Amid the shift towards “work from home”, one of the biggest adjustments for global corporations was how to ensure staff’s computing devices remained secure from hackers or malicious attacks.
Unsurprisingly, that just accelerated already-healthy demand for flexible cybersecurity solutions which has resulted in select stocks in the cloud software space witnessing robust share price gains in 2020.
Investors have taken notice. One of the leading cybersecurity cloud operators is Crowdstrike Holdings Inc (NASDAQ: CRWD).
The firm operates a cloud-native solution that helps deliver endpoint security (essentially protecting the actual devices, such as iPhones or laptops, that might allow hackers access to valuable networks).
Earlier this week, Crowdstrike released its second-quarter fiscal year (FY) 2022 earnings, for the three months ending 31 July 2021.
Cybersecurity spend continues to grow
Far from a “pandemic” or “stay-at-home” stock, Crowdstrike (and other cybersecurity specialists) have proved to naysayers that their services are here to stay post-Covid.
In fact, at the moment most companies are underspending on cloud security solutions.
For the latest quarter, Crowdstrike’s revenue was US$337.7 million, up an impressive 70% year-on-year. It also managed to grow its annual recurring revenue (ARR) at a similar 70% year-on-year clip to US$1.34 billion.
Operating cash flow also nearly doubled year-on-year to US$108.5 million while free cash flow soared 126% year-on-year to US$73.6 million.
Perhaps one of the best measures of demand for Crowdstrike’s cybersecurity solutions is the number of cloud “modules” on its platform that customers subscribe to.
The company clearly has stickiness as 66% of its subscription customers now subscribe to four or more cloud modules – up from 57% in the year-ago quarter (see below).
Meanwhile, the percentage of customers on “five or more” and “six or more” modules shows investors that the room for growth is still there.
Long-term investors have rewarded stocks in the space, with Crowdstrike stock up 36% year-to-date while shares of rival cloud security firm Zscaler Inc (NASDAQ: ZS) are up 43% so far in 2021.
One thing is clear. Delta variant or no Delta variant, cloud-native cybersecurity solutions are here to stay.
Source: Crowdstrike Q2 FY 2022 earnings presentation
Disclaimer: ProsperUs Head of Content Tim Phillips owns shares of Crowdstrike Holdings Inc.
