CrowdStrike (CRWD) — Investing In Cybersecurity
In-Depth Analysis and Investment Prospects for CrowdStrike
Crowdstrike, a global cybersecurity leader that provides cloud-delivered protection of endpoints, cloud workloads, identity and data, just released earnings results. This article delves into the myriad factors influencing CrowdStrike’s standing, weighing in on bullish and bearish perspectives, to provide a comprehensive understanding of its future potential.
📢 FY2024Q2 Financial Results
🏦 Revenue: $731.6M, +37% y/y
💸 Net Income: $8.5M, or 1% of total revenue
🔸 Subscription: $690M, +36% y/y
🔸 Annual Recurring Revenue: $2.93B, +37% y/y
🔸 Next Quarter Rev Outlook: $775.4M-778M, +33.7% y/y
🔸 Module adoption rates increased to 63%, 41%, and 24% for 5+, 6+ and 7+ modules, up from 59%，36%， 20% a year ago.
Investment Thesis
Bullish Opinions
🔸 There is a massive demand in the CyberSecurity market. According to the forecasts of several institutions, the CyberSecurity market will have a compound annual growth rate of more than 12% by 2030. CrowdStrike predicts that TAM will reach US$98 billion in 2025, an annualized growth rate of 13%.
🔸 The company’s revenue is growing rapidly. Not only has the revenue growth rate reached 37% this quarter, but the guidance for the next quarter will continue to grow at 30%+.
🔸 The company successfully achieved GAAP profitability this quarter, proving its profitability.
🔸 High customer satisfaction: Net Retention Rate reached 125%. The proportion of customers using Crowdstrike’s multiple modules is also increasing.
🔸 The network effect is gradually taking shape. The company has a large number of customers, and the data from these customers can in turn help CrowdStrike develop better security products. A security vulnerability discovered by one customer can be quickly used to prevent other customers from receiving the same threat again.
🔸 Bank of America’s Opinions: “We believe that CrowdStrike is positioned to gain share in the Endpoint Protection Platform market and expand into other areas of security over time with its scalable cloud native, next-generation endpoint platform. We favor CrowdStrike’s best-in-class subscription growth and net retention rates and expect the company’s Software as a Service (SaaS) model and new offerings to deliver sustainable high growth as the company invests to gain market share.”
Bearish Opinions
🔸 The cybersecurity market is characterized by intense competition, with notable competitors including Microsoft, Palo Alto Network, and SentinelOne.
🔸 In light of prevailing macroeconomic conditions, an increasing number of companies are evaluating cost-reduction measures, contemplating deferred payments, or showing a preference for bundled solutions from major corporations, such as Microsoft, to achieve cost efficiencies.
Conclusion: Bullish 🚀
Despite the intense competition in the cybersecurity market, the demand for cybersecurity will only grow with the advancement of artificial intelligence. Even amidst challenging macroeconomic conditions, most businesses are unlikely to compromise on cybersecurity expenditures. Currently, CrowdStrike’s growth shows no signs of slowing down.
