CrowdStrike - Blue screen or green rocket?

[Sijoittaja-alokas]

CrowdStrike Holdings, Inc. is an American cybersecurity technology company headquartered in Texas. The company provides endpoint protection services, threat intelligence, and cyberattack response services. CrowdStrike has been involved in the investigation of several significant and high-profile cyberattacks, such as the 2014 hack of Sony Pictures and the cyberattacks on the U.S. Democratic Party in 2015–2016.

CrowdStrike was founded in 2011 by George Kurtz, and in 2013, the company released its first product, the Falcon antivirus software.

CrowdStrike has received significant funding from investors, such as Google in 2015. In 2019, the company went public on the Nasdaq. In recent years, the company has made several acquisitions, such as Preempt Security in 2020 and Humio in 2021. In 2024, CrowdStrike joined the S&P 500 index.

The company has continued its growth in the cybersecurity market by offering a wide range of services to both private companies and the public sector. This makes it a significant player in the global cybersecurity landscape, where defending against all kinds of security threats is increasingly important.

---

Investor Perspective

Well, let’s start with recent events. It wasn’t long ago that a widespread IT outage, caused by issues with CrowdStrike software, caused chaos in computer systems around the world. Airport check-in systems have suffered from disruptions globally; banks, supermarkets, and media companies are among the other businesses reporting the appearance of the “Blue Screen of Death” and network outages.

CrowdStrike is a leading player in “endpoint” protection solutions, which demonstrates its strong position and customer trust in the cybersecurity industry—this has been emphasized even after the crisis, despite everything. The company is known for its innovation, which enables continuous development and the provision of new and better solutions to its customers. The role of a pioneering leader sounds good, but that blue screen makes you wonder. Back to business; CrowdStrike’s products have generally received good reviews, which indicates high customer satisfaction and helps maintain customer loyalty as well as attract new customers through recommendations.

The company operates in a highly competitive market, which requires continuous investment in innovation and marketing to stay ahead of competitors and maintain its strong market position. The company has suffered reputational damage after the aforementioned global outage, which may weaken customer trust and negatively impact the decisions of potential customers, while also endangering its reputation/brand value and customer loyalty.

---

Q2/2024

A very long tweet about the company, I’ll only copy the beginning. More behind the link:

https://x.com/EugeneNg_VCap/status/1829162594785210647

---

More figures:

Price/Book
25.36

P/E Ratio
501.51

Gross Profit Margin
75.3%

From here

[Sijoittaja-alokas]

Here is a pretty good recent summary of this cybersecurity company.

https://x.com/ZeevyInvesting/status/1829186585457283542

[Sijoittaja-alokas]

Palantir has understandably sparked more discussion here than Crowdstrike. Here, these companies have been put head-to-head for comparison.

https://x.com/ZeevyInvesting/status/1857789470206046669

Crowdstrike is growing and thriving.

https://x.com/stock_unlock/status/1857155284487094583

[Sijoittaja-alokas]

Here is another quick look at Crowdstrike.

https://x.com/Quality_stocksA/status/1858188790084337975

---

EDIT:

I’ll briefly summarize the article I linked below.

The company experienced the worst setback in its history: a faulty software update crashed millions of computers worldwide and caused a sharp drop in the stock price. The stock has recovered and has risen 58 percent from its August lows.

On November 26th, the company will release its figures. According to forecasts, the company’s revenue is expected to be $982 million, and if the figures exceed expectations, the stock price could continue its strong rise; furthermore, the long-term goals of $10 billion in annual revenue have remained in place, which according to the article makes the stock promising for long-term investors.

Prediction: CrowdStrike Stock Is Going to Soar After Nov. 26 | The Motley Fool

[Sijoittaja-alokas]

Crowdstrike will release its results on Tuesday. The tweet below can provide suitable pre-event vibes.

https://x.com/ZeevyInvesting/status/1860773097340821886

[Sijoittaja-alokas]

Here is an interesting comparison of Palantir and Crowdstrike, much discussed on the Forum \n\n\nhttps://x.com/ZeevyInvesting/status/1861485075059101798\n\n

[Sijoittaja-alokas]

Here’s some stuff from CrowdStrike’s Q3 results.

