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Cloud Stocks: CrowdStrike Soars to Record Highs

Posted on Wednesday, Jul 15th 2020

A recent market report on endpoint security systems estimates the industry to grow at 6% CAGR to reach $18.6 billion by 2027. As organizations continue to operate under remote working conditions, there is an increased adoption of security services. Endpoint security players like CrowdStrike (NASDAQ: CRWD) are benefiting from this adoption.

CrowdStrike’s Financials

Last month, CrowdStrike reported its first quarter results that surpassed market expectations. Revenues grew an impressive 85% over the year to $178.1 million, surging ahead of the Street’s forecast of $165.4 million. On an adjusted basis, EPS was $0.02, compared with the market’s forecast of a loss of $0.06 per share and significantly ahead of previous year’s loss of $0.47 per share.

Subscription revenues grew 89% over the year to $162.2 million. Professional services for the quarter grew from $10 million last year to $15.9 million.

Annual Recurring Revenue (ARR) increased 88% to $686.1 million of which $85.7 million was net new ARR added in the quarter.

Among key metrics, it added 830 net new subscription customers to end with over 6,260 subscription customers. Its subscription customers that have adopted four or more cloud modules increased to 55% and those who have adopted five or more cloud modules increased to over 35%.

For the current quarter, CrowdStrike expects revenue of $185.8-$190.3 million with an adjusted net loss per share of $0.02-$0.00. It expects to end the year with revenues of $761.2-$772.6 million and a net loss of $0.08-$0.05 per share. Analysts were forecasting revenues of $173.1 million for the quarter with a net loss of $0.06 per share and revenues of $727.5 million for the year with a net loss of $0.12 per share.

CrowdStrike’s Expanding Products

CrowdStrike continues to expand its product offering and recently announced that it was strengthening the CrowdStrike Falcon platform with Linux protection capabilities. The update will include additional features such as machine learning prevention, custom Indicators of Attack (IoAs) and dynamic IoAs. According to CrowdStrike, Linux systems have frequently been the target of attacks by cyber criminals. As enterprise workloads continue to migrate at a rapid pace to the cloud, there is a bigger need to ensure that cloud workloads provide a solution that can provide deep runtime security for Linux hosts, whether they are running on public or private clouds or on-premise data centers.

CrowdStrike Falcon offers a platform-centric approach by securing these diverse workloads using a single agent. Its agent detects and prevents malicious processes using dynamic IoAs and enables customers to detect and prevent attacks using custom IoAs.

Additionally, the company is also expanding its product lineup to help meet remote working conditions. It recently launched a Falcon Prevent for home use program that allows organizations to install Falcon Prevent on their employees’ home systems. The free-of-charge offering has been well received with over 250 customers who are taking advantage of these work from home and search programs. While the initial service is free, it helps CrowdStrike make inroads into more organizations.

Besides product expansion, CrowdStrike is looking to grow internationally through partner network. It entered into a tie-up with Computacenter, a technology partner for large private and public sector organizations, and Veronym, a cloud-managed security service provider that focuses on the SMB segment. These partnerships will help CrowdStrike Falcon expand their presence in the international arena, especially in Germany, Austria, and Switzerland.

Its stock is currently trading at $105.61 with a market capitalization of $22.9 billion. It had soared to a 52-week high of $118.57 earlier this month. It hit a 52-week low of $31.95 in March this year.

CrowdStrike went public last year, when it raised $659.1 million by pricing its stock at $34 apiece at a valuation of $6.6 billion. Prior to listing, it had raised $481 million in funding from Accel Partners, CapitalG, March Capital Partners, Rackspace, Telstra Ventures, Warburg Pincus, IVP, General Atlantic, Instant Scale Ventures, and Cloud Apps Capital Partners. It had last raised $200 million in June 2018 at a valuation of $3 billion.

This segment is a part in the series : Cloud Stocks


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