-Total revenue was $302.8 million, a 70% increase (vs 63.8% consensus estimate), compared to $178.1 million in the first quarter of fiscal 2021. Subscription revenue up 73%
-Annual Recurring Revenue (ARR) increased 74% year-over-year and grew to $1.19 billion
-Subscription Gross Margin: GAAP subscription gross margin was 77% in the first quarter of fiscal 2022 and fiscal 2021.
-Income/Loss from Operations: GAAP loss from operations was $31.3 million, compared to $22.6 million in the first quarter of fiscal 2021. Non-GAAP income from operations was $29.8 million, compared to $1.2 million in the first quarter of fiscal 2021.
-Delivered record operating and free cash flow for the second consecutive quarter.
-Added 1,524 net new subscription customers
-Optionality: CrowdStrike’s subscription customers that have adopted four or more modules, five or more modules and six or more modules increased to 64%, 50%, and 27%
Outlook:
Q2 Outlook: Total revenue $318.3 - $324.4 million; Non-GAAP income from operations $26.3 - $30.7 million; Non-GAAP EPS $0.07 - $0.09.
2022 Outlook: Total revenue $1,347.0 - $1,365.7 million; Non-GAAP income from operations $115.7- $129.6 million; Non-GAAP EPS $0.35 - $0.41.
Not bad quarter. The growth is slowly decreasing. My guess is that FY22 revenues will be between 1.4 and 1.5b = roughly between 60% and 70%. I fear it will be more in low to mid 60s. Market cap just below 50b.
Fundamentally great company, still my largest position. However, considering slowing growth my guess is that road to 300 will be a long one. Will be probably reducing position from 20s to teens and looking to redeploy proceeds into better opportunities. Could be totally wrong with such train of thought…
You can pretty much bank on it being closer to $1.5b (or higher).
Company is pulling in ~$1.2bil ARR and still growing about 70%, this is extremely impressive growth at this scale. I don’t see any reason to sell at this point and might consider adding to my 26% position if the market continues to yawn at results like this.
$CRWD is up and down in AH. No one can make up their minds as seen on the first two posts here.
QOQ growth slowed a lot:
Q1 11.73%
Q2 16.83%
Q3 13.96%
Q4 14.31%
Q1 7.00%
The beat and raise were small, but they did beat. That’s why it’s not tanking in AH. I think the most likely scenario is this will grind higher at a measured pace this year. So if you want to invest in other opportunities, go for it. If want to hold, or add, it’s also not a bad idea as well. I will probably sell some shares with the next big market pop.
I think it is too early to say if things are really slowing down. Although guidance for Q2FY22 is only 7.12%, it is not likely to be that bad. With only a 4% revenue beat for Q2, QoQ growth would be 11.4%, not too far off prior Q2’s. If we also assume an annual revenue beat of 10% (in line with prior beats), then YoY revenue growth for FY22 is 72%. Additional details for my reasoning is as follows:
I looked at guidance vs. actual for the past 8 quarters, and revenue typically exceeds the high-end of the guidance by 3.68% to 9.74%. If we assume a 4% beat for Q2FY22 revenue (Q2FY20 revenue beat was 3.94% and Q2FY21 was 4.56%), then QoQ growth ending Q2FY22 is 11.4%. QoQ growth ending Q2FY20 and Q2FY21 was 12.49% and 11.73%, respectively, so Q2FY22 is in the ballpark.
I also looked back at the guidance vs. actual for annual revenue. For the past two years, actual annual revenue exceeded guidance from Q2 estimates by 10.31% (FY20) and 13.18% (FY21). If the annual revenue beat is 10%, then YoY FY22 revenue growth is 72%. Recall, YoY FY20 revenue was 93%, and FY21 was 82%.
I plan on holding and waiting for at least another quarter before I determine things are trending in a new direction.
For me this was a key question and insight in the Q&A session - pay attention to the subtleties here:
Q: Andrew Nowinski
Great. Thank you. And congrats on another fantastic quarter. I wanted to just get a question in on the net new ARR this quarter. So you, again – you saw no seasonality from Q4 to Q1, which I think is the first time at least the last three years where net new ARR has not declined sequentially, clearly indicating a significant change in the spending environment. In the past, I think you’ve talked about AWS driving a significant percentage of that net new ARR. So, I was curious, was that again the key driver this quarter that enabled CrowdStrike to defy normal seasonality?
