Crowdstrike: undervalued


Quarter     Revenue
Oct 2018      90m 
Jan 2019     106m
Apr 2019     122m


Quarter     Revenue
Apr 2019      96m 
Jul 2019     108m
Oct 2019     125m

Is Crowdstrike less than 6 months behind Zoom? Kinda looks that way…the growth is so similar. And I certainly hope so, because CRWD’s mkt cap is just under $10 billion, while ZM’s is over $18 billion.

Saul just said Crowdstrike had one of the strongest quarters he’s ever seen from any company. I completely agree with that, and I also just wanted to call out the mis-pricing I’m seeing on CRWD shares. I’ve significantly added to my position this week. It is now my second largest position, at 17% of my portfolio.

I hold Zoom too, but only a 3% position or so.



Hi Bear,


Zoom just reported $166.6 million in revenue and guided for $176 million next quarter (which of course is low balled)

Crowd is guiding to $138.6 million next quarter and of course that will be passed easily.

Although if they can squeeze out a few more quarters of 85-90% growth they may get closer…

Full year FY2020 Guidance: (Helpful that both are currently in FY2020 Q4)

Zoom: $610 million
Crowd: $468 million

Maybe we will finally get a real sustained surge at the start of the new year when hopes are high, and accounts are flush with cash :slight_smile:



This revenue comparison falls short for me because it isn’t an apples to apples comparison. As the saying goes, not all revenue is created equal. Zoom’s revenue picture is quite a bit different than Crowdstrike’s, namely when you are looking at profitability.

Revenue (ttm) (both growing 80%+)
Zoom: $540.2M
Crowdstrike: $409.8M

Gross profit (ttm)
Zoom: $437.8M (81.05% gross margin)
Crowdstrike: $284.6M (69.44% gross margin)

Operating income (ttm)
Zoom: $7.6M (1.41% operating margin)
Crowdstrike: -$146.2M (-35.67% operating margin)

Free cash flow (ttm)
Zoom: $90.9M
Crowdstrike: -$38.4M

Zoom has income flowing through to the bottom line and is generating cash, while Crowdstrike is still mounting sizable losses and burning cash. Zoom’s quality of revenue appears to be much higher.

I don’t own either company, but given these numbers I wouldn’t expect Crowdstrike to command the same multiple as Zoom. Every dollar of revenue Zoom brings in is more valuable than the revenue being brought in by Crowdstrike… at least as I see it. (Of course, that could change. But matching Zoom’s revenue numbers and growth rates doesn’t automatically mean the valuation multiple should also be matched.)

David K


This revenue comparison falls short for me because it isn’t an apples to apples comparison.


Your point is valid. My little comparison wasn’t supposed to be by any means comprehensive. Still, the point was not that Crowdstrike was equal to Zoom, but that it is on the path. So please note CRWD’s rapid progress in the quarter they just reported:

Gross profit (ttm)
Zoom: $437.8M (81.05% gross margin)
Crowdstrike: $284.6M (69.44% gross margin) - ZM has the edge here for sure, but CRWD subscription gross margin was 74% this quarter, and since subscription revenue is becoming a bigger and bigger part (almost all) of revenue, this is causing overall gross margin to trend up

Free cash flow (ttm)
Zoom: $90.9M
Crowdstrike: -$38.4M - CRWD had +7m in FCF this quarter, vs -13.1m last year. Give them time…this is trending well.

Zoom has more Operating Income as you point out, no doubt there. They spend FAR less on R&D and little enough on S&M to eke out a couple million a quarter. Personally as a ZM shareholder, I’d like to see more R&D…I mean, we want them to continue to innovate. And we’ll have to watch the trends the next couple quarters, but I think CRWD will improve Operating Income by a lot.

Thanks for the thoughts.



This is an interesting compare Bear between the 2 high flyers. Both businesses are clearly absolutely crushing it. As you say ZM business is about 6 months revenue-wise ahead of CRWD, maybe. I’m going to compare the ZM quarter (Q1 2019) where they had approximately the same revenue as CRWD did this quarter.


ZM   -  $122M (+103%)
CRWD -  $125M (+88%)

Non-GAAP Income:

ZM    -  +$8.9M
CRWD  - -$16.5M

Free Cash Flow:

ZM    -  $15.3M
CRWD  -  $7M

When at approximately equal revenue, Zoom was a much more profitable business and growing quite a bit faster. But as you say, CRWD is definitely moving in the right direction on the profitability front. And so still is Zoom.

ZM peaked at about a $27B market cap and CRWD at about $20B, both around June. This was clearly unsustainable for both and I’m glad I waited for both. Though I did temporarily hold Zoom a few times. Now ZM and CRWD are higher revenue and still growing at hyper hyper growth and ZM is $19B and CRWD at $11B, or thereabouts.

It looks like CRWD might be undervalued a bit, as you say, at least compared to Zoom. I’ve recently built both up to full size positions. About equal for both, around 6-7%. Will be interesting to see if CRWD is still growing at 85% when they catch up to ZM’s most recent quarter at $166M and what their profitability looks like at that time. And of course where will Zoom be at that time. Over $200M likely.

And more importantly where will the market caps be then?