CrowdStrike Holdings, Inc. (CRWD) on Q4 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by and welcome to the CrowdStrike Fourth Quarter and Fiscal Year 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. . Please be advised that today’s conference is being recorded. . I would now like to hand the conference over to your speaker today, Maria Riley, Investor Relations for CrowdStrike. Please go ahead. Maria Riley: Good afternoon and thank you for your participation today. With me on the call are George Kurtz, President and Chief Executive Officer and Co-Founder of CrowdStrike; and Burt Podbere, Chief Financial Officer. Before we get started, I would like to note that certain statements made during this conference call that are not historical facts, including those regarding our future plans, objectives, and expected performance, including our outlook for the first quarter and fiscal year 2022 are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent our outlook only as of the date of this call. While we believe any forward-looking statements we have made are reasonable, actual results could differ materially because the statements are based on current expectations and are subject to risks and uncertainties. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements whether as a result of new information, future events or otherwise. Further information on these and other factors that could affect the company’s financial results is included in filings we make with the SEC from time-to-time, including the section titled Risk Factors in the company’s quarterly and annual reports that we file with the SEC. Additionally, unless otherwise stated, excluding revenue, all financial measures discussed on this call will be non-GAAP. A discussion of why we use non-GAAP financial measures and a reconciliation schedule showing GAAP versus non-GAAP results is currently available in our press release, which may be found on our Investor Relations website at ir.crowdstrike.com or on our Form 8-K filed with the SEC today. Please also note that in light of our recent acquisition of Humio management will provide additional information into our guidance assumptions. We do not intend to provide this additional information on an ongoing basis. Now, I'll turn the call over to George to begin. George Kurtz : Thank you, Maria. And thank you all for joining us today. We have a lot of ground to cover. I will focus today's discussion on three key points. First, we delivered a phenomenal fourth quarter with results exceeding our expectations across the board, as customers of all sizes are increasingly choosing CrowdStrike as their security cloud platform of record. Second, as recent events such as the SUNBURST software supply chain attack highlight, stopping the breach is no longer just about protecting endpoints. It also encompasses cloud workload security and identity protection. We continue to enhance our capabilities and invest in all these areas, including our timely acquisition of Preempt, and as a result, we are driving strong momentum with customers. Third, our recent acquisition of Humio is a key element of our strategy to drive long-term growth. Together, we are building what we believe will be the fastest, most cost efficient, and extensible cloud data platform that will deliver best-in-class visibility for security as well as observability for IT operations. 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. We delivered another outstanding quarter and fiscal year. Our record performance highlights our continued exceptional execution and ability to rapidly scale our business, while at the same time maintaining best-in-class operations. In fiscal year 2021, we delivered 82% revenue growth, 7% operating margin, and $293 million in free cash flow or 33% of revenue. We are exiting the year with a record fourth quarter, which includes record subscription gross margin at the high end of our target model and record free cash flow of $97 million. In the fourth quarter, we saw broad-based demand and strength in multiple areas of the business with multiple large deals, none being outsized. Similar to last quarter, demand for our solutions was well balanced between new customers and expansion business and between large enterprises and mid-market and smaller accounts. We once again ended the quarter with a record pipeline, which we believe indicates a strong foundation for future growth. In the fourth quarter, we delivered 75% ARR growth year-over-year to reach $1.05 billion. Rapid new customer acquisition as well as expansion business within existing customers drove substantial growth in the quarter, once again resulting in another quarter of record net new ARR, which came in at $142.7 million. Excluding the acquired net new ARR reported in Q3, net new ARR grew approximately 30% quarter-over-quarter, which is an increase from the trend we saw last year. We continue to be very pleased with the success of our land-and-expand strategy. Our gross retention rate remains