Crowdstrike Q420

CRWD - Q420

pre earnings

User comments:…
User comments:…

Supplemental numbers:…
vinegar on pandemic impact:…
CC transcript:…
CC notes (Edyboom):…

Revenue 152.1M +89% !!

  • Sub Rev 138.5M +90% !!
    ARR 600.5M +92% !!
    Adj Gross Margin 73% +600bps
  • Adj Sub GM 77% +700bps, +100bps seq
    Adj Op Loss -6.7M (vs -28.0M)
    … margin -4.4% (vs -34.8%), +860bps seq !!!
    Adj Loss -3.9M (vs -28.0M) !!
    Adj EPS -0.02 (vs -0.60) !!
    Opex 118.4M +98%
    CFFO 66.1M (vs 15.8M) !!
    FCF 50.7M (vs -0.1M) !!
    … margin 33.3% !!!, +2770bps seq !!!
    Cash 912.1M
    Custs 5431 +116% ^^, +400bps seq
    $NER >120%

Revenue 481.4M +93%

  • Sub Rev 436.3M +99%
    Adj Op Loss 65.6M (vs -115.8M)
    Adj Loss 62.6M (vs -119M)
    Adj EPS -0.42 (vs -2.65)
    CFFO 99.9M (vs -23.0M)
    FCF 12.5M (vs -65.6M)

CEO: “… regardless of the spending environment cybersecurity is not a discretionary purchase for organizations. Cybersecurity is mission critical to both the public and private sector. Endpoint or workload security is also essential to protecting a remote workforce. While the impact to the macroeconomy from the coronavirus is unfolding in real time, we know it is forcing companies to conduct business differently and rapidly shift to a remote workforce. With our cloud native platform, our lightweight agent that is easily deployed at scale and our frictionless go-to-market engine, CrowdStrike is uniquely positioned to meet their cybersecurity needs. … we are seeing strong success with our strategy to land bigger with more modules and we are also seeing an acceleration in new logo business which further accelerated in Q4 as the dynamics in the competitive landscape shifted in our favor. We view these two trends as positive developments and very healthy long-term indicators for our business, but they have a natural trade-off on expansions in the near term. … In Q4 we continued to recognize operating leverage in our SaaS model and the benefits of scale, even as we increased investments in our global reach and cloud platform.”

My stance: Wow. Top line growth is holding steady at this level, and even bumped up +100bps from last Q. Margins moving extremely quickly to positive. Such an impressive Q, I had to add an extra “!” for those margin gains. Customer growth is ACCELERATING (112% last Q to 116% this Q). This is clearly a stock with a tailwind, with the massive number of people working remotely having all those devices in the field needing protection (along with ZS, NET, OKTA for protecting network traffic).

I may have broken my ! key on this report.

long CRWD 11%


FCF $50M was mind boggling for this company…
they had positive FCF ($7M) last Q as well…
And if you look at the source of this large FCF - it is primarily coming in from deferred revenue…

Their earnings report had only annual cash flow statement, so I have not decoded last Q FCF… but just looking at annual cash flow statement, for $481M revenue during the year, they have $281M deferred revenue sitting in cash!!! That means, they have pulled in >50% of next year revenue already in cash!

Contrast this with most businesses that need to offer between 30 days to 180 days credit to their customers, these guys get paid in advance for a year or more! Clearly customers think its better to pay annual dues to CRWD in advance than letting someone break into their security using some other vendor’s products!

BTW - I am half way through the earnings call transcript… best part so far is they announced Splunk as their customer and they talk about how Splunk adopted CRWD. Now many on this board may be familiar with SPLK - it was 2016 - 2018 era high growth, big data company that is still going through transition to cloud model. However, SPLK is also a large SIEM vendor - someone ESTC competes with. So well known, security tech expert company is adopting CRWD for securing their own end points.

To me CRWD is as high conviction as DDOG and AYX.