Please ensure Javascript is enabled for purposes of website accessibility

The Must-See Chart for Investors That Wasn't in CrowdStrike's Earnings Report

By Brian Withers and Brian Stoffel - Apr 11, 2021 at 7:02AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It shows why this cloud security specialist is poised for even more growth.

CrowdStrike Holdings' (CRWD -0.59%) most recent quarterly results were impressive, but that's not what investors should be the most excited about. It's a chart that the company didn't share that has Motley Fool contributor Brian Stoffel jazzed about the long-term prospects of this cybersecurity specialist. On a Fool Live episode recorded on March 17, Fool contributors Brian Stoffel and Brian Withers discuss the chart and what it means for shareholders.

Brian Stoffel: I'm starting with the stock that literally just reported earnings last night, and that is CrowdStrike, ticker symbol CRWD. Let's talk about what happened with CrowdStrike, and here we go. This is a company that covers cybersecurity from the cloud. It's one of the biggest cloud-native companies, which means they didn't have to make that awkward transition from offering cybersecurity on servers to being able to do it from the cloud. They just started there.

Overall, I'm just going to run through the headline numbers. The revenue was up 74 percent; that's pretty good. The recurring revenue was up just about the same, 75 percent, their margins expanded and I just like to go down here. I don't really care about net income, truth be told, because I know there's so many different accounting tricks that play into that. Other investors do, and that's fine. That's just not my flavor of investing. But I do like looking at the cash flow, and we see cash generated from operations is $115 million. But then if we go down and look at the full year, they have free cash flow of $293 million compared to just $12 million last year. So growing like gangbusters.

But what I really want to focus on is this right here, and it's a chart that I made from the data that they have available. CrowdStrike has 10, or maybe it's 11 now, different tools that its customers can use. They started publishing how many were using 4 out of 10 in their fiscal second quarter of 2019, which is basically 2018. So that's what this blue bar is. This red bar is the number of customers with at least five tools. This yellow one is with six. For context, the ones with four tools up 130 percent, with five tools, up 158 percent. And then this [six tools] was just up 28 percent sequentially, but that rounds to about 170 percent annually. That to me is very impressive. I'm a shareholder, very happy with those earnings.

Brian Withers: Hey, Mr. Stoffel, one of the things that you've written about, and I really like about CrowdStrike, is the fact that they learn more from every customer that they add. I imagine adding these modules and having customers adding those modules, allows that data collection process to be even more robust.

Brian Stoffel: Yes. I think it's one of the most impressive network effects you can have, that's not like a social network. If all three of us join, it's a better product because then we're learning from anyone who tries to breach Brian Feroldi from Brian Withers. With each one, we're getting stronger. Now, other security companies have that now. But CrowdStrike was first and so they have the head start and that head start can just carry them. It's carrying them for a long way. So I thought it was a really great quarter.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

CrowdStrike Holdings, Inc. Stock Quote
CrowdStrike Holdings, Inc.
CRWD
$185.92 (-0.59%) $-1.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
323%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.