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CrowdStrike, one of our "future hero" stocks, reported market-beating numbers on Tuesday night, and the share price popped 10% yesterday. You will recall that CrowdStrike is a leading cybersecurity company, that uses AI to identify threats in real time without draining too many resources from your computer or phone.
Revenue for the quarter grew 35% year-on-year to $786 million. CrowdStrike's key metric is its ARR (annual recurring revenue) because this is sticky income, coming from clients on contract. The current ARR run rate is $3.1 billion, up from $1.2 billion only two years ago!
The company has finally swung from a loss to a profit. Software companies are in the enviable position of being able to grow revenue much faster than costs. Goldman Sachs estimates that its profits will double over the next year, from around $1.50 per share to around $3 per share, and then double again by 2026 to around $6 per share.
The stock has been on a tear this year, up over 100%! That sounds good, but in reality it its flat over three years. This is a high-risk company, meaning the share price is going to be very volatile over the next few years, as the CrowdStrike business continues to grow exponentially. If you have a high tolerance for risk, and don't own this one already, it's a good one to consider.
