CrowdStrike (NASDAQ:CRWD)

Internet security platforms are in high demand.

Crowdstrike offers cloud security products to its customers. Crowdstrike leverages it’s global footprint and many users to train its systems to recognize a wide range of threats far faster than any human could. Crowdstrike is consistently named a leader in its field and trusted by some of the world’s largest cloud companies.

positives

-leader in cloud security (Gartner, IDC, Foresters)
-focussed on being true “cloud native”, meaning they operate only within the cloud and don’t split their focus, one of the few companies to start in the cloud
-having a cloud based security solution means that Crowdstrike can collect tonnes of data from its users to further educate its AI product
-cloud based ensures that all customers get the best product
-over 60% of attacks don’t use malware, many existing platforms only look for malware attacks and aren’t prepared to adjust to someone actively hacking a system
-offers lots of important modules, endpoint security, zero trust, file protection, cloud security, etc.
-ai tells customers where their biggest weaknesses/vulnerabilities are so they can prioritize patches
-crowdstrike offers a warranty up to $1 million to users of its falcon complete platform, the warranty has never been claimed
-traditional firewall protection doesn’t work anymore with people working from anywhere, new solutions are needed
-new addition, Humio, offers log management
-Humio offers very large capacity for data and super fast processing (can ingest 1PB of data a day), more data = greater security
-Humio gives Crowdstrike another product type to sell to developers, in addition to its security solutions
-crowdstrike is offering an automatic workflow platform called falcon fusion that notifies customers of events and automatically draws needed information and draws a roadmap to fix the problem
-the cloud security/IT industry is constantly understaffed as a whole, so a provider that can offer automation to multiply the productivity of each person is of great value to a company
-Crowdstrike XDR (extended detection and response) draws information including that from third parties in order to get the best insights into security threats, XDR is available to third parties such as Cloudflare, Google, ZScaler, Okta and other cloud industry leaders in order to provide the best security to all parties
-rev growth above 60% in most recent year/quarter
-gross margins in the high seventies
-free cash flow positive, over 150m in most recent quarter
-non-gaap profitable
-grew customer count by 65% in last year
-customers are adding new modules (products) rapidly - “CrowdStrike’s subscription customers that have adopted four or more modules, five or more modules and six or modules increased to 69%, 57%, and 34%, respectively, as of January 31, 2022. “
-about $2b in cash and equivalents, despite being labelled around $1.4b, current liabilities are actually lighter than they look with about $1.1b of that marked as deferred revenue (subscriptions that the company still has to fulfill), because of the capital light design of the company this doesn’t equal a lot of increased costs they will have to bare to cover this, this is actually more of a positive, as it is recognized now as free cash
-cyber security is only becoming more integral in a digital world
-founder led, founder is involved and has deep understanding of business and tech
-George Kurtz has a CPA and security background
-its an enterprise level company meaning its customers are stable

negatives/risks

-like any security company, a major hack would be a big hit
-long term debt is the only line that stands out on the balance sheet, this is probably in large part attributable to Humio acquisition
-internet technology changes quickly so like any company operating in this space cloudflare will have to keep innovating and spending on R&D to keep up