What happened
Shares of cybersecurity specialist CrowdStrike Holdings (CRWD +1.21%) jumped 6% by 12:45 p.m. ET on Thursday.
The pop came in response to an announcement by CrowdStrike that it will expand an ongoing partnership with cloud content accelerator Cloudflare (NET +0.28%) -- which is up 9.5% today -- "to provide joint customers with Zero Trust capabilities."
Image source: Getty Images.
So what
The companies jointly announced that: "Cloudflare is integrating its Zero Trust platform with CrowdStrike Falcon Zero Trust Assessment to give joint customers simple and powerful controls to ensure employees have secure access to applications wherever they are working. Joint customers of Cloudflare and CrowdStrike [will now] benefit from new combined security features."
Employees at these joint customers will now be able to "secure conditional access to applications from any endpoint, regardless of the user or location," the announcement said. And Cloudflare will provide CrowdStrike with "insights from Cloudflare's global network, spanning more than 250 cities and blocking an average of 86 billion cyber threats each day." The aim here is to better inform CrowdStrike's cybersecurity algorithms when cyberattacks arise, and enable CrowdStrike to respond faster to threats to Cloudflare users.
Now what
The companies placed no dollar value on this expanded partnership. But it stands to reason that by partnering, each company will gain broader access to the other's partners, creating opportunities for cross-selling that could boost sales growth.
This might be hard for investors to value precisely, but with CrowdStrike stock valued largely on sales, and at a heady 32 times sales -- and Cloudflare even more richly priced at 52 times sales -- keeping those growth rates going is clearly of paramount importance to both companies. Any failure to grow, or even failure to grow as fast as the market is hoping for ... well, let's just say that the first step down could be a doozy.
