This is my first post on this board. I am an individual investor. NET, ZM, DOCU and CRWD are my four largest SaaS positions.
I’m trying to understand if CRWD’s business performance can support an increasing stock price.
What’s caused me to pause is declining YoY growth:
• Quarterly revenue growth, though high, has been decelerating from 88% in 3Q2020 to 84% in 2Q2021.
• TTM (Trailing Twelve Months) Annual Recurring Revenue (ARR) is showing a trend of declining Y/Y growth
• DBNRR has stayed at 120 for the last 2 quarters, but has slowed down Y/Y and sequentially from 142 in 1Q2020 to 124 in 4Q2020.
• The quarterly Y/Y subscription customer count has declined 1Q and 2Q 2021, and the sequential growth rate has steadily declined over the last 5 quarters.
On the other hand:
• Gross margins and Subscription Gross Margins have held steady at 75% and 78% in 1Q and 2Q 2021, respectively.
• Operating and Free Cash Flow positive for last four quarters
• Consistently improved net income/share, and is profitable for last 2 quarters.
• George Kurtz, CEO and co-founder, has a stake worth more than $2B
Many of you have positions in CRWD and have likely thought through this and could shed some light.
Ivan
Data collated from Quarterly Earnings announcements and Conference Call transcripts. Numbers with a parenthetical (e) are my best estimate of 3Q2021 numbers based on historical revenue outlooks and the average of outlook earning beats.
I don’t know if others will agree but as long as the numbers look this good I’ll be pretty happy and won’t pay too much attention to small changes or even trends. This amount of growth can overcome most pricing issues over time. If things slow down significantly then that would be a concern of course, but I don’t see why it would.
QoQ is what I’ll be watching for the next year anyway. If that customer count, for example, stays at 15%, it represents an acceleration in the real count. (To keep the percent the same you have to add greater and greater amounts). If you are right about the projection then the QoQ growth percentage represents a re-acceleration even if the YoY figure does not:
It is great to track (and see!) these numbers, if nothing else but to keep them in mind for future reports. Thank you for posting!
I’ve had this itchy thought that we may see some near-term churn in endpoints causing a reduction in growth (which may or may not affect revenue even if this were true). The other side of the coin is that once protected I’m not sure user-end-points would leave the system over the short term (I wouldn’t expect people who installed the protection to uninstall it over the course of a couple of months. Once installed I think it is mostly forgotten about until enough time has passed that a company is sure they need less and by then growth might be enough for this dynamic to never materialize). Long-term I have zero doubts that end-points grow exponentially. So, as a long term investor, I’m just not worried about this.
If we start seeing significant endpoint churn, it is likely that CRWD is not reporting many detections, or worse false positives and false negatives (really black eye stuff). Currently CRWD has a strong track record of efficacy and therefore must have strong daily processes and strong people that stay on top of this stuff. Other than cost or convenience, I see no reason for churn. I am not worried but we must always watch the tea leaves.
Crazyczech-
What makes Crowdstrike unique in End Point Protection (EPP) security is that they have chosen to take this sector by blitzscaling. Most of the companies that we all are investing in are doing blitzscaling so that is not unique. But companies that are in sectors that do blitzscaling either win most or lose all. If other companies in the sector are not blitzscaling they will lose. So usually if one company is blitzscaling than the others will too. Crowdstrike seems to be heading to win most. Every person/company they put on their platform increase the power of their product. That is why I believe in Crowdstrike and as long as the numbers are great they keep proving me right.
Me here: Now, we know Zoom has been Blitzscaling their business; but, now every other enterprise hoping to Blitzscale will do so using Zoom at some level to Blitzscale themselves.
And if yours is not a software company, how could it not use Zoom to attempt Blitzscaling. For those like me thinking this buzzword is just that, here is a nice piece on it at Harvard Business Review. https://hbr.org/2016/04/Blitzscaling
TLDWR
“We’re in a networked age. And I don’t mean only the internet. Globalization is a form of network. It adds networks of transport, commerce, payment, and information flows around the world. In such an environment, you have to move faster, because competition from anywhere on the globe may beat you to scale.
Software has a natural affinity with blitzscaling, because the marginal costs of serving any size market are virtually zero. The more that software becomes integral to all industries, the faster things will move.”
Sorry that link in the prior post worked a minute ago🥴. It’s Reed Hastings,Visiting Professor at HBS, being interviewed by Harvard Business Review. IoT was recommended by both Smorgasboard and Buynholdisdead.