Stock Story -
Cybersecurity company CrowdStrike (NASDAQ:CRWD) announced better-than-expected results in Q3 FY2024, with revenue up 35.3% year on year to $786 million. The company expects next quarter's revenue to be around $838.3 million, in line with analysts' estimates. It made a non-GAAP profit of $0.82 per share, improving from its profit of $0.40 per share in the same quarter last year.
Is now the time to buy CrowdStrike? Find out by reading the original article on StockStory.
CrowdStrike (CRWD) Q3 FY2024 Highlights:
- Revenue: $786 million vs analyst estimates of $777.4 million (1.1% beat)
- ARR: $3.15 billion slight beat vs. expectations of $3.14 billion
- EPS (non-GAAP): $0.82 vs analyst estimates of $0.74 (10.9% beat)
- Revenue Guidance for Q4 2024 is $838.3 million at the midpoint, roughly in line with what analysts were expecting
- Full year guidance raised for revenue, non-GAAP operating profit, non-GAAP EPS
- Free Cash Flow of $239 million, up 26.7% from the previous quarter
- Gross Margin (GAAP): 75.2%, up from 72.8% in the same quarter last year
“CrowdStrike’s record third quarter exceeded expectations, delivering new milestones across the business: net new ARR growth accelerated to a record $223 million and ending ARR surpassed $3 billion, making CrowdStrike the fastest and only pure play cybersecurity software vendor in history to achieve this milestone," said George Kurtz, CrowdStrike's president, chief executive officer and co-founder.
Founded by George Kurtz, the former CTO of the antivirus company McAfee, CrowdStrike (NASDAQ:CRWD) provides cybersecurity software that protects companies from breaches and helps them detect and respond to cyber attacks.
Endpoint SecurityAlmost every company is slowly finding itself becoming a technology company and facing cybersecurity risks. As the volume of internet enabled devices grows, every device that employees use to connect to business networks represents a potential risk. Endpoint security software enables businesses to protect devices (endpoints) that employees use for work purposes either on a network or in the cloud from cyber threats.
Sales GrowthAs you can see below, CrowdStrike's revenue growth has been impressive over the last two years, growing from $380.1 million in Q3 FY2022 to $786 million this quarter.
Unsurprisingly, this was another great quarter for CrowdStrike with revenue up 35.3% year on year. On top of that, its revenue increased $54.39 million quarter on quarter, a very strong improvement from the $39.05 million increase in Q2 2024. This is a sign of acceleration of growth and great to see.
Next quarter, CrowdStrike is guiding for a 24% year-on-year revenue decline to $838.3 million, a further deceleration from the 47.9% year-on-year decrease it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 29% over the next 12 months before the earnings results announcement.
Cash Is KingIf you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. CrowdStrike's free cash flow came in at $239 million in Q3, up 37.3% year on year.
CrowdStrike has generated $864.6 million in free cash flow over the last 12 months, an eye-popping 30.5% of revenue. This robust FCF margin stems from its asset-lite business model, scale advantages, and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.
Key Takeaways from CrowdStrike's Q3 Results Sporting a market capitalization of $50.16 billion, more than $3.17 billion in cash on hand, and positive free cash flow over the last 12 months, we believe that CrowdStrike is attractively positioned to invest in growth.
CrowdStrike narrowly top analysts' ARR (annual recurring revenue) and revenue expectations this quarter but beat on non-GAAP operating income and non-GAAP EPS by a more convincing amount. While next quarter's revenue guidance was only in-line, non-GAAP operating income was head. Full year guidance was also raised. Zooming out, we think this was a decent quarter, showing that the company is staying on target. Investors were likely expecting more, and the stock is down 1.4% after reporting, trading at $209.5 per share.