high and best in class at 98% at year-end. Our dollar-based net retention rate exceeded the 120% benchmark throughout the year. Net retention increased to 125% as of the end of FY '21, up from 124% at the end of FY '20. For the interim FY '21 quarters, net retention was 128% in Q3, 131% in Q2, and 126% in Q1. Moving to the P&L. Total revenue grew 74% over Q4 of last year to reach $264.9 million. Subscription revenue grew 77% over Q4 of last year to reach $244.7 million. Professional service revenue was $20.3 million, setting a new record for the second consecutive quarter and representing 49% year-over-year growth. In addition to providing valuable breach remediation and forensic services to organizations around the world, our professional services are a strong lead generation engine for the Falcon platform. Among organizations who first became a professional services customer after February 1, 2019, the average subscription ARR derived for every $1 spent on initial incident response or proactive service engagement grew to $5.51. This is up significantly when compared to $3.73 reported last year. In terms of our geographic performance in Q4, we continue to see strong growth in the U.S. as well as international markets. Approximately 71% of fourth quarter revenue was derived from customers in the U.S.; 14% from Europe, Middle East and Africa markets; 10% from Asia Pacific; and 5% from other markets. Growing our international business is a key component to our plan to sustain growth over the long term. We were pleased to see our investments in these markets deliver in fiscal 2021, with EMEA posting 84% growth and APAC revenue more than doubling at 113% over last year. We remain focused on building a long-term business with sustainable growth and compelling margins. In Q4, we recognized significant operating leverage in our SaaS model and the benefits of scale even as we increased investments in our global reach and cloud platform. Fourth quarter non-GAAP gross margin improved to a record 77%, a 380 basis point increase from Q4 of last year. Our non-GAAP subscription gross margin increased to 80% compared with 77% in Q4 of last year. Subscription gross margin reached the high end of our target range, reinforcing the business advantage of our "collect data once and reuse many times" strategy. Total non-GAAP operating expenses in the fourth quarter were $170.3 million or 64% of revenue versus $118.4 million last year or 78% of revenue. We continued investing aggressively in our business during the quarter. Scaling our business efficiently remains a top priority, which is why we intensely focus on our unit economics, including Magic Number. In Q4, we ended with a Magic Number of 1.3, which remains very high. We attribute this to our frictionless go-to-market engine, including our digital lead generation and self-service e-commerce capabilities, and while to a lesser degree, some benefit from reduced travel due to COVID-19 restrictions. We drove strong leverage in the quarter and fiscal year. For FY '21, total operating expenses as a percentage of revenue improved by 17 percentage points, with both R&D and G&A within our target operating model. The leverage we generated this year demonstrates the efficiency in our model and enables us to step up investments in new technologies, new international geographies and other marketing programs as well as continue to hire aggressively. We believe this will lead to sustained growth over the long term. We look forward to sharing additional details about our model on our next investor webinar scheduled for April 8. Fourth quarter non-GAAP operating income was a record $34.4 million, and operating margin improved 17 percentage points over Q4 of last year to reach 13%. Q4 represents our ninth consecutive quarter of improving non-GAAP operating performance on both a dollar and margin basis. Non-GAAP net income in Q4 was $31.2 million or $0.13 on a diluted per share basis. Our weighted average common shares used to calculate fourth quarter non-GAAP EPS was on a diluted basis and totaled 236.7 million shares. This brings our non-GAAP net income for fiscal 2021 to $62.6 million, or $0.27 on a per share diluted basis using 234.4 million shares. We ended the fourth quarter with a strong balance sheet. Cash and cash equivalents totaled approximately $1.9 billion. Our cash balance reflects approximately $740 million in net proceeds from the $750 million senior unsecured notes issued in January. We also expanded our revolving credit facility to $750 million, providing CrowdStrike access to additional capital without diluting our shareholders. Cash flow from operations in the fourth quarter grew to $114.5 million, and free cash flow increased to $97.4 million, setting new records for both measures. Before we move to our guidance, I would like to make a few modeling notes. With respect to net new ARR, as is typical for software companies and similar to last year, we expect to see seasonality as we move from Q4 to Q1. Our