CrowdStrike (CRWD) 2Q Earnings

Investment Analysis Clubs Saul’s Investing Discussions
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Seems like a good solid consistent quarter but shows a mild trend of deceleration (something for the market to have an opinion on I’m sure, but just a quick look). I guess I hoped for a bit of a blow-out excitement and instead I’m just content. This is a very quick look though. I look forward to the call in about 25min!


Q                       Q2'FY21	Q1'FY21	Q4'FY20	Q3'FY20	Q2'FY20
Ending                  Jul-20	Apr-20	Jan-20	Oct-19	Jul-19

Total revenues   	199.0	178.1	152.1	125.1	108.1
      Revenue growth   	84.0%	85.3%	89.1%	88.5%	94.1%

Gross profit     	144.6*	131.2	108.7	87.8	76.5
      Gross margin  	72.7%*	73.7%	71.5%	70.1%	70.8%

*These values were not calculated by me. I only see the subscription gross margin (78%) at a glance, not this total one, but so far the source has been pretty good so I’ll post it and we can figure it out later.

Posted: https://ir.crowdstrike.com/news-releases/news-release-detail…

September 2, 2020 at 4:05 PM EDT

Second Quarter Fiscal 2021 Financial Highlights

- Revenue: Total revenue was $199.0 million, an 84% increase, compared to $108.1 million in the second quarter of fiscal 2020. Subscription revenue was $184.3 million, an 89% increase, compared to $97.6 million in the second quarter of fiscal 2020.

- Annual Recurring Revenue (ARR) increased 87% year-over-year and grew to $790.6 million as of July 31, 2020, of which $104.5 million was net new ARR added in the quarter.
Subscription Gross Margin: GAAP subscription gross margin was 76%, compared to 74% in the second quarter of fiscal 2020. Non-GAAP subscription gross margin was 78%, compared to 76% in the second quarter of fiscal 2020.

- Income/Loss from Operations: GAAP loss from operations was $30.0 million, compared to $50.6 million in the second quarter of fiscal 2020. Non-GAAP income from operations was $7.8 million, compared to a loss of $20.6 million in the second quarter of fiscal 2020.

- Net Income/Loss: GAAP net loss was $29.9 million, compared to $51.9 million in the second quarter of fiscal 2020. GAAP net loss per share, basic and diluted, was $0.14, compared to $0.40 in the second quarter of fiscal 2020. Non-GAAP net income was $7.9 million, compared to a loss of $23.1 million in the second quarter of fiscal 2020. Non-GAAP net income per share, diluted, was $0.03, compared to a loss of $0.18 in the second quarter of fiscal 2020.

- Cash Flow: Net cash generated from operations was $55.0 million, compared to negative $6.2 million in the second quarter of fiscal 2020. Free cash flow was $32.4 million, compared to negative $29.2 million in the second quarter of fiscal 2020.

- Cash and Cash Equivalents increased to $1,065 million as of July 31, 2020.

Recent Highlights

- Added 969 net new subscription customers in the quarter for a total of 7,230 subscription customers as of July 31, 2020, representing 91% growth year-over-year.

- CrowdStrike’s subscription customers that have adopted four or more cloud modules increased to 57% and those with five or more cloud modules increased to 39% as of July 31, 2020.

- CrowdStrike was identified as the fastest-growing endpoint security software vendor in the IDC Worldwide Endpoint Security Software Market Shares, 2019 report.

- CrowdStrike, Netskope, Okta, Inc., and Proofpoint, Inc. announced they are coordinating to help organizations implement an integrated, zero trust security strategy. The companies will offer integrated solutions, advanced insights, and reference architectures, in addition to implementation best practices, accounting for end-user, device, network, and data security.

- Announced the addition of applications from Illumio, Obsidian Security, and SecurityAdvisor to the CrowdStrike Store.

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Submitted early by accident!!

I meant to call out this stat! Profit!
“Free cash flow was $32.4 million, compared to negative $29.2 million in the second quarter of fiscal 2020.”

I also wanted to point out the change in guidance to the upside!

Last 8k Total revenue:

         Q2 FY21		     Full Year FY21
$185.8 - $190.3 million		**$761.2 - $772.6 million**

This 8k Total revenue:

         Q3 FY21		    Full Year FY21
$210.6 - $215.0 million		**$809.1 - $826.7 million**

Also guiding Q3 to be roughly break even (Non-GAAP). By roughly I mean the numbers straddle $0.

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Earnings Call Slide deck:
CrowdStrike Holdings, Inc. 2021 Q2 - Results - Earnings Call Presentation

4

They are also predicting a fairly large deceleration in Q4 revenue growth.

For the full year they predict ~818M in revenue at the mid-point.
If you subtract out Q1-Q3(178+199+212)=589 that leaves you with predicted Q4 revenue of 229M.

That is only a 51% increase in revenue from Q4 2020. (229-152)/152=77 77/152=51%
Of course, they are probably sandbagging, but it is worth keeping an eye on.

2 Likes
5

They’ve generally beat guided growth by about 10% the last few quarters:


      Guided   Actual
4Q21  50%
3Q21  70%
2Q21  76%      84%
1Q21  75%      85%
4Q20  74%      90%
3Q20  89%      82%
2Q20  86%      93%

And sequential growth appears relatively consistent


      Guided   Actual
2Q21  7%       12%
1Q21  11%      17%
4Q20  11%      22%
3Q20  11%      16%
2Q20  8%       13%
1Q20           20%
4Q19           21%
3Q19           18%
2Q19           19%

Of note, in Q2 of last year they guided to $452m for FY20, with $120m in Q3 (+82%) and $128m (+60%) in Q4, then in Q3 they raised guidance to $139m for Q4 (+74%) and ultimately came in at $152m (+90%) for the largest percentage beat over guidance.

So, their guidance is lower than guidance before, and they’ll probably beat but still be lower than before. Maybe guidance is somewhat muted by COVID and just an overall unwillingness for some companies to spend money. One should probably accept that growth will slow slightly as the numbers grow, and if their growth slows from mid-high 80’s to high 70’s. A similar pattern of raising guidance from say $229m (+51%) to $248m (+63%) then coming in at $266m (+75%) would work fine for me ($866m for the year, +80%).

31 Likes
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I guess I hoped for a bit of a blow-out excitement and instead I’m just content.

How about if we take a look:

Adj op income was $8 million, up from a LOSS of $21 million.

Adj net income was $8 million, up from a LOSS of $23 million.

Adj EPS was 3 cents, up from a LOSS of 18 cents.

Op cash flow was $55 million, up from a LOSS of $6 million.

Free cash flow was $32 million, up from a LOSS of $29 million

Rafe, you are spoiled.:grinning:

Saul

60 Likes
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Rafe (and everyone else), notice what an amazingly clearer picture you get if you

round off to whole millions

use “Adj” instead of “Non-GAAP”

use “Adj Op Income” instead of “Non-GAAP Income from Operations”, etc

leave off all those references to “in Q2 of 2020”

say “3 cents” instead of $0.03

say “up from” in all those places instead of “compared to”

say “up from a LOSS of” where appropriate.

It is the same information, just SOOOOOO… much clearer.

Saul

60 Likes