CrowdStrike significantly grew its revenue in the third quarter, reaching over a billion in revenue, which is almost 30 percent more than the previous year. Subscription revenue rose to over $960 million, indicating strong growth. The company’s annual recurring revenue (ARR) exceeded $4 billion, making it the first cybersecurity company to do so, highlighting the appeal of the Falcon platform.

GAAP-based net income showed a loss (considering all business revenues and expenses, including depreciation, operating expenses, and potential one-time items), but non-GAAP results were significantly positive, reflecting strong operational performance. The Falcon Flex subscription model and modular solutions proved popular among customers, with over 97 percent of customers continuing to use the service. The gross margin for the third fiscal quarter remained stable at approximately 80 percent.

CEO George Kurtz emphasized that CrowdStrike stands out due to its innovations and scalable solutions. CFO Burt Podbere, in turn, stated that the company exceeded expectations despite an event in July that disrupted operations. Deepening customer relationships strengthened growth prospects, increasing confidence in the company’s future as an AI leader in cybersecurity.

https://x.com/StockMarketNerd/status/1861519420679475246

https://x.com/EconomyApp/status/1861524091813142835

[Sijoittaja-alokas]

Crowdstrike reported a strong Q3 and continues its exceptionally good momentum, are the markets slowly starting to forget the company’s previous blunders?

Here is one more concise view of the company after its Q3.

https://x.com/ZeevyInvesting/status/1861822266775884277

[VasynytKonsulentti]

@Sijoittaja-alokas already summarized the financial side and the earnings report’s content well. All in all, the earnings report felt like a defensive victory, even though the guidance is unclear (the aftermath of the July incident will still affect things for a good while).

In itself, I even see that July incident as a good thing in the long run. The corrective actions for operations were very much what I had expected to happen (internal quality assurance, customers being able to adjust so-called channel updates themselves, and various compensation/engagement packages). Despite that, their PIR (Post Incident Review) highlighted shortcomings in quality assurance that, in my opinion, should have already been in order. So this was perhaps a good and necessary reminder that even kings can fall if they don’t properly take care of the basic matters of their kingdom when expanding rapidly.

Otherwise, I was once again very pleased with the latest acquisition during the quarter, namely the purchase of Adaptive Shield. This thus expands CS’s capabilities in the area of SSPM (SaaS Security Posture Management). Currently, the (secure) use of SaaS services is a complete blind spot for many companies. This acquisition also strongly supports and complements CS’s existing offerings, e.g., in the area of identity protection, by achieving a better end-to-end situational awareness of how, from where, and who uses which SaaS services and what risks are associated with them. So, once again, a targeted acquisition that will be integrated into the Falcon family and supports the growth story and customer needs (one consolidated, comprehensive, and efficiently operating platform).

My expectations for near-term growth and profitability are not incredibly high, but from a longer-term perspective, CrowdStrike’s story is still strong. So, I’m still firmly on board.

[Sijoittaja-alokas]

Thanks for the good ideas!

---

Here’s a tweet about target prices, so nothing too special.

https://x.com/StockMKTNewz/status/1861783680949084435

[Sijoittaja-alokas]

Here’s a really comprehensive tweet thread about various companies in the cybersecurity sector, and of course CrowdStrike was included.

https://x.com/Sergey_Opl/status/1867193872662552891

The rest of the tweet thread

[Sijoittaja-alokas]

In the tweet below, CrowdStrike is discussed.

Earlier this year, the stock surged by 50 percent, and the infamous July software bug wreaked havoc, causing a slight dip, but it still rose by 39 percent by the end of December.

