CrowdStrike Holdings, Inc. (CRWD) on Q1 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by and welcome to the CrowdStrike Fiscal First Quarter 2021 Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. Now, it’s my pleasure to turn the call to Maria Riley, CrowdStrike Investor Relations. Maria Riley: George Kurtz: Thank you, Maria, and thank you all for joining us today. We are once again hosting this call remotely and ask for your patience in the event we experience any technical difficulties. Let me begin by saying we hope you and your families are healthy. We extend our deepest thoughts to everyone affected by the COVID-19 outbreak. I will start by summarizing three key points. First, CrowdStrike delivered another exceptional quarter with results well exceeding our expectations across the board, including generating non-GAAP operating income for the first time. Our strong performance demonstrates our ability to execute at peak levels and protect our customers even in light of a global crisis. Second, we believe work from home and digital transformation are sustainable trends for our business. It is mission critical to protect workloads irrespective of where they are located on or off the corporate network. We believe these trends have helped increase our leadership in the security cloud category that we pioneered. And third, we continue to win new logos as companies are rapidly pivoting away from on-premise legacy technologies and moving to cloud-native architectures that provide prevention, visibility, and control on a single platform. Additionally, the competitive environment has evolved to our favor as market share of the incumbents continues to erode. Burt Podbere: Thank you, George and good afternoon everyone. As a quick reminder, unless otherwise noted, all numbers except revenue mentioned during my remarks today are non-GAAP. Operator: Thank you. And our first question is from Sterling Auty with JPMorgan. Please go ahead. Sterling Auty: Yes, thanks. Hi guys. It sounds like everybody is healthy which is fantastic. Maybe just to start off, when we look at the network security space, I think the expectation is that after this initial surge for remote access capacity that they are going to see kind of demand paid off. When you think about endpoint in its totality, are you expecting something different or more durable in the demand? George Kurtz: Hey, Sterling. This is George. So, thanks for the question and we are all safe. Thank you. Yes, I think what we have seen here obviously there is the work from home, and I think ultimately a more into the work from anywhere and there will be a hybrid model of people going back to work, but I think we all know that we are not going to continue in the same way that we had pre-COVID. So, we see that as a long-term opportunity. And really, I think if you take work from home and you – and capitalize it, it’s really part of digital transformation. And what we have seen directly just over the last couple of months is just digital transformation being accelerated, which means more people working outside of their corporate environment. It also means more cloud workloads, right. And this digital transformation, which encompasses work-from-home is really a longer-term trend that we are seeing. In fact, on our 100-by-100, I was speaking with a CIO, and I said, tell me a little bit about your digital transformation program. And he said, well, we had a 2-year roadmap. And in one day, at the end of March, we executed on that. That just gives you an idea of how fast things have been accelerated. So we see that as a long-term secular trend and tailwind that we’re able to benefit from. Sterling Auty: Fantastic. And then maybe just on the – follow-up on the go-to-market strategy. You talked about the partnership with AWS. Maybe from a high level, is your expectation that you want to go deeper and bigger with the existing partners versus going broader and bringing on a lot more partners? George Kurtz: I think that’s always been our view is to have bigger, deeper partners where we can spend more time and invest more dollars and effort as well as the partner. And we think that is a much better program than having many partners that aren’t necessarily moving the needle for us. So yes, a big part of it is deal registrations are up, big part of it is people wanting to move off incumbents. And for us, we’d rather double down on the big partners, and AWS has been really a fantastic partner for us. You can see the results. And they really remove a lot of the friction in the sales process. So, we’re excited about that, and we look forward to continuing that in the future. Sterling Auty: Makes sense. Thank you. Operator: Thank you. Our next question is from Saket Kalia with Barclays Capital. Saket Kalia: Okay, great. Hey, thanks guys for taking my questions here. Maybe first for you, George, can you just talk a little bit about Falcon for containers and AWS to sort of on that last point? Realizing that it’s still early here, I think you said in the prepared comments that ARR there was up about 75% over last quarter. Can you talk a little bit about what your customers are saying about this tool and who you’re displacing in that sort of environment, if anyone? George Kurtz: Sure. Great to connect, Saket. I will start with the latter part. There is not a lot to displace out there, because it’s really a Greenfield opportunity when we think about container protection, and the beauty of our model has always been the simplicity. So, the same lightweight agent can be used to protect many containers, and there is a big difference between what we do and what others do, where they have to run inside of every container. We can actually run outside the container at the operating system level and get visibility into every container. Now what’s