CrowdStrike reported earnings on Wednesday which beat on almost every metric. The company is still growing fast, sales increased 42% year-on-year, gross margins came in at a whopping 78% and operating income grew 40%.
The company is signing bigger clients which are harder to close. It now has more than 400 clients that pay them over $1 million a year. During the quarter they signed a deal with the US Department of Defence and 2 Fortune 100 companies. They even stole a multimillion-dollar client from Microsoft, who are turning out to be their biggest competitor. CrowdStrike claims they offer a more efficient product at a cheaper price.
Of course, AI was a big theme in the earnings call. CrowdStrike has been using AI for years to make its products more effective by recognising patterns. As other companies start to explore the theme, CrowdStrike will be in a prime position to offer them security solutions. They already have strong partnerships with Google and Amazon.
The stock has very high expectations. It trades at 67 times next year's earnings. Even after all the metric beats, it dropped 10% before the market opened. Things got much better in open trade and it only ended down 1.6%.
This remains one of our future hero stocks, not for the faint-hearted but is showing amazing growth in a sector that is thriving. We are happy to hop along for the ride in small doses.