Competitor Wiz, which focuses on cloud infrastructure security, has grown rapidly, reaching $500 million in annual revenue by summer 2024. Wiz also received significant investments, and its valuation rose to $12 billion. Both companies operate in the cybersecurity sector, but their focuses differ: CrowdStrike protects devices from malware, while Wiz focuses on cloud service vulnerabilities.

https://x.com/moneyballinvest/status/1874126441949860178

[VasynytKonsulentti]

@Sijoittaja-alokas

Both companies operate in the cybersecurity sector, but their focuses differ: CrowdStrike protects devices from malware, while Wiz focuses on cloud service vulnerabilities

CrowdStrike has one of the broadest and most diverse service/product catalogs in the cybersecurity sector today, which is by no means limited to endpoint protection, where the company originally started and which is still one of its core pillars. The company’s “other” services, such as cloud security, identity protection, and log management, have shown strong growth figures (triple-digit YoY %, if I remember correctly) in recent years, and this pace will surely continue in the near future.

I wanted to clarify this a bit, as many seem to have the (wrong) impression that CrowdStrike is just a “laptop and mobile phone protector.” While it is that too, its broad and high-quality consolidated product portfolio is why the company is a world leader in the cybersecurity field.

[Sijoittaja-alokas]

Here’s a “Palantir vs Crowdstrike” comparison after a long time

https://x.com/ZeevyInvesting/status/1879538278732599644

[niko_naakka]

“CrowdStrike Holdings Inc. Achieves 100% Detection, 100% Protection, 100% Accuracy in 2024 SE Labs Enterprise Advanced Security (EDR) Ransomware Test”

https://www.investing.com/news/assorted/crowdstrike-holdings-inc-achieves-100-detection-100-protection-100-accuracy-in-2024-se-labs-enterprise-advanced-security-edr-ransomware-test-432SI-3834279

“CrowdStrike stock soars to all-time high of $398.33”

https://www.investing.com/news/company-news/crowdstrike-stock-soars-to-alltime-high-of-39833-93CH-3834870

“JMP Securities maintains $400 target on CrowdStrike stock”

https://www.investing.com/news/analyst-ratings/jmp-securities-maintains-400-target-on-crowdstrike-stock-93CH-3834031

[Sijoittaja-alokas]

Crowdstrike significantly increased its revenue in the last quarter of the fiscal year, driven particularly by demand for subscription services. Recurring annual revenue continued to rise and customer retention remained high.

The company reported strong demand for AI-driven offerings, such as cloud and identity protection services. Management emphasized customers’ growing desire to consolidate their security solutions onto a single platform and that the company’s long-term profitability targets are achievable.

However, investors generally considered the guidance to be somewhat soft.

https://x.com/StockMarketNerd/status/1897035351371472935

---

EDIT:

https://x.com/EconomyApp/status/1897036932456309043

[Sijoittaja-alokas]

Despite the problems, Crowdstrike’s RPO has grown.

Had to find out what that acronym means:

RPO figure (Remaining Performance Obligations) refers to future revenues from already concluded contracts.

https://x.com/StockSavvyShay/status/1897360329895715095

---

A couple more highlights:

https://x.com/StockMarketNerd/status/1897358919397437586

[Sijoittaja-alokas]

CrowdStrike is rapidly growing its popularity in various ways.

Now, 32 percent of customers use at least seven modules, whereas two years ago the figure was 22 percent. The company’s products are thus spreading quickly and widely.

https://x.com/finchat_io/status/1900261086294868077

[Sijoittaja-alokas]

Kyberturvallisuussektori - räjähtävää & kannattavaa kasvua luvassa

In that quoted message, Crowdstrike was mentioned generally when talking about a company in the sector and in a quite positive light, but there was also a slightly different perspective here.

https://x.com/originsights/status/1903111117649613140

[VasynytKonsulentti]

Yet another example of how CrowdStrike leverages its platform to consolidate ever more new services. So now, endpoint agents are utilized to perform network-level asset and vulnerability mapping. This means that through the network of endpoints, it is possible, for example, to check for vulnerabilities in network platforms/targets where it is not possible to install a CrowdStrike agent, such as routers, firewalls, etc. This work has typically been done with products from Tenable, Qualys, etc., which have had to be installed throughout the network infrastructure, and now the matter is conveniently handled with one and the same CS agent, from one and the same console, without any installations or the use of point products.

It’s probably not hard to guess that this will further increase the number of modules for CS customers (i.e., how many different modules of the CS platform customers subscribe to).