A: Burt Podbere, CFO
Hey Andy, this is Burt. So, I think it’s just more broad-based demand. I don’t think it’s necessarily focused in just AWS. I think, the great news is we essentially delivered a second Q4 in Q1, to your point. You’ve been following us closely. I think it’s the continuation of trends we have been seeing for quite some time. George talked about them, the digital and security transformation, cloud adoption, this robust threat landscape. And I think we’re in a buying environment. And so, we’re really excited to be able to post such a strong Q1. But I think, again, it goes back to the broad-based demand. But thanks for tracking that information.
Basically the analyst and the CFO are making the point that, in the past, net new ARR, in absolute $ have always dipped from Q4 to Q1 until now.
That does not look like slowing growth to me. In fact quite the opposite!
I totally agree that Q1 was a great quarter and there was no sign of slowdown just from the Q1 numbers. However, the concern is in Crowdstrike’s Q2 guidance. In last Q4, they guided $287.8 - $292.1 million revenue for Q1FY22, and then they delivered $302.8 million. This was only a 3.66% beat on the upper bound of guidance, which was the lowest in their history as public company! Now they’re guiding $318.3 - $324.4 million revenue for Q2FY22. What if they have a 3.66% beat again? It will yield only $336.3 million. From $302.8 million to $336.3 million will only be a 11% QoQ growth. Compounding 11% QoQ growth for four quarters will just be a 51.8% YoY growth, which is definitely much lower than the 70% revenue growth Crowdstrike has right now.
I believe this is where the concern of slowdown really comes from.
Compounding 11% QoQ growth for four quarters will just be a 51.8% YoY growth
It seems people are trying to extrapolate excepted sequential growth for the current Quarter (Q2 vs. Q1) to make it seem like Crowds growth is decelerating quickly. Q2 vs. Q1 has been the lowest sequential growth Q for every year CRWD has been a public company and probably before then. It has been ~11-13% for the past few years when other Qs have been much higher. Yes, the growth is slowing slowly as is expected when revs/ARR get >$1bil, but using Q1->Q2 sequential growth to extrapolate full year growth is not the right way to look at it IMO.
Sorry for the formatting, I don’t know how to make good tables on here-
Luffy,
You annualized CRWD’s weakest seasonal quarter and compared to YoY growth, and used the assumption that their beat against guidance would tie their weakest ever.
That’s like taking Netflix’s Q1 sequential growth (historically their weakest as it is post-Holidays), apply the weakest beat on record, annualized it, then say “wow look at that slowdown, the year-over-year growth in the last Christmas quarter was much better!”
Let’s compare apples to apples shall we? Rather than mislead (even if that was unintentional).
Revenue of $336.3M in Q2 (top end guidance with a similarly historically-bad 3.66% beat) would be 68.8% growth. A very minor slowdown from the 70.0% growth just reported.
But wait a minute! Let’s drop the most pessimistic assumption and say that CRWD beats similarly with prior quarters, around 6%. Boom, Q2 growth suddenly reaccelerates to 72.8%, up from 70.0% just reported.
Damned Statistics.
For the record, I trimmed CRWD from a 32% position to a 23% position (still largest), and added LSPD. This was planned, I only held out in case CRWD reported something each-shattering.
It feels like we are making calculating CRWDs deceleration in revenue a little more complicated than it is.
CRWD is estimating $1,365m for the year in revenue. (using top end of range)
Last year at the end of Q1 they estimated at $772m and actually came in at the end of year at $874m. I would say they probably were really conservative last year because of COVID starting up and COVID pushed up their growth a bit.
So I will take what they are saying as more accurate this year. That gives them $1,365m vs $874m which is 56% fiscal 2022 vs 2021. That is a slowdown. It is still a great company but it is a slowdown. It is a slowdown in a market where the spending and move to digital is about as high as I literally have ever witnessed. I work for a big consulting company and businesses are spending like crazy on digital transformation right now.
