all-time high. For investors with long time horizons, Atlassian looks like a great option.

Paycom Software

Cloud-based HR and payroll software provider Paycom is similar to Atlassian in that it's figured out how to sell its products efficiently. In Paycom's case, that efficiency stems from treating sales like a core competency and taking the time and energy to build highly effective sales teams.

Paycom currently has 55 local sales teams located in cities across 28 states. A sales team typically takes 24 months to reach maturity, so expanding is a slow and methodical process. The payoff, though, is sky-high customer satisfaction and low customer acquisition costs. Annual revenue retention was 93% in 2022, and the company spent just 25% of revenue on sales and marketing. That spending drove 30% revenue growth.

Paycom keeps other costs down as well, leading to impressive profitability. The company reported GAAP net income of $281 million on $1.375 billion of revenue last year. For 2023, Paycom expects to grow revenue by about 24% -- not too shabby given the economic climate. The stickiness and mission-critical nature of Paycom's products certainly play a role in this persistent growth.

Paycom serves smaller businesses, but the company has increasingly been targeting larger ones as well. The typical Paycom customer has between 50 and 10,000 employees, and the company sees a big opportunity to increase revenue per customer by cross-selling additional products. There's still plenty of room to win more customers as well. Paycom has no sales presence in 10 of the top 50 metropolitan statistical areas in the United States, and it only has one sales team in many areas that could support additional sales teams.

Paycom is not a hypergrowth company. Instead, it offers steady, measured, and profitable growth driven by a battle-tested sales strategy. While the company's results will ebb and flow with the state of the labor market, there's little reason it can't grow at a double-digit rate on average for many years to come.