FORTUNE DECEMBER 2020 /JANUARY 2021 125Splunk
5 U.S. (SPLK, $ 199 )Investors have a
big appetite for Big
Data. Splunk, which
helps companies
turn data into usable
information via A.I.
and machine learn-
ing, has seen its
stock rise an impres-
sive 108% since its
low in March. The
company, which
counts 91 of the For-
tune 100 as clients,
recently conducted
a survey that found
57 % of respondents
fear that the volume
of data is growing
faster than their or-
ganizations’ ability
to keep up. No won-
der Splunk’s annual
recurring revenue
from its cloud sub-
scription business
was up 89 % in the
most recent fiscal
quarter.Salesforce
25 U.S. (CRM, $ 258 )The pandemic
hasn’t tripped up
cloud software pio-
neer Salesforce,
whose shares are up
59 % year to date.
Two new plat forms
have helped Sales-
force attract cus-
tomers during the
crisis: Work.com,
which helps compa-
nies manage sched-
uling and safety lo-
gistics around
reopening; and Tab-
leau data-visualiza-
tion software, which
powers contact-
tracing efforts. Wall
Street has high
hopes: Morgan
Stanley analysts be-
lieve the $17-billion-
in-revenue company
could nearly double
that figure by 2024.Palo Alto
Networks
32 U.S. (PANW, $292)Palo Alto Networks
spent the past cou-
ple of years knitting
together a one-stop
cybersecurity shop.
The digital defender
has spent nearly
$3 billion on acquisi-
tions since CEO
Nikesh Arora took
the helm in June
2018. As the pan-
demic pushes work-
ers remote, Palo Alto
is capitalizing on the
trend by helping
companies protect
assets outside the
traditional corporate
firewall. Investors
have apparently for-
given the company
for being unprofit-
able as total share-
holder returns aver-
aged 19% over the
past three years
through Sept. 30.VMware
38 U.S. (VMW, $ 148 )Four years ago,
VMware pivoted: In-
stead of viewing Am-
azon’s cloud service
AWS as a threat, it
linked up with the
service and made it
one of the compa-
ny’s greatest
strengths. Since
then, VMware’s
cloud-computing
and virtualization
software continues
to gain momentum,
helping grow annual
revenue by an aver-
age of 21% over the
past three years. The
company, led by
CEO Pat Gelsinger,
generated $10. 8 bil-
lion in 2019, and, as
of November,
boasted a valuation
of $62.1 billion.Atlassian
3 AUSTRALIA (TEAM,
$ 208 )The Australian
maker of popular
software develop-
ment, planning, and
collaboration tools
Jira and Trello has
been having a good
pandemic. Reve-
nues are up 12.4%
since the end of
2019, although the
company has fore-
cast slower growth
for the coming year.
Atlassian’s gross
profits have ex-
panded in line with
sales, but the need
to account for some
$889 million in out-
standing bonds has
dented its earnings,
with the company
recognizing a net
loss in the past
three quarters.Workday
4 U.S. (WDAY, $209)A dominant force
in cloud-based pro-
grams for HR man-
agement and finan-
cial planning,
Workday’s reach be-
lies its size. Though
it brought in a rela-
tively modest
$3.6 billion in reve-
nue in 2019, its cus-
tomers employ
some 45 million
people worldwide.
Workday’s sales rose
29 % last year, and
analysts anticipate
continued growth as
the company ex-
pands its suite of
tools. Another prom-
ising project: help-
ing corporate clients
take part in “talent
marketplaces” that
connect displaced
workers with new
positions.POWE RIN G B U S INE S S
TO IDENTIFY THE FUTURE 50, the BCG
Henderson Institute examined more than
1, 000 publicly traded companies with at
least $ 20 billion in market value or $ 10 bil-
lion in revenue in the 12 months through the
end of 2 0 19.
Thirty percent of a company’s score is
based on market potential—defined as its
expected future growth as determined by
financial markets. This is assessed by calcu-
lating the proportion of its market value that
is not attributable to the earnings stream
from its existing business model.
The other 70% is based on a company’s
capacity to deliver against this potential. This
score comprises 19 factors, selected for their
ability to predict growth over the following
five years, which fall into four categories:STRATEGY
Our A.I. algorithm relies on natural lan-
guage processing to detect a company’s
strategic orientation from its SEC filings
and annual reports. We assess the clarity of
a company’s strategy from earnings calls.
We also assess a company’s commitment
to sustainability from its governance rating
by Arabesque, a data-analytics firm.TECHNOLOGY AND INVESTMENTS
A company’s capital expenditures and
R&D (as a percentage of sales) measure its
investment in the future. Technology ad-
vantage is assessed through the growth in a
company’s citation-weighted patent portfo-
lio and that portfolio’s digital intensity (share
in computing and electronic communica-
tion). To account for external innovation, a
company’s portfolio of startup investments
and acquisitions is compared with the best-
performing global venture capital funds.PEOPLE
The value of youthful and focused leader-
ship is assessed by the age and stability of a
company’s executives and directors and the
size of its board. The company’s diversity is
assessed by its share of employees and of
management that is female, as well as the
geographic backgrounds of its directors.STRUCTURE
A company’s age and (revenue-based)
size are correlated with vitality loss. But
three-year and six-month sales growth
are predictive of future growth as signs of
revitalization.
Companies with negative cash flow from
operations over the prior three years on
average, indicating elevated performance
risk, were excluded from the ranking.THE FUTURE 50 METHODOLOGY