CRWD Shares Out???

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I’m just doing my DD on Crowdstrike. I’ve compiled the financials from the past 7 quarters, but haven’t listened to or read the calls yet. I’m wondering if there have been any comments or questions about the shares outstanding.

Their current share count as of this past quarter is 130.1M.
Guidance for next quarter assumes 204.1M.

Typically, an IPO will see a surge in shares from the IPO. I get that. Shares out before the IPO equated to around 40M. Why is there such a large increase next quarter?

One has to assume that isn’t going to come down by any means.

The current market cap is $7.5B with a P/S of 21. Using 204.1M shares out the market cap would be about $11.7B and the P/S would be 32.8.

That’s a 56% increase in valuation!

I’m wondering if this has been discussed here or elsewhere if anyone knows.

Thanks for any insight.

A.J.

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Aj, are you sure you’re not looking at shares outstanding not including diluted shares this quarter? Thus the reason for the jump because they’re counting diluted shares in forecasts? I show current mkt cap of $13 billion. Would be interested at like 9 billion.

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The discrepancy may also be related to the different classes of shares too.

With anti-dilutive shares and different classes of shares outstanding, calculating market cap doesn’t seem to be straightforward on these recent tech IPOs these days.

Used to be your typical finance feeds would have the right market cap calculation

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I never trust anything other than the company numbers. Market caps and EV are all over the place.

Yes, I’m sure I’m using their diluted non-GAAP share count.

The line item says this:

Weighted average shares used in computing Non-GAAP net loss per share attributable to common stockholders, basic and diluted

Last quarter they guided to shares out of 129.9M and came in at 130.1M.
They are now suggesting 204.1M shares out next quarter.

Either way, that is what I’ll be using in my valuations (204.1M) as it won’t be going backwards anytime soon. With 204.1M shares out the market cap is $11.9B and the EV is $11B.
Giving the company an 80% growth rate puts the EV around 17.5x next year which is not bad comparatively speaking as long as they don’t keep diluting the stock 56% a quarter!

A.J.

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AJ, I don’t even think looking at the diluted average shares outstanding is enough these days. These tech companies are getters my more and more complicated with their shares outstanding.

Page 41 talks about 28 million anti-dilutive shares they held from their calculation for weighed average diluted shares outstanding.

https://ir.crowdstrike.com/static-files/b59c7f53-0150-4dd7-9…

I do see the weighted average shares outstanding includes class a and b shares. But options, warrants, preferred stock or something else must be excluded.

All these different figures don’t make sense nor does the huge jump in shares next quarter. Stock based compensation was only 4.7 million shares. Something doesn’t add up.

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I mean a difference of 70 million shares in one quarter is almost $5 billion at today’s prices. Not a trivial amount. Regular dilution and SBC does not explain that.

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I mean a difference of 70 million shares in one quarter is almost $5 billion at today’s prices. Not a trivial amount. Regular dilution and SBC does not explain that.

That’s why I asked the question as I didn’t think it trivial either. I always use the last quarter’s share count instead of some weighted average over the past several quarters since our companies dilute so much. I’m used to seeing the share count fluctuate and increase. But not to this degree.

Maybe someone else can help here as it appears you and I for now are the only ones who care.

I’ve already taken it into account in valuing them and it still looks good. Not nearly as good as 130M shares out did, but still good. I, now, just want to know what the heck is going on.

AJ

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I found this on the balance sheet (page 5).

I condensed it to remove the shares that were cancelled when they went public.

Class A common stock, $0.0005 par value; 20,700 shares issued and outstanding as of July 31, 2019. Class B common stock, $0.0005 par value; 205,193 shares, and no shares issued and outstanding as of July 31, 2019.

The difference may be the “weighted average” is because they went public and didn’t have so many shares outstanding at the beginning of the period.

But if I add the number of shares above, that’s 225,893,000 shares. If I add what’s on page 41, that’s 254,205,000 shares, or $17.3 billion at today’s prices.

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Funny I was out bargain hunting today and noticed the exact same thing. One thing I noticed that you guys haven’t brought up is they guided to 147 MM shares for FY2020. You can find it on the second page of the 2020 Q2 earning release. There is a table that states “Weighted average shares used in computing Non-GAAP net loss per share attributable to common stockholders, basic and diluted” that reports 204.1 MM for Q3 FY20 Guidance, and 147.3 MM for Full Year FY20 Guidance. The difference between the two is 57 MM shares, which doesn’t correspond to any share lot counts I can find in the 10Q or S1.

From page 17 and 18 of the S1, I calculate the total shares (outstanding plus potentially dilutive) as 242 - 244 MM, depending on the 2.7 MM shares reserved for the underwriters. The language is so arcane that I cannot decipher whether I am adding up the shares correctly, but I think 244 is an upper limit. It should not be this difficult.

All that aside, I am intrigued by the 147 MM shares they guided to for FY20. I cannot figure out where the number comes from, but it implies a P/S of 24 at today’s price and TTM revenue, and a forward P/S of 19.0 based on their guidance.

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Interesting observation and discussion. Has anyone though of contacting investor relations and asking for an explanation? I’m in China right now with unreliable internet. I would suggest someone else do it.

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But if I add the number of shares above, that’s 225,893,000 shares. If I add what’s on page 41, that’s 254,205,000 shares, or $17.3 billion at today’s prices.

Above it says:

“Class A common stock, $0.0005 par value; 20,700 shares issued and outstanding as of July 31, 2019. Class B common stock, $0.0005 par value; 205,193 shares, and no shares issued and outstanding as of July 31, 2019.”

Those shares don’t count until they are “issued.”

The difference between authorized and outstanding shares

Authorized shares are the total number of shares that a corporation is legally allowed to issue, as stated in its articles of incorporation. The number of outstanding shares cannot exceed the number of authorized shares.

https://www.accountingtools.com/articles/the-difference-betw…

Denny Schlesinger

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Denny - you were confused because 12x only clipped part of the text. It actually said:

205,193 shares, and no shares issued and outstanding as of July 31, 2019 and January 31, 2019, respectively

I think that means:
205.2m shares issued and outstanding as of Jul 31
No shares issued and outstanding back on Jan 31

…and that’s class B. As 12x said, there are also 20.7m class A shares. So 12x is correct, that’s roughly 225.9m shares currently issued and outstanding.

So why were there only ~130m outstanding on average during the quarter, when we know that at the end of the quarter it was ~226m? Because they went public during the quarter. That means at the beginning of the quarter (and until June 12, when they IPO’d), there were only been about 50m shares outstanding. (The rest of the shares that are now outstanding were, back before the IPO, probably housed in convertible preferred stock…as best I can tell. It’s complicated.)

As AJ said they are expecting 204.1m outstanding on average during the upcoming quarter. That doesn’t make sense to me since they already have 226m outstanding, and you wouldn’t expect them to buy all those shares back. Maybe several million of the 226m don’t count for some reason? I’m serious. This math is crazy complicated.

Lastly, GuyLucky pointed out that it’s only 147.3 for the year. That goes back to the fact that there were only 50m or so before June 12.

And even more lastly, the “potential shares” on page 41 shouldn’t be counted yet, 12x.

That’s all I got folks! It’s complicated, and I wouldn’t worry too much. It won’t suddenly double or even go up 50% from here, but it might still fluctuate 10% for the next couple quarters. Such it is with IPOs.

Bear

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Denny - you were confused because 12x only clipped part of the text. It actually said:

Confusion and lack of data are two different things. :wink:

Adding issued and authorized but unissued shares is wrong.

Denny Schlesinger

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