Crowdstrike Q4 -

On Tuesday, our preferred cybersecurity company CrowdStrike released quarterly results, which were very well received. The stock shot up 24% in after-market trade but only ended up 10% the next day. We'll take it.

The growth rate of this business is very impressive. Revenues grew 32.7% year on year. Annual recurring revenue (ARR), a metric that represents premium-paying clients who are now locked into the ecosystem, was up 27% in the quarter. CrowdStrike's revenue retention rate is 98%

The launch of a modular cybersecurity product called FalconFlex in September last year has gone well. It allows clients to increase usage of existing modules or swap out modules as their own requirements evolve. Businesses are dynamic and constantly changing; being able to seamlessly adjust their usage is a massive win. CrowdStrike also benefits from extra revenue at high margins.

All this growth resulted in a big earnings beat. The company made $3.09 per share in the quarter, up 100% from the $1.50 made this time last year. This company has grown revenues at a blistering pace, and good profits are now filtering down to the bottom line. They have net cash of around $2.5 billion and are in great financial health.

We like this theme and we think CrowdStrike is the best operator in the market. There are risks to its dominance though, as the big cloud providers like Microsoft and Amazon are launching some of their own competitive products. But that's how capitalism works, CrowdStrike has the team and the technologies to compete with the best.