If you're looking for a way to profit from the booming demand for cybersecurity services, look no further than CrowdStrike (CRWD -11.10%). Here's why the cloud guardian's stock could be a great buy today -- and also a key risk that investors should note.

1. A massive expansion opportunity

Effective cyber protection should only grow in importance as more businesses digitize their operations and shift their processes to the cloud. Companies that provide these organizations with the means to protect their most valuable data are thus likely to enjoy rising demand for their services. The global cybersecurity market is projected to exceed $256 billion by 2028, up from $162 billion in 2023, according to Statista. 

Chart showing the expected growth of the cybersecurity industry over the next half-decade.

Image source: Statista.

Within this fast-growing industry, CrowdStrike is targeting an addressable market of $158 billion by 2026. With trailing-12-month revenue of $2.2 billion, the cyber sentinel is just scratching the surface of its long-term growth potential. 

2. Valuable digital real estate

CrowdStrike is a leader in endpoint security. Its Falcon Platform defends against threats at the device level, such as smartphones, laptops, and Internet of Things (IoT) sensors.

Hackers use these devices as gateways into their targets' networks. Roughly 90% of cyberattacks originate at the endpoint, which, in turn, account for 80% of the sensitive data lost in security breaches. 

This is why CrowdStrike refers to the endpoint as "the most valuable real estate in all of security." It's also one of the reasons why the cyber specialist's services are quickly becoming a vital part of a well-structured digital security strategy.

3. An AI-powered edge 

CrowdStrike uses artificial intelligence (AI) to strengthen its threat-detection network. Cutting-edge machine learning technology enables CrowdStrike to detect the most worrisome threats and issue real-time alerts to its clients.

The company surveils more than 2 trillion cyber events per day. The more data it collects, the smarter it becomes at identifying risks -- and the better it can protect its customers.

4. Sizzling customer growth 

CrowdStrike's technological leadership is helping it win new business at an impressive clip. Its customer count jumped 41% to 23,019 in fiscal 2023, which ended on Jan. 31. 

Better still, CrowdStrike is successfully expanding its relationships with its existing clients. More than 60% of its customers now use five or more of its cybersecurity modules. Evidence of CrowdStrike's strong customer satisfaction metrics can also be seen in its sterling net dollar-based retention rates, which have consistently remained above 120% in recent years. 

5. Torrid sales and cash flow growth 

These customer gains are fueling a sharp improvement in CrowdStrike's financial position. Its revenue surged 54% to $2.2 billion in fiscal 2023, while its adjusted earnings per share soared 130% to $1.54. 

It should be noted that CrowdStrike is not yet profitable based on generally accepted accounting principles (GAAP). It generated an operating loss of $190 million in fiscal 2023. But the company does produce robust free cash flow, to the tune of $677 million over the trailing 12 months. 

CrowdStrike's profitability and cash production should continue to improve as it scales its operations. Management sees revenue and adjusted profits rising roughly 33% and 49%, respectively, in fiscal 2024. The company is also targeting free cash flow margins of over 30% in the coming years. 

A major risk to consider

Investors should also note that competition is intensifying in the cybersecurity arena. CrowdStrike has formidable rivals, most notably Microsoft.

The software giant is not to be taken lightly. Microsoft has entrenched relationships with countless corporate clients. It also has tens of billions of dollars in cash reserves that it can use to fund its massive research and development program. 

And yet, 8 out of 10 corporations choose CrowdStrike's cybersecurity solutions over those offered by Microsoft in head-to-head tests. This impressive win rate is a testament to CrowdStrike's superior endpoint security technology. It's also an excellent sign that the cloud defender's rapid growth is likely to continue in the years ahead.