CRWD vs S Comparison

[MajorFool20]

Given SentinelOne just reported their Q4 yesterday, I thought it would be interesting to compare them against Crowdstrike when they were at the same scale. It is pretty striking how similar these two companies were at the same stage.

CWRD, Q3 2019 (quarter ended Oct 2018):

ARR: $254 million
QoQ growth: 22%
YoY growth: 125%

Revenue: $66 million
QoQ growth: 19%
YoY growth: N/A

Adj. Gross Profit: $45 million
Adj. Gross Margin: 67%

Adj. Operating Loss: ($29) million
Adj. Operating Margin: -43%

FCF: ($13) million
FCF Margin: -20%

Customers: 2,147
QoQ growth: 19%
YoY growth: N/A

DBNRR: 127%

S, Q4 2022 (quarter ended Jan 2022):

ARR: $292 million
QoQ growth: 23%
YoY growth: 123%

Revenue: $66 million
QoQ growth: 17%
YoY growth: 120%

Adj. Gross Profit: $43 million
Adj. Gross Margin: 66%

Adj. Operating Loss: ($43) million
Adj. Operating Margin: -66%

FCF: ($7) million
FCF Margin: -11%

Customers: 6,700
QoQ growth: 12%
YoY growth: 70%

DBNRR: 129%

There are a ton of similarities between the two. The largest differences are the size of ARR and customer count. SentinelOne has a higher ARR while at the same stage as Crowdstrike and is growing it at about the same rate. They also have far more customers than Crowdstrike did at this stage although Crowdstrike was adding customers faster and clearly landing bigger deals. It seems to me that SentinelOne is following the Crowdstrike playbook quite closely, and if their stock price follows accordingly, I will be very pleased.

Fast forward two quarters for Crowdstrike, and they reported their first quarterly earnings as a public company. Q1 2020, reported on July 18, 2019. At the time, CRWD reported ARR of $365 million, up 115% YoY and revenue of $96 million, up 103% YoY. Their TTM revenue was $299 million, and by the end of July, they traded at a market cap of approximately $18B. Well, if my forecast are accurate (I have SentinelOne growing ~20% the next two quarters which seems conservative given their guidance), then SentinelOne should have roughly $296 million of TTM revenue two quarters from now while growing ~107% YoY. For SentinelOne to trade at a similar multiple as CRWD did in July 2019, the S stock price will need to roughly double from its price today. Obviously, there are many flaws with this logic as CRWD at the time was a hot IPO fresh off the press, but I think it goes to show there is quite a bit of upside at SentinelOne’s current market cap. Just my $0.02.

Rex
Long CRWD & S

[gmcnatt]

A few other comparisons between Crowdstrike and SentinelOne IMO:

#1. After that first public report from Crowdstrike their stock, along with many other SAAS stocks, proceeded to fall about 50% from August to December of 2019 despite subsequent incredible reports. A lot of people’s portfolios were hit really hard.

We can see from the top of Saul’s Nov 2019 portfolio roundup

https://discussion.fool.com/my-portfolio-at-the-end-of-nov-2019-…

This has been a tumultuous few months. I was up 77% at the end of July, but after that there was a marked meltdown of our SaaS stocks. It seemed remarkable to me that while all of my stocks were hit hard, and a couple were down more than 50% from their highs, I was never truly worried, undoubtedly because I had lived through many of these drops previously

#2. After the FY Q3 2020 report (released on 6 Dec 2019), Saul and others started to accumulate the shares despite talk of how “expensive” the stock was. Here’s Saul’s take

https://discussion.fool.com/crowd-a-moderately-deep-dive-on-earn…

And further down someone responds:

34x sales seems ludicrously high, which is why it sold off.

CRWD is up 271% from that day until today. And was up 449% from that day until the first week of November 2021.

#3. A few months later, in March 2020, we entered a terrible and uncertain macro environment (the pandemic). Stocks sold off indiscriminately, even those of companies that were putting up solid numbers and were sure to benefit, like Crowdstrike.

Today we’re in a terribly uncertain macro environment and stocks like S are getting sold indiscriminately despite putting up terrific results, and being a company that is sure to benefit.

[BeachMan2115]

I think comparing CRWD (circa 2018) versus S (circa present) does not help an investor make the right decision about these two companies. It leads to hope, which is not a strategy.

As a potential customer, I would not give Sentinel more leeway because they are a “younger” company. I will base my purchasing decision on their product capabilities, price points, services promised, referrals and references etc.

And as a shareholder I want to see more customers buy from them, existing customers to buy more and pay more for their products.

Anyways, both companies were founded around the same time - CRWD (2011) and S (2013). So Sentinel is not that “young” as compared to Crowdstrike.

So comparing their two Q4 earnings reports, some key observations:

1. S is growing faster than CRWD

2. CRWD is more profitable than S

3. CRWD is more operationally efficient than S

4. Customer growth is a toss up between the two.

One needs to dig a little deeper into how efficient their sales machines are in terms of generating new revenue and new ARR.

And are these respective sales machines ramping up or slowing down?

And then you extrapolate that over say a 3 year period to check if S would catch up with CRWD.

Another relevant question would be, whether there is enough TAM for both of them to co-exist or do they start taking away market share from each other in the near future.

I currently like and own both CRWD (10%) and S (1%). And I am digging into these numbers and questions to decide whether I need to shift these allocations.

Beachman (@iwannabeontheb2)