Growth stocks have been the darlings of the stock market for the past decade or so, and it's easy to see why when you look at how many of the top ones have performed during that time. Although the volatility of growth stocks can be hard to stomach for more risk-averse investors, it can often pay off down the road with patience.
For investors with $1,000 available to invest, cybersecurity company CrowdStrike (CRWD +0.81%) can make a great addition to your stock portfolio. It is well positioned to capitalize on the growing demand for cybersecurity and provide great returns for shareholders.
NASDAQ: CRWD
Key Data Points
Solidifying itself as one of the top players in the industry
When CrowdStrike released its Falcon platform in 2013, it was one of the first AI-native cybersecurity solutions.
Since CrowdStrike has been using AI for cybersecurity for so long, it has a competitive advantage over companies newer to the space: relevant data. AI models of any type rely on massive amounts of data to be trained to become effective. The more data, the better, because it improves the accuracy and effectiveness of threat detection and response.
This advantage has helped CrowdStrike produce industry-leading modules. The Gartner Magic Quadrant for Endpoint Protection Platforms -- which evaluates cybersecurity platforms based on their completeness of vision and ability to execute -- recently recognized CrowdStrike's platforms as the best for their ability to execute. This was the fourth year in a row it's received that recognition.
Awards aside, CrowdStrike's 119% dollar-based net retention indicates strong customer loyalty, and the fact that 64% of customers are using five or more modules shows the value they're receiving.
Encouraging financial performance from its fiscal year 2024
CrowdStrike has the financial performance to back its customer metrics. In its fiscal year 2024 (ended Jan. 31), CrowdStrike made $3.05 billion in revenue, which was up 36% year over year (YOY). This growth was largely due to the 36% YOY growth in subscription revenue and the $875 million in net new annual recurring revenue it added.
It also adds to the exponential growth we've witnessed since the company began reporting its financial information.
CRWD Revenue (Annual) data by YCharts
Focusing more on its operational efficiency, investors should be pleased with CrowdStrike's operating income, which increased 86% YOY to $660 million on 22% margins (up from 16%). As long as CrowdStrike can maintain its growth momentum, it should continue to deliver strong financial performance for the foreseeable future.
Looking ahead, CrowdStrike has provided positive guidance for fiscal year 2025. It expects revenue to be between $3.92 billion and $3.99 billion, which would be up 28% to 31% YOY.
An industry that's in the earlier stages of what it can become
The reality of cyberattacks is that they are expensive for companies, both financially and reputation-wise. In IBM's annual "Cost of a Data Breach" report, it noted three key findings that can put these costs into perspective:
- The average cost of a data breach globally in 2023 was $4.45 million, a 15% increase over three years.
- Around 51% of organizations plan to increase security investments due to a breach.
- Organizations that used security AI and automation saved an average of around $1.76 million, compared to organizations that didn't.
Those figures are just for data breaches. They don't include other types of cyberattacks, such as ransomware, phishing, malware, and the dozens of others that exist. The financial and reputational damage a cyberattack can cause a company is why the industry has become so vital and will only become more indispensable as the world becomes more digitally interconnected.
CrowdStrike estimates that the total addressable market for AI-native security platforms will grow from $100 billion in 2024 to $225 billion by 2028. This projected growth opportunity gives CrowdStrike significant room to expand its business and its investors a chance to benefit from long-term growth.
