I'd like to share some due diligence on CrowdStrike Holdings (CRWD), a leading player in the cybersecurity market.
1) Strong Financial Performance: CrowdStrike recently reported impressive results for their April quarter. Their earnings per share rose by 84% to 57 cents on an adjusted basis, beating analysts' estimates. Additionally, revenue climbed 42% to $692.6 million. In both profit and revenue terms, CrowdStrike outperformed expectations, showing the company is making more money and delivering solid growth.
2) Disappointing Outlook, but Perspective Needed: Despite these robust results, the company's stock took a hit, mainly due to a less-than-stellar revenue outlook for the next quarter, projected at $722 million versus analyst estimates of $719 million. While the modest outlook may have disappointed some, it's important to remember that these are estimates – they can be surpassed. Besides, a consistent track of exceeding past estimates should be considered.
3) Solid Annual Recurring Revenue (ARR): Subscription-based businesses thrive on their ability to secure consistent, recurring revenue, and CrowdStrike is excelling here. Their ARR saw a 42% increase to $2.73 billion, slightly above expectations. This growth indicates a healthy subscription base, providing a predictable and steady stream of future revenue.
4) Stock Performance and Rating: Despite a recent dip after the earnings report, CRWD's stock has climbed 46% in 2023 so far, indicating a generally upward trend. Also, it holds an IBD Relative Strength Rating of 84, meaning it has outperformed 84% of all stocks over the past year. Although it's not at the top of the scale, there's potential for further growth.
TLDR: While the short-term outlook might have triggered a negative reaction in the stock market, CrowdStrike's strong financial performance, rising ARR, commitment to innovation, and relatively strong stock performance all suggest a solid potential for long-term growth.
Leave a Reply