the benefit of that? The benefit is, it does not get in the way of the development cycle. Developers and IT teams don’t want – and DevOps, they don’t want any friction in the model, and we have a model that introduces like zero friction. So, it’s been very well received. In addition to that, we have added a ton of capabilities into that offering, including all kinds of additional prevention capabilities as well as understanding the container configurations and helping manage the containers, the security of those containers in multi-cloud as well as on-premise very easily. So, it’s been very well received, and even as an extension to what we’ve done in containers, particularly in the cloud area, we’ve added much broader Discover capabilities. As you know, the IT teams are really struggling to figure out where their shadow IT is. We can help in those areas as well. Saket Kalia: Got it. That makes sense. Burt, maybe for you for my follow-up, thanks for the historical data on that net revenue retention in the slide deck. I think you said CrowdStrike remained above the 120% sort of goal on net revenue retention. I guess, the question is, at what point do you foresee clearly some of the bigger lands that you’re getting here with customers opting for four to five modules to perhaps start impacting that metric? And clearly, that’s a good problem to have with bigger lands, but curious if that’s something to consider for that metric as the platform approach sort of continues to resonate? Burt Podbere: Thanks, Saket, and thanks for the question. So, as you know, we don’t manage the net retention number. We still think that 120% is a good benchmark in a normalized environment. And you are right, it did remain over 120% for this quarter. I mean, as you know, dollar-based net retention can fluctuate quarter-to-quarter, and it is a noisy metric. Just because it goes down, it does not necessarily mean bad thing and vice versa. We did see a trend up through Q4 where we were seeing the larger wins, and that was certainly impacting our dollar-based net retention rate, and that was fine. And we think that going forward we will likely see some more larger lands given the fact that more and more customers are buying four or five of our modules. Having said all that, as you think about the SaaS companies in the traditional land and expand, over time both the expand might take over at some point and as clearly as we bring more and more value to our customers in terms of more modules, we could possibly see an uptick. But my final comment on that is, today we’re still going after both. We’re still going after the large new lands and we’re still going after the expansion opportunities and we’re paying our sales force the same whether or not they bring in a new logo or a new land or an expansion. Saket Kalia: Very helpful. Thanks guys. Burt Podbere: Thank you. Operator: Thank you. Our next question is from Gur Talpaz with Stifel. Gur Talpaz: Awesome. Thank you. Good afternoon. Congrats to both of you on the strong results. George, I want to ask you if you were seeing a shift in appetite for non-traditional use cases in the current environment. I think the market well understands that we have seen a shift here in EDR and JV, but are you finding yourself being deployed in other areas, perhaps at a more aggressive rate these days given everything that’s happening out there? George Kurtz: Hey, Gur. Thank you for the question. Absolutely. I think this quarter was really a tipping point into use cases outside of just security, and we’ve been building our Discover module for several years. And a big part of that is focused on IT ops and security – I should say hygiene as well when we think about asset discovery and configuration. We talked about emergency patches and configuration management and password reset. So this functionality drives a lot of automation into the IT stack. And just given COVID in the remote work environment, we had so many customers that were struggling and really in a panic mode trying to figure out how are they going to understand these systems. How are they going to touch these systems remotely when they are sitting behind everyone’s local firewall and cable modem and they actually turned to the security team because they had solved that problem and they basically – it was sort of an eye opening experience for the IT folks in terms of our capabilities in what we can do. So I see it really as a tipping point. And we think about our capabilities, that goes well beyond just security. And I think this particular environment with remote work from home is a perfect use case for how we can drive automation and save a lot of money for the IT teams. Gur Talpaz: That’s super helpful. And then Burt, maybe one for you, congrats again on the gross margin here, given your commentary around the rollout of new data centers, what’s the right way to think about both the lower and upper thresholds of your gross margin over the next few quarters with the goal here to be properly conservative? Burt Podbere: Yes. So hey, Gur, great question and one near and dear to my heart. So, gross margin expansion has been a focus of mine and my colleagues in the DevOps center. And to-date, we have had great success in being able to expand our margins through obviously new modules coming to bear, new modules need more gross margin for us as well as opportunities within the data centers in terms of efficiency. But as we think about the future we see opportunities to even – to increase even more our gross margins with respect to lowering our long-term costs with respect to data centers, moving them to lower cost environments. But in the initial stages, it takes more to get those up and running. And so on a quarter-to-quarter basis, it might fluctuate, but not materially. We are already still smack