It’s time to explore a cyber security leader. Here is the break down of $CRWD, otherwise known as CrowdStrike.
Current Price: $277.89
52/Wk High: $289.24
52/Wk Low: $115.25
Market Cap: $63.4 Billion
3 Month Performance: 34.15%
Read below for the break down!
CrowdStrike ( $CRWD ) is a leading cyber security company that was founded in 2011 and offers cloud-native and multi-tenant solutions for endpoint defense and more.
The company’s digital security platform is called Falcon and is offered to customers through a bevy of software as a service (SaaS) levels including Falcon Pro, Enterprise, Premium, and Complete.
Furthermore, CrowdStrike offers 19 modules via their Falcon platform. The modules focus on a multitude of digital security areas including endpoint solutions, threat hunting, threat intelligence, cloud security, and workload management.
CrowdStrike is led by CEO, President, and co-founder George Kurtz (@George_Kurtz). Kurtz boasts more than 28 years of experience within the security industry and held prior positions at McAfee and his own company Foundstone.
The company’s management team also maintains leaders with prior experience from the likes of the FBI, Kratos Defense & Security, OpenDNS, Microsoft, and CyberArk Software.
Looking to CrowdStrike’s customers as a show of confidence, consistent clients of the company include ADP, Goldman Sachs, Zebra, Credit Suisse, and more.
Shifting into general market metrics, the global cyber security market was valued at $156.24 billion as of 2020. Looking to the future experts believe the market will reach $352.25 billion by 2026, resulting in a 14.5% compound annual growth rate (CAGR) according to Mordor Intelligence.
Digging deeper, current industry trends point towards further adoption of artificial intelligence (AI) and machine learning technologies that better protect digital systems.
Rotating into the latest quarter CrowdStrike beat Q2 2022 expectations with an EPS of $0.11, better than the analyst’s EPS consensus estimate of $0.09. On a year-over-year basis, EPS improved by 266.67%.
On the revenue front total Q2 2022 revenue was $337.7 million representing a significant 70% improvement on a year-over-year basis.
Breaking down revenues total Subscription revenue was $315.8 million, representing a strong 71% increase in Subscription revenue on a year-over-year basis.
On the flip side, Professional Services revenue totaled $21.854 million in Q2, representing over 48% revenue growth within the segment on a year-over-year basis.
Rounding out revenues CrowdStrike reported a significant improvement in Annual Recurring Revenue (ARR) with Q2 ARR totaling $1.34 billion as of July 31st. On a year-over-year basis, ARR experienced a 70% jump.
Shifting into margins Subscription Gross Margin landed at a solid 76% but remained in line and flat when compared to the 76% in Q2 of 2021.
Furthermore, operating margins improved with Q2 GAAP operating margin landing at -14% compared to -15% a year prior. On a non-GAAP basis operating margin improved to 10% from 4%.
Moving into income, CrowdStrike reported a net loss of $-57.3 million, representing a significantly larger net loss when compared to the Q2 2021 net loss of $-29.9 million.
On the operations front, the company reported a net loss from operations of $-47.4 million, representing a larger operating loss when compared to the 2021 operating loss of $-30.0 million.
Rounding out income it is important to note that on a non-GAAP basis, CrowdStrike reported $35.3 million in income from operations, representing a significant improvement over the same time 2021 level of $7.8 million.
While CrowdStrike continued to run a net loss profits expanded. In fact, gross profit totaled $247.258 million in Q2, representing a sizable improvement over the same time 2021 gross profit level of $144.580 million.
Exploring gross profit the Subscription segment delivered $239.843 million in gross profit throughout the quarter, representing a sizable improvement when compared to the 2021 level of $140.219 million on a GAAP basis.
Cash flows continued to improve as well with Q2 2021 free cash flow (FCF) totaling $73.6 million, representing a large improvement over the Q2 2021 level of $32.4 million.
Finally, net cash generated by operations totaled $108.5 million in Q2, representing a respectable improvement over the Q2 2021 level of $55.0 million.
On the customer front, CrowdStrike continued to make significant improvements, adding 1,660 new subscription customers throughout the quarter, representing 81% growth year-over-year and bringing total subscription customers to 13,080.
Leadership was upbeat about the quarter.
"CrowdStrike delivered an outstanding second quarter with rapid subscription revenue growth and record net new ARR generated in the quarter,” CEO George Kurtz said.
Looking to the future leadership is confident expecting Q2 2022 revenue to land within a range of $358 million to $365.3 million. As for the full year, management believes FY2022 revenues will land within a range of $1.3912 billion to $1.4094 billion.
Shifting into the balance sheet the numbers are solid.
Long Term Debt: $738.772 Million
Total Liabilities: $2.224 Billion
Total Assets: $3.136 Billion
Cash & Cash Equivalents: $1.787 Billion
On a valuation basis, CrowdStrike does trade at a premium.
Forward Price to Earnings: 385.13x
Price to Sales: 60.85x
Price to Book: 71.94x
Price to Free Cash Flow: 180.63x
Looking ahead management could be more effective.
Return on Equity: -21.93%
Return on Assets: -7.73%
Return on Invested Capital: -12.23%
Given the numbers the analysts are bullish with a mean price target of $310.14/share, representing an 11.76% upside.
The high price target is $340.00/share, representing a 22.52% upside while the low price target is $250.00/share, representing a -9.91% downside.
The big money is quite involved with 71.52% of CrowdStrike being owned by institutions. Top holders include The Vanguard Group, BlackRock Institutional Trust, and Tiger Global Management.
On a technical basis, CrowdStrike continues to show upside potential. According to the six-month charts, the MACD is moving with sizable upside momentum within a range of 7.16 down to 4.62.
The six-month charts are also indicating an RSI of 60.97 and CCI of 71.71, both of which are on the high end.
Exploring investor sentiment the bears continue to point to a growing net loss and bevy of competitors as net negatives.
Meanwhile, the bulls believe CrowdStrikes leading cyber security solutions and consistent management team will lead to continued growth.
In short, CrowdStrike ( $CRWD ) is a solid long-term pick with expanding revenues, growing profits, a reliable management team, a solid balance sheet, and a broadening customer base coupled with an expanding total addressable market (TAM).
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.