guidance includes the impact of our recent acquisition of Humio, which closed on March 5, 2021. We currently expect the acquired net new ARR contribution from Humio to be approximately $2 million in the first quarter. We funded the cash portion of the Humio acquisition with cash on hand. The $352 million cash payment, net of cash acquired, will be reflected in our Q1 FY '22 cash balance. We expect interest expense and fees from the issuance of $750 million in senior unsecured notes and the $750 million undrawn credit facility combined to be approximately $22.6 million per year, excluding amortization of debt issuance costs and discount. Moving to our guidance. We continue to remain optimistic about the demand for our offerings, record pipeline, and the powerful secular trends fueling our growth. For the first quarter of FY '22, we expect total revenue to be in the range of $287.8 million to $292.1 million, reflecting a year-over-year growth rate of 62% to 64%, with subscription revenue being the dominant driver of growth. We expect non-GAAP income from operations to be in the range of $18.5 million to $21.7 million and non-GAAP net income to be in the range of $10.8 million to $13.9 million. We expect diluted non-GAAP net income per share to be in the range of $0.05 and $0.06, utilizing a weighted average share count of 238 million shares. For the full fiscal year 2022, we currently expect total revenue to be in the range of $1,310.4 million to $1,320.7 million, reflecting a growth rate of 50% to 51% over the prior fiscal year. Non-GAAP income from operations is expected to be between $94.8 million and $102.5 million. We expect fiscal 2022 non-GAAP net income to be between $63.8 million and $71.4 million. Utilizing weighted average shares used in computing diluted non-GAAP net income per share of 240 million, we expect non-GAAP net income per share to be in the range of $0.27 to $0.30. The midpoint of our non-GAAP EPS guidance includes approximately $0.08 per share in added operating expense for Humio and $0.09 per share in added interest expense for the debt we previously discussed. George and I will now take your questions. Operator: Our first question comes from Saket Kalia with Barclays. Saket Kalia: A lot to sort of run through, but George, maybe I'll zero in on the public cloud and Falcon Horizon. The question is, as customers take a look at Falcon Horizon and your other security tools for the public cloud, can you just talk about how much you're able to cross-sell those into your existing customer base, and maybe how your conversations, understanding it's early, with new customers are trending around Falcon Horizon and the other public cloud security tools. George Kurtz: Sure. Thanks, Saket. Yes, obviously if you look at our model, we've done a great job of being able to cross-sell our technologies. And when you look at Horizon, it's a perfect opportunity for us to cross-sell into those cloud workloads, which as we've pointed out, are increasingly becoming more and more important for all the companies as they digitally transform. We've gotten tremendous feedback so far. Obviously still early days on Horizon, but again that's something that we had built for ourselves over many years. So while it's new to the market, it's been a proven technology. And it's been very well received so far by our customers, and we've gotten some nice traction with it. So we also pointed out some additional updates in the Linux modules where we can run in a Fargate environment as an example. So overall, very strong offering in the cloud workload runtime protection and visibility space, and we continue to build that out and we'll continue to build that out over time. Saket Kalia: Got it. That's really helpful. Burt, maybe for you for my follow-up, understanding we don't guide to ARR for next year, maybe one component of that, that I wanted to zero in on is that ARR per customer. Obviously, a tough metric to forecast because there are just so many different drivers inside of it. But as you look forward just broad brush, how do you think about that ARR per customer sort of trending in fiscal '22? And what are going to be some of the puts and takes to that? Burt Podbere: Saket, great question, great to hear your voice. So when we think about ARR per customer, you can see that there's a mix shift that is happening. I mean that's evidenced by the accelerated growth we saw in net new logos, and that was really driven by the mid-market and SMB space. And as a reminder, when you think about our ARR per customer across the board, accounts are expanding, and that's evidenced by our 125% net retention rate. And then finally when you think about the overall success of our net new logos and the velocity that we're seeing with respect to our net new logos, you're seeing that we're able to sell to customers large and small. This is very hard to do. And getting great satisfaction from our customers we're -- across the board is something that we absolutely strive to. So there