dab in the middle of our long-term, our long-term range and we anticipate to stay there. So the movements will be small in the next few quarters. Gur Talpaz: That’s super helpful. Thank you. Burt Podbere: You are welcome. Operator: Thank you. Our next question comes from Brad Zelnick with Credit Suisse. Brad Zelnick: Thank you so much for taking the question and congrats on all the great momentum and everything you are doing to keep the world safe. Guys, my question follows up on I think what Sterling asked, just trying to understand how much of the growth is coming from new endpoints? Clearly, you have a lot of laptops being sold as everyone was working from home over these last few months. And if maybe if you were to look at the mix of drivers, endpoint unit growth versus module adoption or maybe dollars per endpoint, said differently, how should we think about that mix in Q1 versus what you would typically see? George Kurtz: Well, hey, Brad thanks for the question. I will take the first part and then I’ll turn it over to Burt. But if we just step back a little bit, and this is one of the areas that I’m always focused on is, when we talk about endpoint, certainly that’s our market we get lumped into, but I think it’s a bit limiting. I think about endpoint as a PC and a server. And really what we are focused on is workload protection, right, which is all of the cloud environments all the container, the femoral workloads, IoT mobile devices. So it’s a much broader opportunity for us. And when you think about what happened with COVID, sure you’re going to have new laptops come online, and you’re going to have people working from home. That isn’t going to change necessarily and those aren’t going to go away. In fact, I talked to a CIO just a couple of weeks ago and they told me whenever they refresh their computers, they’re only going to buy laptops, as an example, right? They’re going to go through a quicker refresh cycle because of that. And most people think that – most people work on laptops, a lot of the folks I know, but people go in the office, they turn their computer on and off, and that’s it. So they need to account for those. So that’s one piece of it, but I think the broader element is really the digital transformation, which is how many of these workloads are going to the cloud. And obviously, the computers they are buying are not going away. But at the end of the day, it’s really about this digital transformation and having a cloud architecture, which we’ve seen accelerate, people moving away from legacy technologies because of this new environment. And I think that’s more of the longer term piece of it is, it’s not just the work from home or work from anywhere, it’s how people are transforming that environment as well as their move to the cloud. Burt, maybe you have comments on the other piece? Burt Podbere: Hey, Brad. Yes, great question. So the other thing that goes along with that transformation at the same time from a long-term perspective is also the increased modules, right? So as you add more modules, it gives the opportunity to the sales team to introduce new things to customers and be able to increase their overall footprint with us from a security perspective. So just by given that we know that that’s part of one of the growth drivers that we’re looking at looking into the future. It’s obviously accelerated by what George was talking about, digital transformation. But the opportunity as well in front of us in terms of all the different types of workloads that customers are looking to have protection on whether it’s work from home type of units or whether it’s in the network or in the cloud. All of them are accelerating for us and we think that that’s a huge opportunity for the growth that we will see in the future. Brad Zelnick: Thanks, Burt. Maybe if I could just follow-up with one. As I think many have been concerned rightfully about customers’ desire to preserve capital and perhaps shrinking duration and extending payment terms. You guys had a blockbuster cash flow quarter I think your best ever, $87 million in free cash. But at the same time, CapEx was a lot lower, at least in what the Street was modeling. Can you walk us through how you’re able to deliver such a strong cash flow result despite being flexible with some customers? And also why did CapEx come down a bit? Was it intentional or maybe something supply chain? Thank you. Burt Podbere: Yes, good question. So obviously we are very focused on cash. For us, coming off such a strong Q4 and even Q1 that obviously propelled the opportunity to collect, so strong collections was a result of the strong performance. So that’s part of it. CapEx, part two of your question, CapEx, we’re trying to be managed throughout the year. If you look at our CapEx overall, you’re going to find that we’re going to spend roughly around 8% of CapEx as a percentage of revenue, with the majority coming in the back end. And that’s just a function of how we see the capacity in our data centers and how much more we need to add and build into them to be able to keep up with our growth. That’s how I think about it. Brad Zelnick: Thanks very much, and congrats again, guys. George Kurtz: Thank you. Burt Podbere: Thank you, Brad. Operator: Thank you. Our next question is from Alex Henderson with Needham. Alex Henderson: Thank you very much. Going to ask you if you have got the call from Cleveland, obviously, you’re going to go into the Rockstar Hall of Fame with these kind of numbers. But I thought instead, I would ask something more mundane along the lines of the free onboarding and the Falcon home products. Can you talk a little bit about the magnitude of that opportunity down the line when those people run-off of the timeline for the free subscriptions and then end up being sign-out. Is that a meaningful