What happened
CrowdStrike (CRWD 4.56%) stock is hopping again Friday. After announcing a tie-up with tech giant Alphabet (GOOG 2.25%) (GOOGL 2.01%) yesterday, the cybersecurity specialist announced an arguably even bigger deal this morning.
And CrowdStrike stock is up 2.2% in 11:15 a.m. ET trading in response.
Image source: Getty Images.
So what
CrowdStrike's newest partner is none other than the United States Department of Defense itself. According to the company, the DoD has just issued it "a Provisional Authorization to Operate (P-ATO) at Impact Level 4 (IL-4)," a status that "will enable CrowdStrike to now deploy CrowdStrike's Falcon cybersecurity platform to a broad range of Department of Defense (DoD) and Defense Industrial Base (DIB) customers to protect their Controlled Unclassified Information (CUI)."
But what does that mean, exactly? IL-4 covers "controlled unclassified information" (as well as information of lower levels of security). It's one level below IL-5 (natch), the level at which a cloud computing company would be permitted to work with DoD's most sensitive information, that which is just short of being "classified" information.
And to that point, CrowdStrike confirms that it's currently "working ... toward" obtaining IL-5 clearance.
Now what
This development in important to investors for two primary reasons:
First, and most obviously, it gives CrowdStrike access to more restricted information, giving it permission to do more work and bid on more contracts than it previously was able to. Second, because it takes time and effort to obtain clearance, each successive IL level functions as a moat around CrowdStrike's business, insulating it from competitors that have not yet reached its level of clearance.
Long story short, CrowdStrike's business just got a bit more valuable, and today's stock price hike reflects that fact.
