CrowdStrike (CRWD -0.40%) reported third-quarter earnings at the beginning of December and the cybersecurity specialist turned in another round of strong growth, showing why it's the leader in endpoint security.

In this segment of Beat and Raise recorded on Dec. 1, Fool contributors Trevor Jennewine and Brian Withers discuss CrowdStrike's recent performance and why the company is well-positioned for future growth.

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Brian Withers: Trevor is back for the double-dip on cybersecurity today with CrowdStrike.

Trevor Jennewine: Yeah, let's do it. Last time I checked, a few minutes ago, this stock actually went up after hours. That's interesting on such a down day.

Brian Withers: Yeah.

Trevor Jennewine: But CrowdStrike specializes, like I mentioned earlier, in endpoint security and Cloud workload protection. Right now, its Falcon platform has 21 different modules that protect everything from desktop computers and servers that you have running on-site to the applications and services that you have running in the Cloud. That also includes tools for threat intelligence, fully managed security and incident response. They just released their earnings after the market closed today. Let's take a look.

Revenue came in at $380 million. That was up 63 percent on the top line. This is a software-as-a-service business, so the subscription annual recurring revenue reached $1.5 billion, so ARR is $1.5 billion, that's up 67 percent. Non-GAAP earnings per share, $0.17. That was a beat on the bottom line. Cash from operations was $159 million in the quarter, up 80 percent. The company now has 14,687 customers. That is up 75 percent, so they're still growing their customer base very quickly. Of those customers, 47 percent of the Fortune 500 are CrowdStrike customers. I think 63 percent of the Fortune 100 are CrowdStrike customers, so a lot of large enterprises there. They don't always provide their retention rate specifically, but they did note that it was over 120 percent in the quarter as it has been for the last 15 quarters, so strong. They're seeing their customers spend more over time, and that's been a pattern.

Highlights and concerns, when you look at all of CrowdStrike's modules, 68 percent of customers are now using four or more modules and that number has ticked upwards, steadily over time. If you go back three years, it was 44 percent and then up to 52 percent, and then up to 61 percent, and now we're at 68 percent. Management has mentioned that the first module essentially covers their cost of revenue and then sum, so when you start adding additional modules, it's basically all gross profit from that point. You get this incremental profitability, and so it's good to see that adoption. In addition to that, the more you come to depend on CrowdStrike, the more modules you purchase, the stickier the platform becomes, the harder it is to replace all of that functionality. On that note, the company CrowdStrike actually launched a Falcon extended detection response during the quarter. This is an XDR application, and this builds on one of these acquisitions earlier, the Jumio acquisition. Jumio specializes in log management or data ingestion. What XDR does, it essentially takes all the data from across all your infrastructure. It's collecting data from endpoints, from Cloud workloads, from networks, from email. It's pulling it all together, running it through CrowdStrike's AI engine and helping you predict and prevent threats like that, so this is an end-to-end solution for security. Then also the XDR product integrates with Falcon Fusion, which is another new product. Falcon Fusion is a framework for orchestrating automated workflows. Together those two things help streamline and accelerate incident investigation, response and remediation. I think moving toward that XDR application is a great strategy that seems to be where the industry is headed.

Also noteworthy, the International Data Corporation recognized CrowdStrike as the industry leader in endpoint security. Microsoft was also recognized as a leader. But CrowdStrike has 12 percent market share, Microsoft has 10 percent, so CrowdStrike is at the top of the industry there. Yesterday, the company announced that it did acquire SecureCircle. This is a Software as a Service company that specializes in data loss protection or DLP. Right now, CrowdStrike's Falcon platform enforces zero-trust at the device layer and at the identity layer. They have endpoint protection, and they also have zero-trust identity that they build that out with their pre-empt security acquisition a little while back. This brings the data layer into the fold. They now have the device layer, the identity layer, and the data layer, so it just makes their protection more robust like that. That move as well. Looking toward the next quarter, they are expecting $409 million on revenue. That was a raise, and in terms of non-GAAP earnings, they're looking for $0.58 per diluted share. Also, a raise, so this is a classic beat and raise. The stock has been hit pretty hard recently, I think it's down 30 percent or so from its all-time high, but maybe a good buying opportunity. I think this company is doing everything right.

Brian Withers: The Zscaler earnings and the CrowdStrike look very similar from just consistency and growth and all the things you want to see. I went back to think back to before the coronavirus, January 1st, 2020. Would you have rather owned shares of CrowdStrike, Zscaler or S&P 500?

Trevor Jennewine: I'm going to go with Zscaler.

Brian Withers: You are a wise man. Let me share the screen. Now, if you'd said Zscaler, or CrowdStrike that wouldn't have been bad either CrowdStrike is a four-bagger since January 2020. But Zscaler is almost a seven-bagger, where the market has gone up about 40 percent over that same period. I don't think-cybersecurity prior to the coronavirus, I think the coronavirus has absolutely with everybody working from anywhere, I think has really helped these companies give them a super tailwind. It doesn't hurt that the government has come out and basically given some guidance that the companies need to get on the stick from a cybersecurity perspective.

Trevor Jennewine: I think you're right on there. I think a lot of the digital transformation initiatives like cloud computing were already a pretty strong tailwind for cybersecurity. But then now that we have all that remote work, I think that's just really emphasized how important it is to have those systems in place. It's probably not something a company really wants to spend money on until it's too late. It's one of those.