are a lot of different dynamics that go into that equation. You've got the velocity from the smaller mid-market folks in terms of the volume of new logos, but you're also seeing us still be able to land those bigger deals. So excited about the opportunity and certainly excited about our expansion opportunities. Operator: Next question comes from Sterling Auty with JPMorgan. Sterling Auty: Appreciate the disclosure on the sales through AWS, but I'm just wondering if you can, either quantitatively or qualitatively, give us a sense of what percent of the net new ARR in the quarter or even the year actually came from protecting cloud workloads? Just so we can get a sense of that use case for endpoint versus traditional ones. Burt Podbere: Sterling, it's Burt, still -- very, very good question. So remember I think that first of all, we feel that it was a strong quarter through AWS marketplace. I think it's growing into a really meaningful number. I think that one of the things you want to really put into perspective is that we're probably one of the most transactioned ISVs on the marketplace. And I think the key is that we're seeing good pull for our new cloud modules. George talked about how many containers we secure, and it's a big number. And I think that when you combine that with almost more than 20% of our servers we protect are in the cloud, I think that you're starting to put the picture together. The better news is that we still have the greenfield opportunity with respect to protecting cloud workloads. And we're really, really ahead of anybody else that's out there in the marketplace. The marketplace is really a great vehicle for transacting business with both large and small customers. And George often talks about the speed in terms of how we close the process with AWS. I think that with respect to their governing contracts or their global contracts, I think that this has been a real advantage for us. If both the buyer and seller agree to this standard contract, that just speeds up the process by 80%. At the end of the day, companies want our tech, and they're buying it through the Marketplace as one avenue. So we see this as, again I want to highlight, we see this as a greenfield opportunity for us. Sterling Auty: And then just the other question on Humio, George, when you think about XDR, how would you kind of characterize any differences between XDR and SIM? Is this kind of the first step or do you see those as the same opportunity? So in other words, are you going to become more of a full-blown SIM provider over time? George Kurtz: Well, I think you have to look at the outcome. The outcome is to find advanced threats. And you don't want to create just bigger needle stacks, right? You want to be able to find those nuggets that are out there. You want to leverage the vast artificial intelligence technologies that we've built. And we've been, even prior to Humio, I mean we've built a lot of technology, which would be XDR-like in terms of looking at different network flows and connectivities. So we feel really good about the technology. We've looked at just about everything else that's out there, and we were just blown away about how fast the technology works, index-free ingestion and what it's going to bring. And as I pointed out in the script, it's going to help in multiple areas across the board that I pointed out, even the CrowdStrike Store to pull additional integrations in. So I think it's a real foundational technology for us. You'll hear more about it as we solidify the integration plans, but very excited. Operator: Our next question comes from Fatima Boolani with UBS. Fatima Boolani: George, maybe I'll start with you just with respect to Humio. You did talk a lot about the revenue opportunity associated with Humio. I'm wondering if you can expand upon the cost/benefit opportunities. And to the extent we can think about CrowdStrike re-platforming the back end on Humio, and if that's a path that you're thinking about as it relates to Capex, gross margin and just the way you're thinking about your own back end infrastructure? And then I have a follow-up for Burt, if I may. George Kurtz: Well certainly, it will be a technology that will be used throughout the CrowdStrike platform. You could see we're at the high end of our range for gross margins. So I think it could be a small impact, but I'll let Burt comment on anything further than that. But overall it's going to be foundational technology for us. Its ability to compress data is without actually having to rehydrate it. So I mean you can search all this information even in a very compressed format, which is very unique in the industry. I think it's certainly going to help across the board, and we'll know more when we get into it. Burt Podbere: Yes, it's a good question, Fatima. I think that to George's point, I mean we're already in a good spot with respect to our subscription gross margin. There's going to be a little help with respect to Humio. And so we do anticipate an opportunity