Last year was tumultuous for CrowdStrike Holdings (CRWD +0.81%). On July 19, it released a corrupted update to its industry-leading cybersecurity software that crashed more than 8.5 million of its customers' computers around the world. CrowdStrike stock plummeted by 42% following the outage, as investors feared it would trigger a customer exodus and a sharp drop in revenue.
However, the stock has since soared to a record high, as it appears the company's cybersecurity platform is so good that not even the industry's biggest-ever blunder could convince businesses to abandon it. In fact, management hasn't reduced its long-term revenue forecast at all, so it appears there won't be any negative effects lingering from the outage.
CrowdStrike is scheduled to report its latest financial results for its fiscal 2025 fourth quarter (ended Jan. 31) on March 4. We are likely to learn more about the company's progress, so should investors buy the stock ahead of the release?
Image source: Getty Images.
An industry-leading cybersecurity platform
The cybersecurity industry has a history of fragmentation, meaning businesses had to buy products from several different vendors to complete their cybersecurity stack. CrowdStrike's Falcon platform is popular because it's a complete, all-in-one solution for businesses of all sizes. It also uses a lightweight, cloud-based architecture so computers and devices aren't bogged down with clunky software.
The Falcon ecosystem includes 28 different modules spanning cloud security, identity management, endpoint protection, and more. Artificial intelligence (AI) is embedded into all of them to automate as much of the threat detection and remediation processes as possible, so they operate silently in the background and rarely require intervention from end users.
CrowdStrike's AI models are trained on over 2 trillion daily security events, so they are constantly growing more accurate.
The company also integrated a virtual assistant into Falcon called Charlotte AI, which is always available to answer questions about an organization's security posture. It even prioritizes threats based on their severity, so cybersecurity managers know which problems to tackle first. As a result, Charlotte AI dramatically increases efficiency, saving the average user over 40 hours per week (according to CrowdStrike).
At the end of the fiscal 2025 third quarter (ended Oct. 31), a record 66% of CrowdStrike's customers were using at least five Falcon modules. The company also said it was the biggest quarter ever for its sales department that handles organizations with under 2,500 employees (small and mid-size businesses).
The Falcon Flex product is driving a lot of that momentum. It was launched in 2023, and it provides businesses with a flexible subscription that allows them to reallocate their spending to different Falcon modules as their needs change over time.
As a result, the average Falcon Flex customer has tried over nine modules, so it's a great way for CrowdStrike to showcase its product portfolio and potentially entice more spending.
NASDAQ: CRWD
Key Data Points
CrowdStrike recently increased its revenue forecast
Shortly after the July 19 outage, CrowdStrike reduced its revenue forecast for fiscal 2025 from $4 billion to $3.9 billion. It wasn't a very big cut considering the severity of the incident, and CEO George Kurtz told investors that while many deals were delayed, the vast majority remained in the sales pipeline.
When the company released its third-quarter results, it actually revised its fiscal 2025 revenue higher by $30 million, to $3.93 billion (at the top of the range). It supported Kurtz's confidence that the effects from the outage would be relatively minimal, and it highlighted how much value Falcon provides for its customers.
In fact, management even reiterated its long-term goal to reach $10 billion in annual recurring revenue (ARR) by fiscal 2031. That represents 150% potential growth from CrowdStrike's current ARR of $4 billion.
When the company reports its final results for fiscal 2025 on March 4, investors should look for two things: First, check for any revisions to that long-term forecast. Second, see whether revenue for the year comes in as expected (or better), which could be a sign the outage is well and truly in the rearview mirror.
Should investors buy CrowdStrike stock before March 4?
CrowdStrike is an extremely high-quality company, as evident from the way it bounced back from the worst incident in its history. Moreover, it doesn't have much competition in the platform cybersecurity space -- Palo Alto Networks is currently transitioning to a platform approach, but only a fraction of its customers are on board so far.
Therefore, once businesses adopt the Falcon ecosystem, it's very inconvenient for them to leave because they would likely have to engage several different cybersecurity providers to cover all of their needs. That stickiness is a powerful feature of CrowdStrike's business model.
With all of that said, the stock is not cheap right now. It trades at a price-to-sales ratio (P/S) of 27, which is substantially more expensive than its main rival, Palo Alto, and more than double the valuation of other top cybersecurity stocks like Zscaler:
CRWD PS Ratio data by YCharts.
As a result, investors who buy CrowdStrike stock need to take a very long-term view. While it seems expensive today, it looks like a bargain when measured against the company's projected fiscal 2031 ARR of $10 billion.
That means one quarter probably won't matter much in isolation, so buying the stock either before or after March 4 might be perfectly fine for any investor willing to hold it for the next six years. But, as I mentioned earlier, it's important to ensure management's long-term revenue forecast remains intact.
