Crowdstrike app with logo
Crowdstrike beats third quarter expectations and promises more growth / Image source: Adobe
  • Endpoint security firm beats third quarter expectations
  • Free cash flow and annual recurring revenue stand out
  • Stock doubled in 2023 as investors bet big on AI-powered growth

Cybersecurity company CrowdStrike (CRWD:NASDAQ) has been on a tear this year as investor bet on years of AI-powered growth. They were not left disappointed.

The Austin, Texas-based company announced better-than-expected results in the third quarter to 31 October, producing earnings of $0.82 per share on revenue up 35.3% year-on-year to $786 million. Analysts had been anticipating $0.74 on $777 million ahead of the release.

Crowdstrike’s differentiation is its high-efficacy cloud-based endpoint technology, lightweight single-agent architecture, and massive scale analysing over a trillion events daily.

SHARE PRICE HAS DOUBLED THIS YEAR

The stock has already doubled this year and has rallied nearly 22% into Q3 figures, perhaps explaining why the response looks relatively muted. Pre-market data shows the shares moving about 2% higher when trading resumes on Wall Street to $215.94.

There’s more growth to come. The company expects Q4 (to 31 Jan 2024) revenue to be around $838.3 million, nudging guidance mostly beyond the $836.8 million consensus.

Crowdstrike appProvides customers with high-efficacy cloud-based endpoint technology

Stifel reckons Crowdstrike will be able to sustain revenue growth of somewhere in the low-to-mid-20% range, at a minimum, while improving its operating margin and free cash flow generation.

FREE CASH FLOW AND ARR HIGHLIGHTS

Free cash flow, alongside ARR (annual recurring revenue), are what really stand out. CrowdStrike’s free cash flow came in at $239 million in Q3, up 37.3% year-on-year. This means it has generated $864.6 million in free cash flow over the last 12 months, an eye-popping 30.5% of revenue.

Q3 ARR came in at $3.15 billion, a slight beat versus expectations of $3.14 billion, giving the company incredible visibility to future sales. It means Crowdstrike is already ahead of this year’s 12-month revenue estimate of $3.05 billion and well on track to hit January 2025’s rough $3.9 billion estimate.

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Issue Date: 29 Nov 2023