opportunity to up sell them to the platform? George Kurtz: Well, I think in general, we think work from home and work from anywhere is a meaningful opportunity. Obviously, we were flexible with our licensing, which we thought was the right thing to do from our customers, and that’s still running out. We’ve had a lot of customers take advantage of that. And so a lot of over-deployment, which helped them and ultimately, our goal is to be able to go back and drew them up and move them into a paying program. So we continue to evaluate that opportunity. I think it’s one opportunity that we have and it continues to move forward and the feedback that we have gotten so far has been fantastic. In fact, we have customers asking for a permanent work-from-home program for their home users. And if you think about in today’s environment, lots of people use their own computer at home, they try to connect with a VPN. Customers need it to be a little bit more flexible depending on their industry. So having the home users protected, which are often exposed to something that they could bring into the corporate network, which again is disappearing is important for many of these large institutions. So I do think there is some good opportunities going forward as we look to close out those programs. Alex Henderson: If I could shift the gears slightly, you guys have spent a lot of time and energy on dealing with the Kubernetes environment. You have clearly got a very differentiated product that goes into the runtime side of Kubernetes. Can you talk about your ability to feed that back into the CICD pipeline process back into the pre-deployment side and to what extent you think you can move into the full process flow there? George Kurtz: Well, yes, that’s certainly an ongoing journey for us. And I think we have made substantial progress in all the above. Obviously, we are very strong in run-time security and we have customers using the visibility element of what we are doing to really help them understand what should be deployed, what is deployed, what should be approved if it’s deployed, is it vulnerable, things of that nature. So, I do think there is lot of future opportunities to continue to streamline in that pipeline. And it’s kind of – it gets back to what I said earlier in the call, it’s so easy to deploy, it’s so easy to use. It doesn’t add a lot of friction. So now it’s about adding more value back into the developer pipeline as well as being able to solve some of the security use cases in the outcomes of the security teams are looking for. So, we continue to focus on. We had a huge release just a couple of weeks ago. We have one of the most mature Linux versions with coverage for many different operating systems and that’s been a differentiator for us, particularly in winning cloud workload protection business. Alex Henderson: Super. Thank you very much. Great job, guys. George Kurtz: Thank you. Operator: Thank you. Our next question is from Tal Liani with Bank of America. Tal Liani: Hi, guys. I wanted to ask you about the competitive displacement. And I want to just to discuss two things. Number one is what was the experience this quarter with displacing Symantec specifically? And second, we also see that you are displacing next-gen players and the question is, why, what are the deficiencies in their products or what kind of added value do you provide that allows you to displace also next-gen players? George Kurtz: Sure. Well, we can start with the first one. We continue to displace Symantec customers. Again, for a lot of the reasons that we have talked about in the past, people are looking for platforms and they are looking for technologies that actually work and stop breaches. Ransomware has been a huge driver and signature-based AV is really not capable of dealing with sophisticated ransomware, right. So, people are looking to get off that. Not as a matter of security, I mean that’s certainly an element, but as a matter of business resiliency. And in today’s environment, if we think about the healthcare community, the last thing anyone would want would be a ransomware attack in the middle of the pandemic. So, that’s one. Two is on the next-gen players. Again, we spent the time and effort to build the platform out from the ground up, right. It’s the same Salesforce, Workday, ServiceNow, CrowdStrike. We don’t have an on-premise version, because that’s not our model. So, lot of our competitors built on-premise versions. They try to move it to the cloud and call it a cloud offering. Their data is still on each endpoint. The value is being able to aggregate this data at scale, which we figured out with our threat graph. And effectively that creates a data mode plus the module expansion allows customers to add more modules not agents, right. And even our next-gen competitors, they still have three and four different agents because of their acquisitions. So people want something that’s simple, want something that works and want something that’s future proof and ultimately stops the breach. Tal Liani: Great. And that includes also next-gen players? George Kurtz: That was specifically directed at next-gen players, yes, got it. Tal Liani: I have a follow-up question about your platform can you discuss traction with opening up the platform to third-party applications? Are you starting to see traction with third-parties and what kind of applications are being offered or being demanded? George Kurtz: Yes, we are. We opened up the platform a number of years back and we continue to add partners. I think we are up to 11 now. And again, our goal is higher quality. It is in an Apple App Store, right. It’s really about having high-quality vetted partners in there. And again it gets to the pain point of customers don’t want more agents, they want less of them. And I do think