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CrowdStrike (CRWD) Invests in Salt Security, Boosts Portfolio

CrowdStrike CRWD announced that it has invested in the Application Programming Interface (“API”) security solution providing startup, Salt Security, through its strategic investment vehicle, Falcon Fund.

Apart from investing in Salt Security, CrowdStrike has entered into a partnership with the former. Per partnership terms, the two companies will bring together leading technology to apply API discovery and runtime protection on applications, thereby enabling security testing to strengthen APIs before release.

In partnership with the American venture capital firm, Accel, CrowdStrike launched Falcon Fund in August 2019. With the initial funding of $20 million, the strategic investment vehicle focuses on seed and Series A investments in early and growth-stage startups that are building applications on the CrowdStrike Falcon platform.

Through Falcon Fund, CrowdStrike has already invested in several security startups, including Dig Security, JumpCloud and Talon Security.

With the help of its strategic investment arm, CRWD is focusing on building an ecosystem of next-generation security providers. The ecosystem will enable seamless integrations with security solutions per customers’ requirements to protect themselves in a rapidly evolving threat landscape.

CrowdStrike Price and Consensus

CrowdStrike Price and Consensus
CrowdStrike Price and Consensus

CrowdStrike price-consensus-chart | CrowdStrike Quote

Strong IT Security Demand Aids CrowdStrike’s Growth

CrowdStrike has been benefiting from the rising demand for cyber-security solutions due to the slew of data breaches and the increasing necessity for security and networking products amid the hybrid working trend. The continued digital transformation and cloud migration strategies adopted by organizations are key growth drivers.

Per the latest MarketsAndMarkets report, the worldwide cybersecurity market is projected to grow from an estimated $173.5 billion in 2022 to $266.2 billion in 2027 and witness a CAGR of 8.9% during the forecast period. This trend is likely to impact demand for CrowdStrike’s products positively.

The Sunnyvale, CA-based company’s next-generation antivirus, EDR, and device-control products are well-poised to gain amid the thriving remote work culture.

Furthermore, CrowdStrike is focusing on partnerships and aggressively investing in research and development to broaden its product portfolio and market reach.

In March 2022, the company expanded its partnership with Cloudflare NET. Under the agreement, Cloudflare intends to provide more powerful Zero Trust solutions for mutual customers by integrating its Zero Trust platform with CrowdStrike’s Falcon Zero Trust Assessment platform.

In June this year, CrowdStrike introduced its latest graph database — Asset Graph. The database dynamically monitors and tracks complex interactions among assets, providing graphic visualizations of asset relationships, such as devices, users, accounts, applications, cloud workloads and operations technology, to secure IT operations from breaches.

The aforementioned factors are driving CrowdStrike’s financial performance. In the latest reported second-quarter fiscal 2023 results, the company’s revenues surged 58% year over year to $535.2 million and surpassed the Zacks Consensus Estimate of $517.1 million. Its non-GAAP earnings improved to 36 cents per share from 11 cents in the year-ago quarter and beat the consensus mark of 28 cents.

Subscription revenues jumped 60% year over year to $506.2 million. The company added 1,741 net new subscription customers during the reported quarter. It had a total of 19,686 subscription customers as of Jul 31, 2022, reflecting year-over-year growth of 51%.

Zacks Rank and Key Picks

Currently, CrowdStrike carries a Zacks Rank #3 (Hold), and Cloudflare has a Zacks Rank #4 (Sell). Shares of CRWD and NET have plunged 14.3% and 53.4%, respectively, year to date (YTD).

Some better-ranked stocks from the broader Computer and Technology sector are Clearfield CLFD and Silicon Laboratories SLAB, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Clearfield's fourth-quarter fiscal 2022 earnings has been revised upward by 10 cents to 80 cents per share over the past 60 days. For fiscal 2022, earnings estimates have moved 36 cents north to $3.13 per share in the past 60 days.

Clearfield’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 33.9%. Shares of CLFD have soared 10.3% YTD.

The Zacks Consensus Estimate for Silicon Laboratories’ third-quarter 2022 earnings has increased 36.1% to $1.13 per share over the past 60 days. For 2022, earnings estimates have moved 20.5% up to $4.41 per share in the past 60 days.

Silicon Laboratories’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 63.6%. Shares of SLAB have decreased 37.4% YTD.

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