The American stock market has enjoyed a resilient decade, bouncing off the lows caused by the great financial crisis by steadily and consistently making new all-time highs. Since Jan. 1, 2010, the S&P 500 index has climbed 182%, good for annual returns of 10.9%. While passive index investors have done well, some fintech companies -- companies using technology to make traditional financial tasks affordable, convenient, and fast -- have trumped those returns by orders of magnitude.
Before ushering in the 2020s, let's look back at the five best-returning fintech stocks of the 2010s and the strategies that led to their success. For purposes of this exercise, let's limit the discussion to gains that stocks have seen on U.S.-based exchanges and companies that make most of their revenue from fintech applications.
These five fintech companies have trounced the market over the past decade. Image source: Getty Images.
5. Axos Financial
Stock price appreciation since Jan. 1, 2010: 1,080%
While this might surprise recent shareholders (the stock has underperformed the market over the past five years), Axos Financial (AX -1.82%) has shown phenomenal returns since earlier this decade, when it was previously called BofI Holding (BOFI), the holding company for Bank of Internet USA. Axos was a pioneer in the virtual-only banking arena and used the tried-and-true formula of keeping costs down with a branchless and paperless approach, enabling it to keep rates on loans and deposits attractive.
However, it's not just Axos Financial's stock price that has risen over the past decade. For its 2010 fiscal year, the company recorded $21.1 million in net income and total assets of $1.4 billion. In 2019, the financial institution earned $155.1 million in net income with total assets of $11.2 billion, representing growth of 635% and 700% respectively -- not too shabby!
4. Ellie Mae
Stock price appreciation since Jan. 1, 2010: 1,550%
In April 2011, just after the beginning of the 2010s, Ellie Mae (no longer publically traded) went public, issuing shares at $6 and raising $45 million in the process. In April 2019, it was acquired by a private equity group at $99 per share in an all-cash deal, giving shareholders who held since its IPO more than a 15-bagger. Through its Encompass Digital Lending Platform, the company offers lenders and mortgage brokers a single system of record that automates several of their industry's practices, including consumer engagement, originating loan production, selling loans on the secondary market, and purchasing loans.
3. Fair Isaac Corporation
Stock price appreciation since Jan. 1, 2010: 1,570%
Fair Isaac Corporation (FICO -1.23%), best known for its consumer credit scores, provides data management, analytics, decision-making software, and consulting services to financial institutions and consumers. These solutions, backed by more than 165 patents, enable banks and other lenders to manage customers, reduce fraud, and collect debts in more than 100 different countries around the world. Every time consumers run their score to take out a loan or apply for credit -- think mortgages, autos, and credit cards -- FICO makes money.
In its 2019 fiscal year, FICO earned $1.16 billion in revenue and $192 million in net income, up from its 2010 totals of $605 million and $64.5 million, respectively.
2. MarketAxess Holdings
Stock price appreciation since Jan. 1, 2010: 2,590%
MarketAxess Holdings (MKTX -0.52%) has created the largest electronic marketplace for institutions to buy and sell bonds, creating more price transparency, competition, and choice in the process. More than 1,600 active institutional investors participate in MarketAxess's marketplace, with 900 trading at least three products on its platform.
In 2010, MarketAxess finished its fiscal year with $146.2 million in revenue and $31.4 million in net income. With one quarter remaining in its 2019 fiscal year, MarketAxess believes its top line will hit between $244 and $256 million. Through the first nine months of 2019, its net income is $155 million. From 2013 to 2018, MarketAxess produced annual revenue growth of 13% and annual EBITDA growth of 15%.
MarketAxess's addressable market is huge, with $70 billion in global daily bond trading volume. Since most bond trading is still done manually, over the phone and through email, this creates a long runway of growth for MarketAxess in the years ahead. In 2018, total bond trading volume rose to $1.7 trillion (about $6.75 billion in daily volume or less than 10% of the global total) on the company's electronic platform, up from $402 billion in 2010.
1. LendingTree
Stock price appreciation since Jan. 1, 2010: 3,060%
LendingTree (TREE -2.58%) provides an online marketplace for consumers to shop for a variety of credit needs by allowing them to compare quotes and prices from more than 500 vendors. This includes shopping for "mortgage loans, mortgage refinances, auto loans, personal loans, business loans, student refinances, and credit cards," according to the company's website. The MyLendingTree platform provides its 13.2 million subscribers with credit monitoring and recommendation services too.
By clicking through LendingTree's user-friendly platform, consumers can complete an application for a loan in minutes. After completion, they begin receiving competing bids from LendingTree's partners, literally within a matter of seconds.
LendingTree ended 2018 with $765 million in revenue and $96.5 million in net income. When the 2010s began, its revenue was $198 million with a net loss of $17.5 million for the year.