that is an underappreciated fact in the industry is how painful more agents are. So when we look at the opportunity we have in the store we continue to add apps around patch management. We continue to add apps around white listing. We continue to add apps in the OT space. So, those are all being built out or built out and we keep adding more partners and we keep announcing new partners. And it’s been a real strategic I think weapon for us, because none of our competitors have a store quite like that and people love the flexibility that we are offering them. Collect once, reuse many and allowing that flexibility to our customers really saves them a lot of time and money in their operational overhead of their endpoint. Tal Liani: Got it. Thank you. Operator: Thank you. Our next question is from Joel Fishbein with SunTrust. Joel, your line is open. Joel Fishbein: Good afternoon, guys. Sorry, I was on mute. Congrats on a great quarter. George, I wanted to follow-up on the vendor consolidation story that seems to be accelerating here for you guys. Cloud module adoption is just fantastic and Burt had talked about more investment in R&D. Can you talk a little bit about some of the new modules that you are working on that are coming out and when we should start to see them, DLP, firewall management, maybe firmware protection, some of the other stuff that you guys are working on to sort of grow that 10, 11 number to continue to grow that? George Kurtz: Sure. Thanks, Joel. If we look at the modules today, we have got 11. We do have firewall management. We do have firmware protection, which is already in the product. As you might imagine, we don’t talk about the future modules that we are going to come out with, but we are always working on new modules and getting feedback from customers. We are spending a lot of time again looking at various use cases and how it can help customers with insider threats and use cases that again go beyond just core security. A big focus this quarter for us was our Discover module and the ability to help IT teams and there are a lot of use cases that have come back in terms of what people are looking for above and beyond just security. So, we continue to look to enhance the modules we have because we are never done with them. We are always updating them. That’s the beauty of the platform. I have had customers tell us we like in one day and the next day there is just tons of new stuff that shows up and we don’t have to do anything. It is nothing they need to do which is there and that’s the beauty of the platform. So, we are rapidly working on new technologies and new modules and obviously we are bringing on new store partners. So as we have new modules, we will be sure to bring everybody current with them. Joel Fishbein: Thank you. Operator: And our next question is from Matt Hedberg with RBC Capital Markets. Matt Hedberg: Hey, guys. Thanks for taking my question. At RSA, it was great to see Spotlight in action. I wonder if you can dig into that product a little bit more that module and maybe some of the competitive wins you are seeing against traditional vulnerability management peers? George Kurtz: Yes, thanks. The module adoption was up this quarter for Spotlight. I mean, it shouldn’t be a surprise given the fact that everybody is working remotely from home. And guess what, compliance mandates don’t really care if you are at home or in the office, right. So customers have a compliance mandate which is they have to understand what their vulnerabilities are on their systems and to have real time visibility into your vulnerabilities irrespective of where that endpoint of workload is, is huge for customers. So, we saw that being rolled out pretty rapidly and with the click of a button people have visibility. I think again it goes back to the consolidation play. People don’t want yet another agent. Some of the VM players have pushed their cloud agents. And at the end of the day, these are just kind of scanning technologies that add a lot of overhead for the endpoint. And the beauty of our model again is the fact that we have already collected the data and we are not putting extra burden on the endpoint from a performance perspective and we are not waiting for a scan to happen, it’s always real time. Matt Hedberg: Thanks, guys. George Kurtz: Thank you. Operator: Thank you. Our next question is from Sarah Hindlian-Bowler with Macquarie. Sarah Hindlian-Bowler: Hi, guys. Hi, George and Burt. It’s great to hear your voices and I am glad everyone is well. I wanted to ask – actually I have a couple of questions, but I will just go right to you, George and I will follow-up with Burt in a bit, but this was clearly a phenomenal quarter and I know your strength is being driven by digital transformation. But if I can dig a little bit down deeper, how do I think about the upside and what’s driving it the most between all of these major trends you have driving these results, work from home, competitive positioning versus incumbents and even your new products? Is there anyway you can give me a sense of the mix and if it’s evenly distributed or skewed to one or the other? Thanks guys. George Kurtz: Well, thanks, Sarah. Good to hear from you. And it’s a hard question to answer, because each customer is a bit different. Certain customers that have too much complexity and again they just want to simplify. Others have suffered breaches on their different technologies and they are looking for something that’s more effective. Others are looking for force multipliers like Falcon Complete where they just don’t have the headcount that was been a huge opportunity for us this past quarter. So, when you put all that together, I mean, there is a lot of tailwinds as you talked about. You have got the incumbents losing market share and abandoning the market. You have