Two Most Important Nuggets from CRWD--to me

Greetings Board,
Long-time stalker, rare-poster. But thought I’d add more own color on CRWD’s earnings.

Two Most Important Things to Evaluate
But first, I just wanted to talk about the two most important things I evaluate in my own “Antifragile Framework” for investing: OPTIONALITY and MOAT.

Here’s what stuck out to me about optionality:
When CrowdStrike went public just last year, there were 10 modules customers could choose from. Today (thanks in part to acquisitions) there are 17 such modules.

I don’t expect that to continue growing at the same pace, but it’s clear that as more data is collected, more tools will solve more pain points for customers.

Here’s what stuck out to me about the moat:

1) Network Effect: Each additional customer using an additional module makes the service more valuable for existing customers. That’s because the Threat Graph collects TRILLIONS of data points each week. Whenever one customer (say, in Antarctica) is hit with a novel breach attempt, the rest of all customers (globally) gain near-instant immunity to similar breaches.

2) High Switching Costs: When customers adopt multiple modules, it’s not only good for optionality and the network effect, but it also makes it far more likely that customers are there to stay for the long-haul. Switching is a pain in the you-know-what.

On that front, the company has long been releasing the percentage of customers who have 4+ modules. Then last year, they started reporting on 5+ modules, and just this quarter, said that 22% of customers have 6+ modules.

But why the growth in terms of percentages is nice, when you look at the absolute figures, they are rather astounding

Customers with 4+ Modules
Q2 2019: 611
Q3 2019: 946
Q4 2019: 1183
Q1 2020: 1468
Q2 2020: 1895 (210% growth)
Q3 2020: 2281 (141% growth)
Q4 2020: 2716 (130% growth)
Q1 2021: 3444 (135% growth)
Q2 2021: 4121 (117% growth)
Q3 2021: 5134 (125% growth)

Customers with 5+ Modules
Q3 2020: 1368
Q4 2020: 1792
Q1 2021: 2191
Q2 2021: 2820
Q3 2021: 3703 (171% growth)

Customers with 6+ Modules
Q3 2021: 1852

I’ll take it!



I agree with all your points, it is indeed adding greatly to the value of the platform.

Additionally, the Cyber Security TAM will continue to expand as new types of devices/technology are introduced into the work environment.

Think about the next wave of mobile computing devices of which the primary enabler will be 5G. That translates to be more endpoints with new vulnerabilities that need protection. There will be more and more devices on a network. This is optionality and opportunity that I can clearly see with no end point. Long CRWD and NET !


It’s a simple observation but noteworthy nonetheless, I think

2020 Q3 is first time CRWD mentions “customers with 6+ modules”

Seems to me there’s a long path of growth ahead if that metric is only just becoming worth reporting


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