Why CrowdStrike stock soared as much as 17% Thursday
Earnings, revenue and future guidance topped analyst estimates. Wall Street says the stock’s a buy.
Shares of cyber company CrowdStrike (CRWD) surged Thursday after the company reported fourth-quarter revenue and earnings that topped Wall Street consensus estimates.
The company also issued upbeat guidance for the current fiscal year 2023 that exceeded analyst estimates.
CrowdStrike stock closed Wednesday at $169.79 and popped to a week high of $196.90 during extended trading. Shares opened Thursday at $187.90, climbed to a high of $198.67 in the first hour of trading before trading fairly flat for the rest of the day. Shares closed Thursday at $191.02, up 12.5% for the day.
Why CrowdStrike stock is surging
CrowdStrike reported fourth-quarter and full-year fiscal 2022 earnings Wednesday at market close, with earnings, revenue and 2023 guidance topping analyst estimates.
Revenue for the quarter grew 63% year over year to $431 million, compared to the $412 million estimated. CrowdStrike reported quarterly earnings of $0.30 per share, beating the $0.20 expected.
Subscription revenue, CrowdStrike’s primary source of revenue which includes access to its Falcon endpoint protection platform, was $405.4 million for the quarter, a 66% increase year over year.
“Customers are increasingly leveraging the breadth and depth of the Falcon platform as they look to transform their security stack,” said CrowdStrike co-founder and CEO George Kurtz in a statement.
The company added over 1,600 subscription customers for the third consecutive quarter, bringing its total customer base to 16,325, a 65% year-over-year increase.
CrowdStrike said annual recurring revenue (ARR) increased 65% from the same quarter last year and grew to $1.73 billion as of January 31, 2022. Of that, $216.9 million was net new ARR added in the quarter. Since CrowdStrike’s revenue relies heavily on subscriptions, ARR is a key measure of the company’s business health, helping measure the company’s subscriber growth.
CrowdStrike had cash and cash equivalents of $2 billion as of January 31, 2022.
Looking ahead, the company said it expects to earn between $1.03 and $1.13 a share for fiscal 2023, on revenue of between $2.13 billion and $2.16 billion. Wall Street consensus was expecting fiscal 2023 earnings of between $0.66 and $1.07, on revenue of between $1.88 billion and $2.18 billion.
Thinking of buying CrowdStrike stock?
Cybersecurity is a large and growing market that CrowdStrike is tapping into, and Russia’s invasion of Ukraine and the growing fears of a significant ramp-up of cyberwarfare could accelerate the demand for endpoint protection.
The company is aiming to capture more market share by expanding its pipeline, which it’s done through various acquisitions in the last couple of years. CrowdStrike currently has 22 modules across its platform.
In 2020, CrowdStrike added a zero-trust module to its platform through its acquisition of Preempt Security, a leading provider of zero-trust technology. On a call with investors on Wednesday, Kurtz described it as being a “highly differentiated module,” saying CrowdStrike’s competitors “really don’t have anything that’s close to this.”
“It certainly is a big way for us to help differentiate the platform among many others,” Kurtz added. “And it has been an absolute standout for us.”
CrowdStrike said it anticipates it’ll continue its strong momentum into 2023.
Crowdstrike is currently down 36% from its all-time high of $298.48, which it just hit in November.
Analysts are largely bullish on the stock, with 29 of the 32 analysts covering the stock giving it either a Strong Buy or Buy. Two give it a Hold, while only one rates the stock Underperform.
This includes a series of analyst upgrades that came on Thursday following CrowdStrike’s stronger-than-expected earnings.
Five-star Barclays analyst Saket Kalia maintained his Buy rating on the stock on Thursday. Michael Walkley, a five-star analyst with Canaccord Genuity, also maintained his Buy rating on CrowdStrike stock.
The average price target is $266.10, a 39% premium over the current price.
For more information and a five-year chart of the stock’s performance, see our dedicated guide to CrowdStrike stock.
At the time of publication, Matt Miczulski owned shares of CRWD.
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