Data is now the new oil as a wave of digitalization washes over individuals and corporations in the wake of the pandemic. Cloud computing has enabled many businesses to scale at a rate never seen before, helping them to grow their customer base as well as their revenue and free cash flow. This explosion in users looks set to continue as companies build sturdy moats with specialized software that caters to all aspects of an organization's requirements.
Here are three stocks that are leveraging their cloud platforms to deliver sizzling growth that could help your investment portfolio in the next decade.
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CrowdStrike
CrowdStrike (CRWD 2.03%) is a cloud-based platform that delivers protection from cyber threats and ensures data security for its customers. The company prides itself on using artificial intelligence that continuously improves through machine learning as it consumes more data, thereby providing better overall protection over time.
CrowdStrike's success shows in its financial numbers. The company has grown its revenue from $874.4 million in fiscal 2021 (ended Jan. 31) to $2.2 billion in fiscal 2023. Although the company is still reporting operating and net losses, its free-cash-flow generation has steadily improved from $292.9 million to $676.9 million over the same period.
For the first quarter of fiscal 2024, CrowdStrike's growth has carried on as the company reported a 42% year-over-year jump in revenue to $692.6 million. Annual recurring revenue also climbed by the same amount to $2.7 billion as of April 30, and the company generated a higher free cash flow of $227.4 million compared to $157.5 million in the prior year. CrowdStrike's subscription customer base has also multiplied since fiscal 2019, going from just 2,516 to 23,019 at the end of fiscal 2023.
Impressively, slightly more than half of the Fortune 500 companies are its customers. What's more, CrowdStrike estimates that its total addressable market this year stands at $76.1 billion and is also growing at an annual rate of 13%, giving the company an addressable market of $97.8 billion by 2025.
Snowflake
Snowflake (SNOW 3.69%) runs a data cloud platform that allows its customers to collate, review, and analyze data from unrelated sources to gain insights. The company collects data from open data providers and allows customers to collaborate privately with specific groups of suppliers, partners, or other stakeholders.
This functionality led to impressive customer growth, with total customers jumping 29% year over year to 8,167 in the first quarter of fiscal 2024. Importantly, customers with more than $1 million in product revenue have surged by 80% year over year to 373 over the same period.
Snowflake's top-line growth has also been impressive, with revenue growing from just $592 million in fiscal 2021 to $2.1 billion in 2023.
The company has also seen free cash flow shoot up sixfold year over year from $81.2 million to $496.5 million in fiscal 2023. The first quarter of 2024 saw continued growth for the data company, with product revenue jumping 50% year over year to $590.1 million and remaining performance obligations climbing 31% year over year to $3.4 billion.
The dollar-based net retention rate has also hovered above 150% for the last five quarters, demonstrating the loyalty of Snowflake's customers. The company projects that its total addressable market will hit $248 billion by 2026.
Atlassian
Atlassian (TEAM -9.56%) runs a platform for work management software so that teams within an organization can collaborate and coordinate their workflows. In the last three fiscal years, Atlassian has seen its subscription revenue more than double from $931.5 million in fiscal 2020 (ended June 30) to $2.1 billion in fiscal 2022. Total revenue surged from $1.6 billion to $2.8 billion over the same period, and the company generated an average positive free cash flow of $718.5 million over the three years.
Atlassian's financial results for the first nine months of fiscal 2023 saw continued growth. Revenue improved by 27% year over year to $2.6 billion with free cash flow coming in at $572.1 million, slightly higher than the $556.2 million generated in the prior period.
The customer base has also expanded by 38.2% from the third quarter of fiscal 2021 to the third quarter of fiscal 2023, and customers have also reported that the company's platform provides mission-critical functionality for their teams. During last year's Investor Day event, the company estimated that it had a significant runway ahead of it as there are 800,000 companies with technical teams and a whopping 2.2 million businesses with 10 or more knowledge workers.
These numbers translate into a total addressable market of $29 billion that is growing at 14% annually -- all in all, a promising scenario for investors.
