After signing up for investor alerts on the S website, surprisingly several S sales people scheduled a call with me for today.
I’m a sole proprietor, so not much S business potential at my company.
However, I did learn a few things and thought it might be helpful to share with you.
The two sales people on the call joined S in February of this year (sign of growth?).
They indicated that ransomware insurers are now requiring more cybersecurity protection before issuing insurance. These insurers are also bringing in cybersecurity protection while a breach is in progress, to get the situation under control and clean it up. Both situations appears to benefit S as a cybersecurity option.
I asked about their competitors. They referenced the MITRE report (I think it’s at https://mitre-engenuity.org/mad/state_of_attack_report_2021/…).
And they specifically mentioned as competitors:
And also a private company named Cybereason:
Based upon what I’ve read, seems like Cybereason could be a unicorn in the making.
Reality is the market is super competitive and only going to get more brutal.
Microsoft’s product is really good and bundled with M365 so very tough price and integration wise.
Carbon Black is top notch and wasnt even mentioned.
Cyberreason is really nothing special and probably will go public at an inflated market cap like Sentinel One did.
Overall tough space and while growing due to security threats and requirements its only going to get more fierce.
Reality is the market is super competitive and only going to get more brutal…Overall tough space and while growing due to security threats and requirements its only going to get more fierce.
Yes, here are their most recent quarter results, announced last month. I can see how the “super competitive”, “tough”, “brutal”, “fierce”, space is just killing them.
Total revenue was $66 million up 120% from $30 million a year ago
ARR was up 123% $292 million
Total customer count was up over 70% yoy to over 6,700.
Customers with ARR over $100K was 520, up 137% yoy
Net Retention Rate was 129% as of January 31, 2022.
Adj Gross margin was 66% up from 54% a year ago.
Cash was $1.7 billion
Looks really scary!
This is what makes a market…people with differing opinions on the same company…willing to take opposite sides of the trade.
I would like to offer a different perspective on S vs CRWD. We need to dive deeper into unit metrics. Maybe things will shift with the upcoming Q1 earnings report - I am happy to change my POV based on any new numbers.
Even if you scroll past CRWD’s better gross margins, better operating margins, better EBITDA, better cashflows…these three metrics stick the landing.
CRWD generates $26k in new quarterly revenue per new customer over the past 5 quarters. S is at $14k.
CRWD generates $106k in new ARR per new customer over the past 5 quarters. S is at $60k.
CRWD’s forward annual revenue run rate is $2163M. S is about 15% of that ($370M).
Many investors erroneously consider S to be a younger company and give them a bit of leeway when making comparisons. However, they were both founded around the same time - CRWD (2011) and S (2013). We need to ask ourselves why is S so much behind?
S will find it tough to catch up with CRWD, unless they broaden their products, services and TAM. This will need additional investment in R&D or acquisitions or both. This means raising more capital, extended unprofitability, increased shareholder dilution and future pressure on their stock price.
e.g. Their most recent $617M acquisition of Attivo cost 58% in cash and 42% in stock and will bring in about $40M incremental annual revenue in 2022.
JAN22 OCT21 JUL21 APR21
S 51 59 64 63
CRWD 74 73 73 74
S 108 121 128 120
CRWD 70 70 63 63
S 29M Debt; 1670 Cash
CRWD 774M Debt; 1997 Cash
S Sales grow faster YoY%
ARPU for CRWD is higher because they target larger customers than S does. They are both moving in each other’s direction though. IMO, its a strategy difference and probably not as big a deal when identifying differences between the two.
$S has a lot of customers via their MSP partnerships. These partnerships generally target smaller companies. For example, I have $S on my laptop because my company (300 employees) is an MSP thru one of the $S partnerships. We provide these services to a lot of other customers; and the vast majority of these are smaller companies. Think of this kinda like the bill.com model when they partner with banks and such and are white-labelled.