Crowdstrike Q4 - Good Guidance

On Tuesday night, CrowdStrike, one of our 'Future Hero' holdings, reported strong results. The cybersecurity company posted a top and bottom line beat, and the share price gained 3% yesterday. It's nice to see positive pops, given recent pressure on stock prices.

There are three key reasons we like CrowdStrike:
1) Protecting a growing trove of digital information is going to become increasingly important to all kinds of organisations.

2) CrowdStrike grew revenue by 48% last quarter and expects to grow by 39% next quarter. Having strong revenue growth is very important if the company has a chance of becoming a 10 bagger investment.

3) Most of CrowdStrike's revenue is from recurring subscriptions, meaning once they lock in a customer, that revenue will hang around for years.

In addition, CrowdStrike is developing new bolt-on security products. Once they have customers locked into their ecosystem, they're able to upsell them extra packages. Given the importance of securing new clients before another company does, they spend around 40% of their revenue on sales and marketing. That's massive!

This investment is not without its risks. In the previous quarter, they made a profit of $111 million. If you factor in the stock-based compensation of $152 million, then the company is still loss-making. We are not the only people who see big potential in the company. Crowdstrike trades on a steep premium, meaning that it will need to continue growing like gangbusters to justify the current share price.

This 'Future Hero' falls into the high risk category, but could lead to big returns.