for increased margin expansion due to that, but also due to other things like more modules that we're going to add to our platform and more optimization. Fatima Boolani: Fair enough. And Burt, since I have you, just with respect to the remarks George made around ARR in the script where there might be some spillover into the first fiscal quarter. Can you just reconcile that and some of the large deal momentum you saw in this quarter, versus some of the seasonality expectations that you pointed us towards for fiscal '22? That would be really helpful. Burt Podbere: Sure. First, let me comment on seasonality. So I think that we typically see seasonality in our business in ARR. And we saw last year, or similar to last year, we saw a dip from Q4 to Q1. And I think that's going to be the case again. The good news is again, there were no outsized deals in the quarter. We had a lot of large deals. And so that was beneficial for us when we think about our ability to continue to land many large deals. And some of the things, some of the remarks that George made with respect to ARR going into Q1, that really relates to some of the subscription start dates. So we would still land them in Q4, but the subscription start date would take place in the following quarter, and that happens in every quarter. And we have many, many, many deals that obviously land in the quarter and also start their subscription start date in the quarter as well. And I think that the other thing is it really is dependent on the customer's deployment schedule, right? We're ready to go anytime, right, but we want to make sure that the customer is ready. And so that's why we think about large deals or small deals landing in one quarter, but the subscription start date in another. Operator: Our next question comes from Brian Essex with Goldman Sachs. Brian Essex: George, I was wondering maybe if you could touch on Humio again a little bit. I guess could they typically see competitively an environment, are they similar to scaler? And/or is this maybe taking their technology and repurposing in a completely different direction than what they were typically, or I guess, strategically aligned for? George Kurtz: Well, I think you've got the normal players in the SIM log management space that are out there that they would consider competitors. With respect to their technology, why it's differentiated, I really did talk about the index-free ingestion, the fact that there's a lot of things that they can do in memory, which is just it's amazingly how efficient the technology is. And when we put it through its paces and hooked it up to our back-end, it handled all the data that we threw at it. So when you look at its flexible architecture and data models, it's different than others where you can operate it from the cloud. You're going to have data in different places, data sovereignty. So i think IT gives us a lot of flexibility. And then when you combine it with our agent, our agent is more than just a forwarder of data. It's a very intelligent agent that does introspection, the system call analysis. Provides information, observability information that can be extremely valuable to IT departments, again outside of security. So when you combine our agent, our smart filtering with their ability at scale to ingest data in real time, we really think it's a winning combination. Brian Essex: Got it. That's super helpful. And maybe as a follow-up, you mentioned in your prepared remarks a crisis of trust within the Microsoft customer base. Could you provide a little bit of context around that? I mean is it strictly with regard to endpoint? Or do you see that across identity management, e-mail with the recent Exchange server? I mean how pervasive do you think it is? And how might that affect not just your business, but others across the ecosystem? George Kurtz: I think it's across the board. We're seeing it. We're hearing it from CISOs. We're hearing it from CIOs. Boards are concerned. When you look at the latest breaches around Sunburts and you look at the Exchange zero-day vulnerabilities, just about every incident response we do involves Microsoft technology. So obviously we're focused on being able to protect it, but there's a lot of customers that are looking at this and saying, "Hey, we need to derisk our environment, and we need another provider." The proverbial, "I don't want the fox guarding the henhouse." And I think just over the last couple of months has really highlighted the risk in using sort of a monoculture for both security and operating systems. Operator: Our next question comes from Andrew Nowinski with D.A. Davidson. Andrew Nowinski: Congrats on the consistently strong execution, which is not easy in this environment. So I wanted to start with a question on a win you mentioned in your prepared remarks at Salesforce. Was the incumbent vendor that you displaced a legacy or a next-gen provider? And why did they select CrowdStrike? George Kurtz: So thanks, Andy. It was a next-gen vendor. One