'Breaking The Mold For Security': 7 CrowdStrike Analysts React To Impressive Earnings Report

Crowdstrike Holdings Inc CRWD shares jumped more than 13% on Thursday morning after the company's earnings and guidance topped Wall Street's expectations.

On Wednesday, CrowdStrike reported fourth-quarter adjusted EPS of 30 cents on revenue of $431 million. Both numbers topped consensus analyst estimates of 20 cents and $410.9 million, respectively. Revenue was up 63% from a year ago.

Annual recurring revenue for the quarter was $1.72 billion, up 65%. Free cash flow was $127.3 million, up 31% year-over-year.

Looking ahead, CrowdStrike guided for first-quarter revenue of between $459.9 million and $465.4 million and adjusted EPS of between 22 cents and 24 cents. For the full fiscal 2023, CrowdStrike guided for revenue of between $2.133 billion and $2.163 billion and adjusted EPS of between $1.03 and $1.13.

Related Link: 4 Costco Analysts Praise Q2 Earnings Beat Even As Growth Slows

Expanding Beyond Core Business: Bank of America analyst Tal Liani said CrowdStrike is generating impressive growth outside of its core market.

"A key focal point of the quarter was success beyond the core endpoint market, highlighted by the Humio, Discover, Spotlight, and identity protection modules contributing 17% of 4Q’s net new ARR, and Cloud security adding an additional 8%," Liani wrote.

BTIG analyst Gray Powell upgraded CrowdStrike from Neutral to Buy and said the company's quarter was thesis-changing.

"While the quarter and the guide were very good, the game-changer for us was the incremental disclosure illustrating real traction in tangential markets outside of core endpoint security," Powell wrote.

Wells Fargo analyst Andrew Nowinski said CrowdStrike's fourth quarter was arguably one of its best ever.

"We continue to believe CrowdStrike is the best-positioned vendor in the space," Nowinski wrote.

Impressive Business Model: RBC Capital Markets analyst Matthew Hedberg said CrowdStrike is "breaking the mold for security" and remains one of the most impressive models he's seen at scale.

"With several additional sizing metrics indicating strong cross-sell success and a bullish demand environment, management noted a record Q1 pipeline, and we believe additional upside to above-consensus guidance seems likely," Hedberg wrote.

Needham analyst Alex Henderson said CrowdStrike was designed with the architecture to successfully deliver Xtended Detection and Response (XDR).

"CrowdStrike demonstrated why it's not just an End-Point Detection and Response product, but instead a scaled, elastic cloud platform capable of delivering a robust and extensive range of well-integrated Security capabilities spanning many adjacencies," Henderson wrote.

Secular Tailwinds: JMP analyst Trevor Walsh said CrowdStrike's cloud-native platform enables it to quickly expand into new areas of cybersecurity when opportunities arise.

"The company benefits from a highly tuned go-to-market engine, with well-aligned sales and marketing efforts from top-level brand awareness to tactical sales execution in the field," Walsh wrote.

Jefferies analyst Brent Thill said he does not see CrowdStrike's secular growth tailwinds slowing down.

"ARR grew an impressive 65% in F4Q vs 67% in F3Q as new business ARR (accounting for churn) of $223M grew 51% yoy organic vs. the prior Q's 47% growth which is a meaningful re-acceleration albeit on a 4 pt easier comp," Thill wrote.

Rating And Price Targets:

• Bank of America has a Buy rating and a $315 target.
• BTIG has a Buy rating and a $257 target.
• Wells Fargo has an Overweight rating and a $275 target.
• RBC Capital Markets has an Outperform rating and a $275 target.
• Needham has a Buy rating and a $340 target.
• JMP has a Market Outperform rating and a $275 target.
• Jeffries has a Buy rating and a $250 price target. 

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