Crowd is an $11B company, trading at a P/S of 25 (run rate) that grew 94% last quarter.
I see growth of 80%-> 65% → 50% the next 3 years, putting them close to $2B in revenue.
I think this is a good estimate because:
customer growth is at 111% and accelerating
the demand for endpoint security will explode over the next 3 years as
a) more companies move to the cloud
b) more ioT solutions come online
c) more hackers and other countries try to steal company information
CRWD is cloud native and easy to implement
as they gain customers, their product gets better and they extend their lead
Estimating a 15-20 P/S in 3 years gives a $30-40 B company and a 3x-4x return.
Risks:
competition from lower cost competitor that could do just as good of a job
Crowd is an $11B company, trading at a P/S of 25 (run rate) that grew 94% last quarter.
I see growth of 80%-> 65% → 50% the next 3 years, putting them close to $2B in revenue.
…
Estimating a 15-20 P/S in 3 years gives a $30-40 B company and a 3x-4x return.
If it is valued at 25x sales now, why would it be valued at 15-20x sales if growth has dropped from 95% to 50% in 3 years? Guidance would be for maybe 40%? At that rate of deceleration, maybe 10-15x sales is more likely?
I like your thinking on CRWD here. I sold mine back in August when the PS ratio got above 60. But I got back in during September and I’ve almost doubled my position in October. At a PS in the 20’s I think they’re a steal.
I see growth of 80%-> 65% → 50% the next 3 years, putting them close to $2B in revenue.
I think that’s right. I’m not even sure they’ll slow to 80% right away. Look at their aggressive guidance (in a world of sandbaggers). Fiscal 2019 revenue was $249m. For fiscal 2020 revenue, they guided to $436m (75% growth) in Q1 and raised that to $452m (82% growth) in Q2. I expect when they report Q3, they’ll raise it again. And then they’ll beat that. CRWD will have at least 90%+ growth this year.
CRWD is cloud native and easy to implement
Maybe customers can start small too? That would explain the fantastic NER of like 140%+ or whatever. Pretty great quality to have…helps them not run into problems with the dreaded “elongated sales cycle.”
Estimating a 15-20 P/S in 3 years gives a $30-40 B company and a 3x-4x return.
CRWD is a bargain here compared to other software stocks considering they have kept falling while others have started rallying back. The market cap is $10.8B and with cash of $827M, their EV is $10.0B.
Their revenue guidance was $450M for this fiscal year. Their year end is January 31, 2020 so the year is now 75% complete. They will likely beat their guidance, but conservatively using the $450M, you get an EV/sales of 22.2 times. That is a great deal considering the following:
• Q2 Revenue is up 94% year over year
• Q2 subscription revenue is up 98% year over year
• Subscription revenue makes up 90.3% of total revenue
• Their non-GAAP subscription margin jumped from 71% in the prior quarter to 76% in Q2, so they improved their margin by 7% (5 over 71) in just one quarter!
• They added 730 net new customers in Q2 for a total of 3,789, meaning they added 24% of their total customers in just the last quarter alone!
• All this and the stock has gone down by 50% in the last 2 months (was over $100)
I bought more today and was thankful for the opportunity to buy below 50.
There are currently 130 MM shares outstanding. At ~$48/share, that’s 6.2 BB. If you use Q3 guidance for shares outstanding of 204 MM, you get 9.8 BB but that’s still 1 BB lower than your 10.8 BB. If you use the full-year guidance for 147 MM shares, you get 7.06 BB (or 15.6 forward P/S). These differences are huge. In particular it is critical to know if the 147 MM full-year guidance is accurate.
There are currently 130 MM shares outstanding. At ~$48/share, that’s 6.2 BB. If you use Q3 guidance for shares outstanding of 204 MM, you get 9.8 BB but that’s still 1 BB lower than your 10.8 BB. If you use the full-year guidance for 147 MM shares, you get 7.06 BB (or 15.6 forward P/S). These differences are huge. In particular it is critical to know if the 147 MM full-year guidance is accurate.