has been making a lot of noise in the investment community. And they chose us because of the scalable platform, low impact, and efficacy. And I think that's across the board, that's what we're seeing, whether it's a next-gen vendor or whether it's an incumbent vendor, is the ease of use, time to value is incredible. We've done some massive financial services companies, and it's been the smoothest rollout that they've seen. It just works, and the amount of visibility that we have is it's unbelievable compared to our competitors. So a lot of things may sound and seem the same, but when you actually get into the technology and platform, this was built to scale. And we've pioneered a lot of these technologies over time. Others have tried to copy us, but a bad copy is still a copy. Andrew Nowinski: Okay. And then maybe just a follow-up as it relates to the legacy vendors that you compete against, I'd imagine the sale of the McAfee enterprise business is a potential churn event for their customers. So just wondering if you could comment on that? And then what inning do you think you're in with regard to taking share from Symantec? George Kurtz: Well, yes, maybe I'll start with the later one -- the latter one. We still are taking share. Just how the sales tactics work and how the renewals work, it's really a great opportunity for us to continue to take share from Symantec. And I think that sort of play is again we'll continue with McAfee in the enterprise business. Whenever you see a disruption between owners, and particularly if it's a financial sponsor, we believe and I think that's been proven over time, you're not going to see a lot of innovation on the R&D side. And again, you're starting with an architecture that's just legacy. So there's a lot of work that would have to be done, and we think it's a great opportunity for us to continue to take share in that area. Operator: Our next question comes from Alex Henderson with Needham. Alex Henderson: I wanted to talk a little bit about the metrics around the pipeline. You stated that you saw a record pipeline. I think you're clearly seeing record deal sizes. Can you talk a little bit about some of the metrics around time to close deals? Are you seeing any change in that time line? And what does the time to first upsell look like? And then in that context, as you are now at the end of the year and looking into the new year, can you give us some sense of what your expectations are around the sales staff build to drive that pipeline over the course of the new fiscal year? George Kurtz: Yes. It's George. Thanks for the question. So we don't normally give the stats out, and candidly it's difficult to give you something that's consistent. You look at an incident response engagement, it could be a week for a massive enterprise deal. You look at some of the other big financial services, it could be 6 months, and everything in between. So I think what's consistent is that when we get into a proof of value, we're winning it. People are seeing the ease of use. It's super easy to deploy. So we can get it out there very quickly, and that does accelerate the sales cycle. I talked about the threat environment being the worst that I've ever seen. And certainly the heightened awareness around that from Boards wanted to make sure they had things locked down. So overall, it's very variable, but I think we've done a good job of consistently proving value to our customers, consolidating agents, proving a real ROI. Sometimes, it's a 30 to 6-month payback on our technology as we rip out other technologies that are there. And in terms of module expansion, as we talked about in the past, we've got in-app trials. We've got a lot of customers trying new modules even if they didn't buy them and then self-selecting, saying, "Hey, I want that." And that obviously makes for very efficient sales model. Burt, anything to add? Burt Podbere: Yes. On your comment about hiring enough salespeople to go after that record pipeline going into the year, so like I've been talking about for a while, Alex, we're constantly looking at our opportunities. And we're going to invest aggressively when we see them. We clearly see them now. Obviously, it's -- we're really happy with our Magic Number at 1.3. But I think we have some room there to continue to aggressively invest in the sales and marketing efforts because we clearly see the opportunity in front of us. Operator: Our next question comes from Joel Fishbein with Truist. Joel Fishbein: Congrats again on a phenomenal execution in the quarter. George, for you, I mean I want to highlight on EY. You talked about it a little bit last quarter. System integrators seem to be playing a much bigger role in this digital transformation and security transformation, which you're obviously a large part of. I wanted to see if you would elaborate a little bit on what's happening with the E&Y partnership? And then if we should expect to see other system integrators like that develop go-to-market strategies