got work from home. You have got cloud adoption, digital transformation. There is a lot of opportunity for us and some of it is white space and the cloud workload is total Greenfield opportunity. There is just nobody there in this cloud workload. In fact, that we have tied in with metered billing makes it easy for people to adopt. So, it gets to down to – it just works, it’s simple, it’s easy to use and people can consume it the way they want to consume it and that has really benefited us. So, one of the things that we talked about in the call as well is the mobile piece, I think that gets underrepresented at sometimes. And we saw some really nice wins because of work from home. And we are one of the leaders really in EDR endpoint for mobile. We kind of developed that from scratch, that category and we have seen some really great traction in that area as well. Sarah Hindlian-Bowler: Phenomenal. Burt, I just really – I really appreciated the update on guidance and how you built out the year, it was really helpful. I just wanted to ask you one quick thing, should I expect to see any increase in churn as a result of just these kind of current frozen economic conditions or are workloads and device growth enough within the existing customer base to help to offset that? Burt Podbere: Hey, great to hear your voice as well, Sarah. So, we are assuming more churn and contraction in our guidance. While we have – the thing is that we have not yet seen a meaningful impact to contraction in churn as a result of COVID-19 given the impact of the broader macro economy. So taking that consideration, we have prudently increased our assumptions for contraction and churn in the quarter. This is one way, as you pointed out, we de-risked our guidance in the year and as we disclosed it in the prepared remarks. So that’s how we are thinking about contraction and churn. Sarah Hindlian-Bowler: Alright. Thank you guys so much. Congratulations. Amazing results. George Kurtz: Thank you. Operator: Thank you. And our last question is from Gray Powell with BTIG. Please go ahead. Gray Powell: Alright, thanks. Thanks for working me in. Lot of the questions have been asked already, but maybe I will add just a high level question. So when things get back to something closer to normal and the economy fully reopens, how will things be different at CrowdStrike? Will you all travel as much and do as many face-to-face meetings as you were doing previously or do you see a permanent change to the way that you run your business? George Kurtz: Well, it’s a great question and I will try to be brief. But we haven’t been more productive. Mike Carpenter and I are having meeting after meeting after meeting, customers are available, they are not traveling and it’s been very productive. It’s a little bit like Groundhog Day sometimes as you might imagine, I am sure everybody feels that. But we have been able to get to the customers. We have been able to get to the CIOs. And more importantly, we have been able to close the deals and that’s what matters. And it’s just a new normal. So certainly, there will be a hybrid. We will travel where customers will accept us and where it’s safe. But I think it’s a different way of doing business and enterprise selling in the SaaS world. Gray Powell: Got it. Okay. Thank you very much. George Kurtz: Thank you. Operator: Thank you. And I will turn the call back to George for his final thoughts. George Kurtz: Well, thanks everyone for the call and their time and attention. We hope to see you next quarter. And of course in today’s environment, we hope everyone stays safe and we hope you have a great day. Thank you so much. Operator: And with that, ladies and gentlemen, we thank you for participating in today’s program and you may now disconnect.
CrowdStrike Holdings, Inc. (CRWD) Maintains Positive Outlook from Morgan Stanley
- Morgan Stanley reaffirms its "Overweight" rating on NASDAQ:CRWD, raising the price target from $355 to $390.
- CrowdStrike's stock price reflects a 1.75% increase, trading at $352.03, with a year-high of $398.33 and a low of $200.81.
- The company's market capitalization stands at approximately $82.32 billion, showcasing its significant presence in the cybersecurity industry.
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a prominent player in the cybersecurity industry, providing cloud-delivered protection across endpoints, cloud workloads, identity, and data. The company is known for its Falcon platform, which offers advanced threat intelligence and cyberattack prevention. CrowdStrike competes with other cybersecurity firms like Palo Alto Networks and Fortinet.
On December 2, 2024, Morgan Stanley maintained its "Overweight" rating for CrowdStrike, indicating a positive outlook on the stock. At the time, the stock was priced at $342.07. Morgan Stanley also raised its price target from $355 to $390, suggesting confidence in the company's future performance and potential for growth.
The Investment Committee has identified CrowdStrike as a top stock to watch for the second half of the year. This attention from investors and analysts suggests potential developments in the stock's performance. Currently, CRWD is trading at $352.03, reflecting a 1.75% increase or $6.06 from the previous price.
Today, CrowdStrike's stock has fluctuated between $336.56 and $354.34. Over the past year, it has seen a high of $398.33 and a low of $200.81. This volatility indicates the dynamic nature of the stock, which is common in the tech sector. The company's market capitalization is approximately $82.32 billion, with a trading volume of 3,280,442 shares on the NASDAQ exchange.
CrowdStrike Holdings, Inc. (CRWD) Price Target and Financial Performance
- CrowdStrike Holdings, Inc. (NASDAQ:CRWD) receives a price target of $395 from KeyBanc, indicating a potential upside.
