Technology, Media, and Telecommunication
CrowdStrike Holdings, Inc. provides cloud-delivered solutions for next-generation endpoint protection in the United States, Australia, Germany, India, Romania, and the United Kingdom. It offers 11 cloud modules on its Falcon platform through a software as a service subscription-based model that covers various security markets, such as endpoint security, security and IT operations, and threat intelligence to deliver comprehensive breach protection even against today’s most sophisticated attacks.
Investment Thesis: CrowdStrike is an emerging stock that has and will continue to benefit from the rise in technology and increased number of employees working from home. Its cutting edge endpoint cloud product positions the firm to be able to provide top tier solutions for its customers and be the go to company for cybersecurity. Although CrowdStrike is young and is yet to be profitable, the low debt on its books and its continued revenue growth will allow the firm to grow and become a leading player in the cybersecurity industry.
Investment Merits: The accelerated transition to digital use across all entities due to Covid-19 has increased the growth and necessity for Crowdstrike than ever before; thus, it is increasing revenue. It is also founded and ran by those with many years in the cybersecurity industry who have a deep understanding for the need and usability of Crowdstrike services. Over 90% YoY Growth every year. Gaining significant market share (Almost 50% of Fortune 100, and over 50% of top 20 banks). Strong customer retention rates: dollar-based net revenue retention rate of over 120%; Meaning current customers are spending 20% more this year than they did last year at the same time
Investment Risks: Crowdstrike is a new company still having negative EBITDA and net income. In order to become profitable, it must sustain its high growth. The Covid-19 pandemic has ushered in a rise of ‘Work From Home’, which increased the number of employees using their personal laptops and computers for work. This generated a significant amount of revenue for Crowdstrike, as companies needed a way to secure their employees personal computers.
Recommendation: Buy at current price, and hold.