CrowdStrike (NASDAQ:CRWD) Posts Better-Than-Expected Sales In Q4, Stock Soars

Petr Huřťák /
2023/03/07 4:09 pm EST

Cybersecurity company CrowdStrike (NASDAQ:CRWD) reported results ahead of analyst expectations in the Q4 FY2023 quarter, with revenue up 47.9% year on year to $637.4 million. Guidance for next quarter's revenue was $676.6 million at the midpoint, which is 1.54% above the analyst consensus. CrowdStrike made a GAAP loss of $48.9 million, down on its loss of $41.7 million, in the same quarter last year.

Is now the time to buy CrowdStrike? Access our full analysis of the earnings results here, it's free.

CrowdStrike (CRWD) Q4 FY2023 Highlights:

  • Revenue: $637.4 million vs analyst estimates of $626.8 million (1.68% beat)
  • EPS (non-GAAP): $0.47 vs analyst estimates of $0.43 (10.4% beat)
  • Revenue guidance for Q1 2024 is $676.6 million at the midpoint, above analyst estimates of $666.3 million
  • Management's revenue guidance for upcoming financial year 2024 is $2.98 billion at the midpoint, in line with analyst expectations and predicting 33.2% growth (vs 55.1% in FY2023)
  • Free cash flow of $209.5 million, up 20.3% from previous quarter
  • Customers: 23,019, up from 21,146 in previous quarter
  • Gross Margin (GAAP): 72.4%, down from 73.9% same quarter last year

“CrowdStrike delivered a record fourth quarter that exceeded our expectations across the board,” said George Kurtz, CrowdStrike’s president, chief executive officer and co-founder.

Founded by George Kurtz, the former CTO of the antivirus company McAfee, CrowdStrike (NASDAQ:CRWD) provides cybersecurity software that protects companies from breaches and helps them detect and respond to cyber attacks.

Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks. As the volume of internet enabled devices grows, every device that employees use to connect to business networks represents a potential risk. Endpoint security software enables businesses to protect devices (endpoints) that employees use for work purposes either on a network or in the cloud from cyber threats.

Sales Growth

As you can see below, CrowdStrike's revenue growth has been incredible over the last two years, growing from quarterly revenue of $264.9 million in Q4 FY2021, to $637.4 million.

CrowdStrike Total Revenue

And unsurprisingly, this was another great quarter for CrowdStrike with revenue up 47.9% year on year. On top of that, revenue increased $56.5 million quarter on quarter, a very strong improvement on the $45.7 million increase in Q3 2023, and a sign of acceleration of growth.

Guidance for the next quarter indicates CrowdStrike is expecting revenue to grow 38.7% year on year to $676.6 million, slowing down from the 61.1% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $2.98 billion at the midpoint, growing 33.2% compared to 54.4% increase in FY2023.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Customer Growth

You can see below that CrowdStrike reported 23,019 customers at the end of the quarter, an increase of 1,873 on last quarter. That is a fair bit better customer growth than last quarter and quite a bit above the typical customer growth we have seen lately, demonstrating that the business itself has good sales momentum. We've no doubt shareholders will take this as an indication that the company's go-to-market strategy is working very well.

CrowdStrike Customers

Key Takeaways from CrowdStrike's Q4 Results

With a market capitalization of $29.9 billion, more than $2.71 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.

We were impressed by the exceptional revenue growth CrowdStrike delivered this quarter, and the company also beat on ARR and free cash flow. Additionally, we were glad to see the acceleration in customer growth. While revenue guidance for next year indicates a slowdown, we think this was a strong quarter for CrowdStrike. The company is up 7.71% on the results and currently trades at $134.54 per share.

Should you invest in CrowdStrike right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.