CrowdStrike Soars Most in Four Years After Strong Results
(Bloomberg) -- CrowdStrike Holdings Inc. surged the most in four years — hitting a record high — after the cybersecurity company reported fourth-quarter results that were better than expected and gave an optimistic outlook for the current period.
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The company is anticipating earnings per share of 89 cents to 90 cents in the three months ending in March, beating the average analyst forecasts for 82 cents. It sees revenue of $902.2 million to $905.8 million, also surpassing estimates.
The Austin-based company’s strong report comes at a time of extreme volatility for cybersecurity stocks. High-profile hacks have created new demand opportunities for some security firms while others have largely missed out. In stark contrast to CrowdStrike, Palo Alto Networks Inc. plunged in February after cutting its revenue forecast for the year, saying customers were facing cybersecurity “spending fatigue.”
CrowdStrike is setting itself apart as it capitalizes on a single-platform strategy that has allowed it to gain market share. Morgan Stanley analyst Hamza Fodderwala noted that CrowdStrike is “one of the few software companies growing about 30% this year.” He said there is “no spending fatigue here,” and that CrowdStrike has “multiple tailwinds including rising cyberattacks, new SEC regulations and AI driving increased demand.”
Chief Executive Officer George Kurtz said from its start CrowdStrike has focused on building seamlessly integrated security offerings and customers have been willing to pay for it because it’s less complex than competitors’ products.
“They want simple, easy-to-use and effective technologies,” Kurtz told Bloomberg News in an interview Wednesday. “What customers really want is they want one place to go.”
CrowdStrike shares jumped as much as 23% to $365 early Wednesday morning in New York, the biggest intraday gain since March 2020. They later pared gains and were up 11% at 11:28 a.m. in New York. Several analysts raised their price targets on the stock.
In the fourth quarter, CrowdStrike reported adjusted earnings of 95 cents a share, beating estimates of 83 cents. Quarterly revenue also exceeded estimates, hitting $845.3 million.
Kurtz credited the “exceptionally strong” results to the company’s consolidated security offerings on a single platform. He noted on a call with investors that an unnamed financial services firm had replaced its Palo Alto cloud products “in a large seven-figure deal.”
As cyberattacks have become more sophisticated as a result of artificial intelligence, companies are increasingly looking to consolidate their security platforms and operate more efficiently. New rules by the US Securities and Exchange Commission also require companies to quickly disclose malicious cyberattacks on their networks and detail the processes in place to prevent them from happening again.
CrowdStrike also announced that it had agreed to buy Flow Security, a firm that runs a cloud-data protection platform. Kurtz said the acquisition will help CrowdStrike track the flow of data through clients’ systems to detect insider threats and prevent leakage.
--With assistance from Ryan Vlastelica and Subrat Patnaik.
(Updates with comments from CEO George Kurtz starting in fifth paragraph.)
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