around CrowdStrike? George Kurtz: Thanks, Joel. And I'll start with the latter one. Obviously, we continue to build out the system integrator partnerships. So you'll see more over time. When you look specifically at EY, they've been great partners for us. The P&G deal that I called out, great relationships there. And as you very well know, they're operating at the Board level. They've got deep and long relationships. And as they're helping companies digitally transform, as I've said many times, you need to go through a security transformation as well. And they're hand in glove. So we're very excited about that relationship. Obviously, it's a worldwide relationship. And I think we're only in the beginning of that. And as that begins to ramp across the globe, we're excited about the potential opportunities that brings. Operator: Our next question comes from Rob Owens of Piper Sandler. Rob Owens: I wanted to touch a little bit on that last answer, George. I guess relative to the international opportunity, and maybe the GSIs could be a great accelerator. And while growth has paced I guess with overall growth, if you think about mix longer term, is there any governing factor or gating factor relative to getting to kind of a 50-50? I look historically at companies in this space, they had revenue half domestic, half international. Could you see that longer term? Or is there anything that might prevent that? George Kurtz: Well, I certainly could see that mix longer term. We continue quarter over quarter to expand rest of world outside of North America as an example. We continue to build the partnerships, and the partnerships are very important outside -- well, they're important everywhere. But in many geographic locales, that's really the only way to go to market is through partnerships. So we'll continue to expand that out when you look at the EYs, AWS of the world, across the globe. We've got many other worldwide partners. And they're certainly very strategic for us. And what we're seeing right now, Rob, is a strong customer pull to the partner community, right? So it's one thing to have a partner network. It's another thing when you have a customer -- their customers saying, "We want CrowdStrike. We want it as our system of record." Operator: Our next question comes from Gray Powell with BTIG. Gray Powell: Congratulations on the quarter. So I think in the prepared remarks, you mentioned that you did not see SolarWinds as a material driver to ARR in Q4. But I do think that everyone probably agrees that there should be a tailwind of growth in the EDR space from the breach in 2021. So I guess how should we think about that this year? And then beyond just EDR, what modules do you see the SolarWinds breach driving the most incremental demand for? George Kurtz: Sure. So we certainly see it as a sustainable tailwind. When you look at what happened, I mean this particular event was probably the most significant I've seen in almost 30 years in my security career. So that's going to drive a long-term trend in terms of customers that want better technologies that want greater visibility that drive EDR and XDR. So that's all good, and we see that. When you look at the modules that we think could really benefit something like our zero trust and really our Preempt technology, we talked about identity being incredibly important. Obviously, you have EDR and there's a lot of technologies that find bad things. But identity is a big element of protecting organizations, both on-prem and in the cloud. And I couldn't think of a more well-timed acquisition than Preempt because of what's happening right now. So we've got -- there's in a conversation we're having with a large enterprise. It doesn't involve identity, specifically, again, where we operate on the endpoints and workloads, and zero trust again on the endpoints and the workloads. Gray Powell: Got it, okay. And then anything on the vulnerability management side or ? George Kurtz: Well, yes, the vulnerability side, a lot of it is driven by the vulnerability of the week from the Microsoft perspective. So people are having a hard time just dealing with all the vulnerabilities, where they are, they patched. If it's patched, is it really the latest? Is it fixed? And our VM Spotlight product -- has really, really matured and is very well received by our customers. And that's actually been one that we've seen, I think, really good uptake on as well. Operator: Thank you. And that concludes our Q&A session. I would now like to turn the call back over to George Kurtz for any closing remarks. Thank you. That concludes our Q&A session. I would now like to turn the call back over to George Kurtz for any further remarks. Maria Riley: Operator, let's go ahead and conclude the call. And I'd like to thank everybody for joining us today. And we look forward to seeing you virtually at our upcoming events. Thank you. Operator: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. 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.
