Over the past few years, cybersecurity companies have seen some significant growth. In this clip from "Ask Us Anything" on Motley Fool Live, recorded on May 5, Fool.com contributors Nick Rossolillo and Connor Allen examine Crowdstrike's (CRWD +0.46%) huge uptick in revenue that has investors excited.
Nick Rossolillo: So there's the market cap breakdown on Ycharts. You can see the yellow line, Palo Alto Networks (PANW +0.16%) at almost $55 billion. Largest by market cap. You see the purple line is Crowdstrike for much of 2020 and 2021, they actually passed up Palo Alto and Fortinet (FTNT +0.45%) in market cap, and just recently Palo Alto reclaimed that lead. And you could argue that's very fair because there's the revenue breakdown.
Palo Alto Networks has far and away more revenue than anyone else, even Fortinet. And Fortinet, you know, is actually valued by market cap exactly the same as Palo Alto. Yet, Crowdstrike is kind of neck-and-neck with these three. And you see they have like less than a third of the revenue of Palo Alto Networks. But here's the reason why.
There's their revenue growth over the last three years. Crowdstrike is just killing it. Over 300% growth in revenue over the last three years and still going really, really strong. So, really, really high expectations for this company.
Jose, in your slides there, you mentioned over 30 times sales, even after the recent sell-off. But there's a reason why. Investors are expecting this to be a really, really high growth company for the foreseeable future.
Connor Allen: Yeah, and like they even, oh. I was just going to say that they even kind of downgraded some expectations this past quarter. They said they're expecting between 42% and 47% revenue growth this year, I think, is the numbers.
But you know, that's still a great number, especially when they're talking about GAAP profitability too, you know. You're like OK, I'm OK with 40% growth for a profitable business like that's no big deal to me. I understand that they've been doubling revenue for the past few years, but at some point, a company's growth has to normalize somewhat.
