CRWD Stock: CrowdStrike Beats Wall Street Estimates in Q4
08 Março 2023 - 07:31AM
CRWD) are up close to 6%
in early market trading today after its earnings and revenue for
fiscal Q4 of 2023 (ended in January) beat consensus
CrowdStrike reported revenue of
$637 million and adjusted earnings of $0.47 per share.
Comparatively, Wall Street forecast the company to report revenue
of $625 million and adjusted earnings of $0.43 per share in the
Let’s see what impacted the
performance of CrowdStrike in Q4 and if the tech stock remains a
top bet for long term investors.
Is CrowdStrike stock a buy, sell or hold?
In Q4 of fiscal 2023, CrowdStrike
increased sales by 48% year over year. Its subscription sales were
also up 48% at $598.3 million, accounting for more than 90% of
total revenue. The company ended the quarter with annual recurring
revenue of $2.56 billion, an increase of almost 50% compared to the
Due to rising inflation and a
challenging macro-environment, CrowdStrike’s adjusted gross margins
fell to 77% compared to 79% in fiscal Q4 of 2022. Its adjusted net
income also rose by 20% year over year to $95.6 million.
George Kurtz, CrowdStrike’s
president, chief executive officer, and co-founder, stated,
“CrowdStrike delivered a record fourth quarter that exceeded our
expectations across the board.
He added, “Highlights of the
quarter included record net new ARR of $222 million, record net new
subscription customers of 1,873, record operating and free cash
flow and a rule of 81 on a free cash flow basis. CrowdStrike’s
growing market share showcases customersU+02019 recognition of the
Falcon platform’s technology leadership and advanced AI that drives
better security outcomes, consolidation and lower TCO.”
CrowdStrike added 1,873 net new
subscription customers in the quarter, taking its total to 23,019
subscription customers, an increase of 41% year over year. Its
module adoption rates stood at 62%, 39%, and 22% for five or more,
six or more, and seven or more modules, respectively.
CrowdStrike announced a strategic
alliance with Dell Technologies to help enterprises prevent, detect
and respond to cyber threats. Its Falcon platform is available with
volume licensing as part of the deal, and it can soon be added to
the purchase of Dell’s line-up of personal computers.
What next for CRWD stock price?
CrowdStrike expects its total
addressable market to expand from $76 billion in 2023 to $97.8
billion in 2025, providing the company with enough room to drive
top-line growth higher in the next few years.
CRWD ended the year with a net
customer retention rate of 125.3% which shows existing customers
increased spending by 25.3% in the last 12 months. A highly engaged
customer base allows CrowdStrike to cross-sell its portfolio of
products and generate cash flows amid a difficult market
Similar to most other SaaS
(software-as-a-service) companies, CrowdStrike also benefits from
high operating leverage, which means it can expand profit margins
at a much faster pace than expenses.
In Q4 of fiscal 2023, it reported
an operating margin of 15%, while this metric stood at just 7% in
fiscal 2021. The company also ended Q4 with a free cash flow of
$209 million, indicating a margin of 33%.
Analysts tracking CrowdStrike
stock expect sales to increase by 32.6% year over year to $3
billion, while adjusted earnings are forecast to increase by 33% to
$2 per share in fiscal 2024. So, CRWD stock is priced at 10x
forward sales and 65x forward earnings.
Despite its lofty valuation,
CrowdStrike remains a top bet due to its improving margins, stellar
revenue growth, and robust customer engagement rates.
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