HomeMarket NewsCrowdStrike on Track to Boost Earnings with Subscription Growth

CrowdStrike on Track to Boost Earnings with Subscription Growth

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CrowdStrike Holdings, Inc. CRWD is gearing up to unveil its fourth-quarter fiscal 2024 results on Mar 5. The prevailing cloud-based cybersecurity solution provider is anticipated to deliver a robust performance driven by a favorable demand landscape, likely propelling its subscription revenues upwards.

Discover how CRWDโ€™s fiscal fourth-quarter overall results are shaping up by clicking here.

Strong Subscription Growth to Drive Q4 Revenues

A surge in revenues from subscriptions is expected to significantly contribute to CrowdStrikeโ€™s fourth-quarter revenue numbers. The spike in individuals accessing corporate networks has heightened the necessity for security measures, potentially amplifying the demand for CRWDโ€™s offerings in the fiscal fourth quarter. An ample pipeline of deals indicates a positive outlook for the company.

Innovative Products Like Falcon Platform to Propel Growth

CrowdStrike Price and EPS Surprise

CrowdStrikeโ€™s robust portfolio, especially the Falcon platform with its 10 cloud modules, is expected to have facilitated the acquisition of new clients during the upcoming quarter. The AI-powered Falcon Platform stands out as the industryโ€™s premier multi-tenant, cloud-native security solution, safeguarding various workloads across different environments like desktops, laptops, servers, virtual machines, and IoT devices.

The cloud-based Falcon platform currently offers 10 cloud modules through a software-as-a-service subscription model. These modules are categorized into Endpoint Security, Security & IT Operations, and Threat Intelligence. CRWDโ€™s all-encompassing security solutions provide a competitive edge over peers like Proofpoint, specializing in identity theft protection, and FireEye and F5 Networks, offering diverse cloud-based security services.

As of the third quarter of fiscal 2024, CrowdStrikeโ€™s subscription clients utilizing five or more cloud modules accounted for 63% of total subscription customers, with 42% utilizing six or more modules and 26% utilizing seven or more modules.

Robust Subscription-Based Business Model to Drive Profitability

CrowdStrikeโ€™s subscription-centric business approach is poised to enhance profitability in the fourth quarter. This model, characterized by recurring revenues, offers higher margins (exceeding 70%) compared to a hardware-centric model. In the third quarter, subscription-based sales contributed approximately 93% to the total revenues, leading to a 230 basis points (bps) year-over-year improvement in the non-GAAP gross margin to 77.8%.

Projections estimate Subscription revenues to reach $788.9 million, marking a year-over-year surge of 31.9%. The fourth-quarter non-GAAP gross margin is expected to climb up by 200 bps year over year to 77.4% based on our forecast.

Zacks Rank & Other Tech Standouts

Currently, CrowdStrike flaunts a Zacks Rank #1 (Strong Buy). The shares of CRWD have escalated by 23.2% year to date (YTD). Other top-ranking stocks from the broader technology sector encompass NVIDIA Corporation NVDA, Amazon.com AMZN and Meta Platforms META, each holding a Zacks Rank #1 currently.

Experts have substantially revised upwards the Zacks Consensus Estimate for the earnings of NVIDIA and Amazon, predicting significant growth for both stocks. Stay informed about upcoming earnings declarations with the Zacks Earnings Calendar.

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