- The company surpasses its $4 billion annual recurring revenue milestone, showcasing strong financial performance.
- CrowdStrike boasts high retention rates, with a gross retention rate (GRR) of 97% and a net retention rate of 115%, reflecting strong customer loyalty.
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a prominent player in the cybersecurity industry, known for its cloud-delivered endpoint protection platform. The company competes with other cybersecurity firms like Palo Alto Networks and Fortinet. On November 27, 2024, Eric Heath from KeyBanc set a price target of $395 for CRWD, suggesting a potential upside of 15.47% from its trading price of $342.07.
Despite a recent decline in share price due to an unexpected third-quarter loss, CrowdStrike's financial performance remains strong. The downturn followed a significant outage in July, yet analysts continue to hold a positive outlook on the stock. As highlighted by Nicole Petallides, the analyst community, including Wedbush's Dan Ives, remains optimistic, with Ives setting a bullish price target of $390.
CrowdStrike's resilience is evident in its recent financial achievements. In the third quarter of fiscal year 2025, the company surpassed its $4 billion annual recurring revenue (ARR) milestone, reporting an ARR of $4.02 billion, slightly above the estimated $4.01 billion. This achievement underscores the company's robust market position and customer loyalty.
The company's retention rates further highlight its strong customer base. With a gross retention rate (GRR) of 97% and a net retention rate of 115%, CrowdStrike not only retains its customers but also sees them expanding their product portfolios. This stickiness is a testament to the value customers find in CrowdStrike's offerings.
Currently, CRWD's stock is priced at $341.78, reflecting a decrease of 6.18% or $22.53. The stock has fluctuated between $340.52 and $359.22 during the trading day. Over the past year, it has seen a high of $398.33 and a low of $200.81, with a market capitalization of approximately $83.77 billion. The trading volume for the day is 7,590,794 shares.
CrowdStrike Beats Q3 Expectations, But Shares Dip on Q4 Revenue Guidance
CrowdStrike Holdings (NASDAQ:CRWD) reported strong third-quarter results and raised its annual forecast, driven by increased demand for its cybersecurity solutions amid the rise of AI-fueled online threats. Despite the positive performance, the company’s shares dropped over 3% in pre-market today due to underwhelming fourth-quarter revenue guidance.
In the third quarter, CrowdStrike achieved revenue growth of 29%, reaching $1.01 billion and surpassing analyst expectations of $982 million. Adjusted profit per share came in at $0.93, well above the forecasted $0.81. The company also crossed $4 billion in annual recurring revenue (ARR), a milestone that reinforced its leadership in the cybersecurity sector.
For the fourth quarter, CrowdStrike projected revenue between $1.03 billion and $1.04 billion, aligning closely with the consensus estimate of $1.03 billion but failing to excite investors. However, the company raised its annual adjusted earnings outlook, now expecting profit per share in the range of $3.74 to $3.76, up from the prior guidance of $3.61 to $3.65.
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) Surpasses Earnings Expectations
- CrowdStrike Holdings, Inc. (NASDAQ:CRWD) reported a significant earnings per share (EPS) beat, with $0.93 compared to the estimated $0.81.
- The company's revenue also exceeded expectations, reaching approximately $1.01 billion against the forecasted $982.8 million.
- Despite strong financial performance, CrowdStrike's shares fell due to a less optimistic fourth-quarter revenue forecast.
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a prominent player in the cybersecurity industry, specializing in cloud-based security solutions. The company provides services to protect against cyber threats, which are increasingly prevalent in today's digital landscape. Competitors in this space include companies like Palo Alto Networks and Fortinet. CrowdStrike's recent financial performance highlights its strong market position and operational efficiency.
On November 26, 2024, CrowdStrike reported earnings per share (EPS) of $0.93, surpassing the estimated $0.81. This represents a 14.81% earnings surprise, as highlighted by Zacks. The company also reported revenue of approximately $1.01 billion, exceeding the estimated $982.8 million. This revenue figure marks a significant increase from the $786 million reported in the same quarter last year, reflecting robust growth.
Despite the strong third-quarter performance, CrowdStrike's shares fell by about 2% in extended trading. This decline was due to the company's fourth-quarter revenue forecast, which did not meet investor expectations. CFO Burt Podbere noted the company's success with customer commitment packages, which have strengthened client relationships despite challenges from a previous incident on July 19th.
CrowdStrike's financial metrics reveal a high valuation, with a price-to-earnings (P/E) ratio of approximately 701.57. This indicates that investors are willing to pay a premium for the company's earnings. The price-to-sales ratio stands at about 23.88, and the enterprise value to sales ratio is 22.95, reflecting the company's overall valuation in relation to its revenue.
