Throughout my investing career, I haven't fully appreciated high-growth companies as I should, and it's a costly, ongoing lesson. A large percentage of stock market winners are high-growth companies -- I've missed a lot of winners by failing to fully appreciate this.
However, not all high-growth companies ultimately prove to be stock market winners. This means that growth isn't the only important factor -- it seems the quality of the growth matters as well.
Low-quality growth examples include businesses that spend too much acquiring other businesses or companies that grow by sacrificing their profit margins. In other words, investors need to dig a little deeper when looking at high-growth companies.
Moreover, investing in high-growth companies is intrinsically risky. Growth is difficult to sustain, and management could fail to efficiently operate a larger enterprise. So these are things to keep in mind with high-growth businesses such as Sezzle (SEZL 3.67%), Rubrik (RBRK -0.16%), and Innodata (INOD 3.45%).
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That said, these three could deliver the kind of growth that rewards shareholders over the long term, which is why investors should at least give them a look in 2025.
1. Sezzle
Forgive the cheesiness, but I have to say it: Sezzle brought the sizzle in the first quarter of 2025. This is a buy now, pay later business that makes a substantial portion of its revenue from charging fees to merchants. But it also has a fast-growing subscription business for consumers. And it's really catching on, with Q1 revenue skyrocketing 123% year over year to $105 million.
Some e-commerce websites have direct integration with Sezzle's platform. Consumers can buy products there and pay in installments with zero interest. These are the merchants that are charged fees essentially for access to Sezzle's younger user base.
With a subscription, however, Sezzle users can enjoy the buy now, pay later feature at merchants not directly integrated with the platform. Merchant and partner income dropped from 62% of revenue in 2023 to 37% of revenue in 2024. By comparison, this subscription revenue stream jumped from 19% of total revenue to 30% of total revenue during this same time. The remainder of the revenue is from fees charged to consumers for things such as late payments.
Sezzle had 658,000 subscribers at the end of Q1 compared with 371,000 in the prior-year period. Subscribers are gradually using the platform to make purchases more frequently. The end result is that Sezzle isn't just growing revenue; its profits are soaring, too. For 2025, management expects net income of around $120 million compared with net income of about $79 million in 2024.
As long as Sezzle can attract more users over time, this is a business that could have a lot more upside, considering its market cap is only about $3 billion as of this writing.
2. Rubrik
With so many bigger cybersecurity names, Rubrik has flown under the radar since its 2024 initial public offering (IPO). And that's a shame, considering it's putting up some of the best red-hot growth numbers in the space. The company's fiscal 2025 ended on Jan. 31. And for fiscal 2025, its revenue was up 54% year over year to $829 million.
Whereas most cybersecurity companies focus on preventing attacks, Rubrik's services are meant to keep businesses running after an attack happens. This differentiation has benefits. The biggest benefit in my opinion is that, instead of directly competing, it's able to collaborate with many top players, including CrowdStrike.
The risk with being a niche player like Rubrik is that platforms that take a more comprehensive approach could launch competing products. And businesses may be enticed to consolidate all of their cybersecurity spending with a single vendor.
That said, Rubrik's growth shows no sign of slowing for now. The company's guidance implies stunning 63% revenue growth in the coming fiscal year, which is well in excess to the growth rate of other players, such as CrowdStrike for example. But Rubrik trades at less than 15 times trailing sales, which is cheaper than what you'd expect for a company growing so fast.
One thing is for sure: The need for cybersecurity solutions is only getting bigger with time. I believe there's room for multiple winning investments in this space. And with its red-hot growth, Rubrik stock could be worth buying in 2025.
3. Innodata
Finally, Innodata may be the cheapest of these three companies, trading at less than 6 times sales. But it may be the riskiest from an investment perspective.
For context, artificial intelligence (AI) models are trained with data. The higher the quality of the data, the better the outcome can be. Innodata provides this data to AI companies, and it's what's propelling its growth. Revenue was up 120% year over year in 2025's Q1. And management expects growth of at least 40% for the full year.
Innodata has three business segments, but its data solutions accounted for 87% of its Q1 revenue. And in 2024, almost half of this data revenue came from a single customer -- herein lies the risk with this investment. It doesn't have many customers, and if it loses any of them, the business could take a big hit.
That said, AI spending is likely in a multiyear growth trend. And while Innodata doesn't disclose the names of its top customers, its biggest customer is likely one of the big AI tech giants. If this small $1 billion company was able to land one of the biggest companies in the world as a customer, it's possible it could do the same with many other smaller companies, which can serve as a tailwind for growth for a long time.
Innodata has also recently taken a big step forward with profitability. It had Q1 net income of nearly $8 million. And this trajectory on the bottom line is why I think this red-hot growth stock could be a good buy in 2025.