Now, you can also take the $1.365m vs market cap and you get a P/S of around 34 end of year (46.7b/1.365). The market usually looks out about 6 months I feel in valuation so we are looking at a pretty reasonable valuation soon for 55% growth this year. Its not an amazing deal but its a great buy and hold.
I will say I don’t have much experience analyzing companies but I am pretty logical and that is how I see it.
Last year at the end of Q1 they estimated at $772m and actually came in at the end of year at $874m. I would say they probably were really conservative last year because of COVID starting up and COVID pushed up their growth a bit.
So I will take what they are saying as more accurate this year. That gives them $1,365m vs $874m which is 56% fiscal 2022 vs 2021. That is a slowdown.
They weren’t only conservative because of COVID. Saul always points out Full year revenue guides are almost meaningless at the start of the year. They are almost as meaningless after a single Q. CRWD has raised full year guidance after every single Q as a public company. They are just going to stop doing that now? Really? With all the tailwinds that the industry has? Not a chance.
Look at FY20 full year guide after Q1 vs. what the result actually was ($436.4 vs $481.4). Full year ended up 10.3% from the guide after Q1. Apply that same beat to this year and you have $1,500mil sales this FY. Or 71%+ growth. That’s not a slowdown (besides for slight drop from larger numbers). The market reaction to this report was pretty ridiculous as I’m not sure what it was expecting (acceleration?). That’s not the first time it’s reacted irrationally. I added to my large position today under $206. Eventually it will be forced to start moving up, I can wait.
I started investing in Crwd at a valuation over 110p/s two years ago, have never bought it under 34 p/s and my whole position has almost tripled from there. That’s why I never ever look at p/s ratios. Same story with my whole portfolio growing into valuation.
Now, you can also take the $1.365m vs market cap and you get a P/S of around 34 end of year (46.7b/1.365). The market usually looks out about 6 months I feel in valuation so we are looking at a pretty reasonable valuation soon for 55% growth this year. Its not an amazing deal but its a great buy and hold.
That was a little confusing to me until I figured out that you changed from $1,365m notation to $1.365b and mislabeled it as “m”. Then didn’t label the final “1.365” in 46.7b/1.365 (but it was clearly implied that this was “b” by the result. Perhaps this will help anyone else that got confused.
If you wrap your table with < pre > and < /pre > it will format as you typed it including with tabs.
Here is the table in a format you might like, that makes it easy to see the revenue growth trends year over year for each quarter:
CRWD is estimating $1,365m for the year in revenue. (using top end of range)
Last year at the end of Q1 they estimated at $772m and actually came in at the end of year at $874m. I would say they probably were really conservative last year because of COVID starting up and COVID pushed up their growth a bit.
So I will take what they are saying as more accurate this year. That gives them $1,365m vs $874m which is 56% fiscal 2022 vs 2021. That is a slowdown…
…I will say I don’t have much experience analyzing companies but I am pretty logical and that is how I see it.
Thoughts?
Hi Jeff,
Sorry, but your lack of experience in evaluating companies made you come to a rather silly conclusion. These companies’ estimates of revenue for the year finishing three quarters from now are always sandbagging/ultra conservative. They are not meant to be taken seriously and the guidance will be increased each quarter. If they are estimating $1,365 million now, there is zero chance that they will not finish over that number, and basing your calculation on that number won’t give you meaningful conclusions. For more on the “estimates game”, there is a section in Part 1 of the Knowledgebase which you would find interesting.
Best,
Saul
Links to the Knowledgebase for this board is in the Announcements panel that is on the right side of every page on this board. (It’s in three parts)
I started investing in Crowdstrike at a P/S valuation over 110 two years ago, have never bought it under P/S of 34, and my whole position has almost tripled from there. That’s why I never ever look at P/S ratios. Same story with my whole portfolio growing into valuation. Best, Pablo A
The above should be framed and hung on every board member’s wall!
Saul
Links to the Knowledgebase for this board is in the Announcements panel that is on the right side of every page on this board. (It’s in three parts)