The company's debt-to-equity ratio is 0.26, suggesting a relatively low level of debt compared to equity. Additionally, the current ratio is 1.86, indicating that CrowdStrike has a strong ability to cover its short-term liabilities with its short-term assets. Despite the modest earnings yield of 0.14%, the company's financial health remains robust, supported by its operational efficiency and market demand for cybersecurity services.
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) Earnings Preview and Market Outlook
- Earnings per share (EPS) is estimated at $0.81 for the upcoming quarter, a slight decline from the previous year.
- Projected revenue growth of 25% year-over-year, indicating strong market presence and customer acquisition.
- High valuation with a P/E ratio of approximately 533.88, reflecting investor confidence in future growth.
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a leading figure in the cybersecurity sector, known for its cloud-based endpoint protection solutions through the Falcon platform. The company competes with giants like Palo Alto Networks and Fortinet, aiming to stay ahead in the fast-paced cybersecurity market.
On November 26, 2024, CRWD is poised to announce its quarterly earnings, with Wall Street analysts forecasting an earnings per share (EPS) of $0.81. This represents a minor decrease of 1.2% compared to the previous year. However, the company's revenue is expected to hit around $983 million, a significant increase of 25% from the year before, underscoring CrowdStrike's expanding market reach and customer base.
The forthcoming week holds importance for investors, especially with markets closing on Thursday for Thanksgiving. CrowdStrike stands out among the stocks to monitor, alongside notable firms like Best Buy, Zoom, and Macy's. The release of October inflation figures and earnings reports from various retailers will likely impact market trends. Investors are set to closely observe these developments to assess the broader economic environment and consumer behavior.
CrowdStrike's financial indicators show a high valuation, with a price-to-earnings (P/E) ratio of approximately 533.88. This suggests that investors are ready to pay a premium for the company's earnings, signaling strong growth expectations. The price-to-sales ratio is around 25.95, indicating that investors are valuing the company's sales per share at nearly 26 times. These metrics underscore the market's optimism regarding CrowdStrike's future performance.
Despite its lofty valuation, CrowdStrike exhibits a relatively low debt-to-equity ratio of 0.27, reflecting a prudent use of debt. The current ratio of about 1.90 indicates the company's solid capability to meet its short-term obligations with its short-term assets, an essential aspect of maintaining growth and managing market volatilities effectively.
CrowdStrike Tops Q2 Estimates With Strong ARR Growth, But 2025 Guidance Falls Short
CrowdStrike Holdings (NASDAQ:CRWD) delivered stronger-than-expected second-quarter results, driving its stock up 8% intra-day today.
The cybersecurity company reported earnings per share of $1.04, surpassing Street expectations of $0.97. Revenue for the quarter came in at $963.9 million, exceeding the consensus forecast of $958.32 million and reflecting a 32% year-over-year increase.
CrowdStrike's Annual Recurring Revenue (ARR) also saw a 32% year-over-year growth, reaching $3.86 billion, with $217.6 million in net new ARR added during the quarter. Subscription revenue, which makes up the majority of the company's earnings, increased by 33% year-over-year to $918.3 million.
Despite the strong quarterly results, CrowdStrike's full-year guidance fell short of analyst expectations. The company projects 2025 adjusted EPS between $3.61 and $3.65, below the Street of $3.88, and revenue between $3.89 billion and $3.9 billion, missing the $3.95 billion analyst estimate.
Scotiabank Lowers CrowdStrike Price Target to $265, Cites Potential Legal and Financial Risks After Global Outage
Scotiabank analysts reduced their price target for CrowdStrike Holdings (NASDAQ:CRWD) to $265 from $300 while maintaining a Sector Perform rating on the stock. The adjustment follows extensive fieldwork, including discussions with four large CrowdStrike customers, three seasoned lawyers, and a cybersecurity insurance expert, to assess the implications of the recent CrowdStrike/Windows global outage.
The findings suggest that most customers with minimal or moderate impact are unlikely to seek concessions from CrowdStrike, while those facing serious financial impacts may turn to cybersecurity insurance and negotiate directly with CrowdStrike for service credits or additional offerings. Legal action appears to be a last resort. Given these insights, the analysts see increased risk to CrowdStrike's ARR estimates for 2025-26, but less concern about legal costs affecting FCF targets for the same period. Despite acknowledging CrowdStrike as one of the leading software companies, the analysts expect the shares to face challenges in 2024, thus maintaining the Sector Perform rating.
