In the fintech industry, where technology is reshaping traditional practices, three titans stand at the edge of transforming how we manage money and invest. These stocks do not just represent companies; they are the trailblazers in the fintech revolution.

These companies are redefining the limits of financial transaction innovation. With their edgy platforms, strategic prowess, and focus on operational moats, they’re disrupting many verticals. Meanwhile, they are breeding unprecedented opportunities for huge returns.

The article explores their strategic maneuvers and leads. From the first one’s solid gross profit milestones to the second one’s rapid revenue growth amidst market uncertainties and the third one’s behemoth transaction volumes, each of these fintech pioneers presents a triumph over challenges and pursuit of a competitive edge.

Read more to unravel the fundamentals behind these fintech juggernauts and how they may yield massive price returns in the years ahead.

Block (SQ)

Block (NYSE:SQ) has multiple fundamental strengths that support its potential for rapid value growth. These strengths can be observed in its performance. To begin with, Block’s gross profit in Q3 2023 reached $1.9 billion, marking an increase of 21% year-over-year. Additionally, the company attained its highest-ever quarterly adjusted EBITDA of $477 million, representing a 25% margin on gross profit.

In the same direction, Block delivered strong cash flow, with adjusted free cash flow boosted to $427 million in Q3. This is a rapid increase from $88 million in Q3 2022. Over the last 12 months, adjusted free cash flow hit $945 million, compared to a negative $99 million in Q2. Hence, this positive cash flow trend suggests the company’s capability to convert its operational performance into large cash reserves.

At its core, the Square platform and Cash App contributed significantly to the overall gross profit. In Q3, Square generated $899 million in gross profit (+15% year-over-year). Meanwhile, Cash App recorded a substantial increase of 27% year-over-year to hit $984 million in gross profit. On the other hand, Block’s Buy Now, Pay Later (BNPL) platform delivered considerable growth, contributing $94 million of gross profit to both Square and Cash App in Q3.

Also, the gross merchandise volume (GMV) from the BNPL platform increased by 24% year-over-year (to $6.7 billion). Moreover, losses on consumer receivables decreased to 0.84% of GMV, indicating improved risk management and operational edge.

Finally, Block is implementing cost-control measures to drive profitability. The company plans to cap its employee count at 12K by 2024’s end. This suggests a reduction of nearly 1K employees over the period (13K as of Q3 2023). Therefore, this focus on optimizing team size reduces duplication, achieving high resource utilization efficiency.

SoFi (SOFI)

Segment-level performance of SoFi (NASDAQ:SOFI) is decisive in supporting its valuations. For instance, SoFi’s lending segment delivered growth despite adverse market conditions. Adjusted net revenue grew by 10% year-on-year in Q4 2023 to hit $347 million. This growth was based on increases in net interest income, which formed 72% of adjusted net revenue.

Notably, the contribution profit margin for the segment hit 65%, a testimony of its profitability solidity. Moreover, its lending segment has been solid and continued to demonstrate upside, notwithstanding macro uncertainties (with the Fed taking a stance of higher-for-longer). Similarly, the financial services segment demonstrated incredible growth levels.

Additionally, net revenue was up by 115%, year-over-year, in the fourth quarter of 2023. The company has been enjoying solid monetization from various product offerings, including SoFi Money, Credit Card, and Invest. The segment has achieved a milestone of 9.5 million products (+45% year-over-year). This points to really strong demand and adoption in the customer base.

Despite continued investments in new initiatives, the segment delivered a contribution profit of $25 million in Q4, a strong signal of SoFi’s capability to balance growth and profitability. In addition, the Tech Platform segment saw an accelerated top-line growth rate, with Q4 2023 net revenue rising 13% year on year. This was driven by the continued monetization of existing clients and new deals signed in new client segments. Lastly, the contribution profit margin of the segment increased to 32%, reflecting its edgy profitability and efficient operations.

Overall, with ongoing investments in offerings, SoFi may continue to capitalize on emerging favorable industry trends that may boost its valuation.

PayPal (PYPL)

PayPal’s (NASDAQ:PYPL) revenue growth and transaction volume are foundational strengths driving its rapid growth potential. The company’s Q4 top-line growth of 9% on $410 billion in total payment volume (TPV) reflects its edgy performance.

Also, this revenue growth reflects PayPal’s capability to capture a large volume of transactions and related demand for its services. Furthermore, the company has a focused approach to managing expenses. This can be observed in the 9% reduction in non-transaction-related expenses year-over-year, leading to improved profitability and sustainability of growth.

Additionally, the sustained growth in transaction volume suggests PayPal’s relevance to financial transactions globally. With $1.5 trillion in TPV for 2023, PayPal is positioned as a leading digital payment ecosystem institution. The volume is based on various factors, including the increasing adoption of digital payments. It also includes the proliferation of e-commerce and PayPal’s expanding network of merchants and users.

To sustain and further accelerate its revenue growth, PayPal focuses on enhancing its value proposition (for consumers and merchants). Its strategic initiatives include improving the checkout experience, expanding offerings, and leveraging analytics to personalize user experiences. These moves may increase transaction volumes and revenues in the upcoming quarters. 

At its core, PayPal targets the quality of its solutions for small businesses. The company is transitioning from offering standalone products to an edgy platform. For instance, initiatives like PayPal Complete Payments (PPCP) target an addressable market of $750 billion. Finally, the transformation may bring in more adoption and top-line growth. Therefore, the solid performance, volume metrics, and edgy initiatives may continue to elevate its market valuations.

As of this writing, Yiannis Zourmpanos held long positions in SOFI and PYPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.