Plenty of growth stocks flew to soaring heights during the pandemic, but a good percentage of those same growth stocks now find themselves in a long, spiraling descent. For example, concerns about rising interest rates and a slowdown in the economy crushed the tech sector. Dozens of top tech companies ended up with layoffs, and revenue growth in industries like cloud software, e-commerce, and digital advertising hit a wall.
While the Nasdaq Composite overall recovered some of its losses this year (thanks in part to the artificial intelligence (AI) boom), the tech-heavy index is still down substantially from its 2021 peak. It remains a challenging macroeconomic environment, but some tech stocks continue to deliver strong growth. Let's take a look at two of them.
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1. Remitly Global
Like the other tech subsectors mentioned above, digital payments struggled as digital commerce slowed in the aftermath of the pandemic. PayPal, for example, saw its revenue growth slow to just single-digit percentages.
One payments company bucking that trend and actually posting accelerating growth is Remitly Global (RELY 1.63%). Remitly specializes in facilitating remittances -- non-commercial money transfers often used by immigrants in one country to send money back home to their families in another country.
With a digital-first approach, Remitly is grabbing market share from traditional money transfer leaders like Western Union and Moneygram, and the company posted impressive growth in its second quarter.
Revenue jumped 49% to $234 million on 38% growth in send volume to $9.6 billion and 47% growth in active customers to 5 million. Meanwhile, the company showed off strong growth on the bottom line with adjusted earnings before interest depreciation and amortization (EBITDA) of $20.4 million, up from a loss of $5.3 million in the quarter the year before.
The company is penetrating a large addressable market that could be worth as much as $1.5 trillion, and it's demonstrated its ability to deliver strong growth in a challenging environment and scale profitability. The stock could have a lot of room to run if it can maintain its current growth rate.
2. The Trade Desk
The digital advertising sector has taken it on the chin in recent quarters, with major social media platforms like Alphabet's Google and Meta Platforms' Facebook slowing to just single-digit growth in their ad sales.
However, The Trade Desk (TTD 1.67%), the largest independent demand-side platform in the U.S., continues to deliver strong results even as the broader industry struggles.
The Trade Desk is the most valuable pure-play ad tech stock based on market cap, and it's been a pioneer in its industry. The company provides a cloud-based self-serve platform, allowing brands and ad agencies to manage and automate their ad campaigns.
The nature of The Trade Desk's business model also means that it has been one of the few tech stocks that is able to deliver high growth and wide profit margins. In the second quarter, revenue in the quarter rose 23% to $464 million, and it reported adjusted net income of $139 million, for a profit margin of 30%.
Not only is The Trade Desk posting strong growth and profitability in a difficult environment, but it also has an excellent customer satisfaction track record. Customer retention has been above 95% in every quarter for the last nine years.
Additionally, The Trade Desk's Unified ID 2.0 protocol is emerging as the standard for the cookie-less internet. It's been embraced by a wide range of advertisers, including leaders like Disney and Procter & Gamble as well as platforms like Warner Bros. Discovery and Comcast's Peacock.
Considering its ability to grow even with the digital ad market at a near standstill, The Trade Desk is likely to deliver even stronger growth once the economy recovers and the ad market reawakens.
