Last year alone, nearly 165 million records in the U.S. were exposed by data compromises, like cybersecurity breaches, according to Statista. And while that's an uncomfortable statistic for online users, it's also an important one for stock investors because it represents a huge opportunity for cybersecurity services.
That's where CrowdStrike Holdings (CRWD +4.33%) and Palo Alto Networks (PANW +5.78%) come in. These two companies are not just providing vital cybersecurity services, but they're also experiencing impressive growth. Here's why these companies could end up being long-term winners in the decade ahead.
Image source: Getty Images.
1. CrowdStrike
CrowdStrike's cybersecurity services focus mostly on endpoint protection (like laptops and mobile devices). And while there's a growing list of competitors in the cybersecurity space, they're having a hard time keeping pace with CrowdStrike, considering the company is currently the No. 1 endpoint security company with nearly 18% of the market.
The company's leading position in this space has translated into impressive financial results. Consider these results from CrowdStrike's fiscal 2023 (ended Jan. 31):
- Revenue increased 54% to $2.2 billion.
- Net cash flow rose 63% to $941 million.
- Long-term debt totaled $741 million while cash was $2.7 billion.
- The company reached a record 1,873 net new customers.
NASDAQ: CRWD
Key Data Points
On the company's latest earnings call, CrowdStrike's co-founder and CEO George Kurtz said that the company delivered a record fourth quarter that "exceeded our expectations across the board" and highlighted the fact that the company reached a record $222 million in annual recurring revenue (ARR).
And even amid a potentially slowing economy, there's still reason to be optimistic about CrowdStrike's continued growth as well. The company's management said that sales will reach an estimated $3 billion in the current fiscal year, up 34% from the year-ago quarter.
2. Palo Alto Networks
Palo Alto absolutely deserves a spot on this list, too, because the company is not only growing like a weed, but also because the company is somewhat of a cybersecurity generalist, making it easy and more cost effective for customers to hand over the cybersecurity reins to Palo Alto.
And that's led to some stellar growth for the company. Total revenue rose 26% to $1.7 billion in the latest quarter, achieving the company's high end of guidance. Additionally, net income totaled $84.2 million versus a loss of $93.5 million in the year-ago quarter.
NASDAQ: PANW
Key Data Points
In fact, it was such a fantastic quarter that the company boosted its earnings guidance for the second half of 2023 to a range of between $3.97 to $4.03, up from a previous range of $3.37 to $3.44.
And if you need another reason to consider Palo Alto, consider that the latest Canalys data ranked the top 12 global cybersecurity vendors -- which account for 47% of the cybersecurity market -- and Palo Alto topped the list with 8%.
Remember to hold for the long-term
The opportunity for Palo Alto and CrowdStrike to continue growing over the coming years is enormous. The global cybersecurity market was valued at nearly $222 billion in 2022 and could climb to $650 billion by 2030, according to Next Move Strategy Consulting. That massive opportunity should be front of mind even with temporary share price swings along the way.
