Leveraging AI and Decisive Partnerships Boosts Cybersecurity Leader's Market Dominance and Revenue Growth

What are the underlying business or industry changes driving this perspective?

• CrowdStrike's platform strategy, including its single-agent, single-platform approach and the consolidation benefits it offers, is expected to continue attracting large deals and help in driving revenue growth.
• The company's investment in AI and machine learning, especially through acquisitions like Flow Security for cloud data runtime security, will enhance its product offerings and potentially boost revenue by solving complex cybersecurity problems.
• CrowdStrike's focus on operational excellence and market-leading growth at scale, coupled with addressing the elevated threat landscape, are likely to result in increased demand for its cybersecurity solutions, positively impacting revenue.
• The expansion of CrowdStrike's product offerings into cloud security with record net new ARR growing nearly 200% year-over-year and into next-gen SIEM with significant ARR growth demonstrates diversification and innovation that can drive future revenue growth.
• CrowdStrike's strategic partnerships, including with Dell and through MSSP channels, provide additional routes to market, opportunity for customer base expansion, and potential revenue growth.

How have these above catalysts been quantified?

• Analysts are assuming CrowdStrike Holdings's revenue will grow by 27.1% annually over the next 3 years.
• Analysts assume that profit margins will increase from 2.9% today to 10.8% in 3 years time.
• Analysts expect earnings to reach $678.7 million (and earnings per share of $2.76) by about March 2027, up from $89.3 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 161.4x on those 2027 earnings, down from 869.3x today.
• To value all of this in today’s dollars, we will use a discount rate of 6.89%, as per the Simply Wall St company report.

What could happen that would invalidate this narrative?

• Increasing competition in cybersecurity, including from companies offering free or bundled products, could pressure CrowdStrike's pricing dynamics and affect revenue growth.
• A significant reliance on platform consolidation and acquiring new modules to drive growth could face challenges if customers resist expanding their product suites due to budget constraints or satisfaction with existing solutions, impacting net new ARR.
• Any failure to seamlessly integrate acquired technologies, such as Flow security, into CrowdStrike's platform could result in operational inefficiencies or reduced efficacy of their cybersecurity solutions, negatively affecting customer retention and expansion rates.
• The pace and success of new product launches, such as Falcon for IT and Charlotte AI, are uncertain and could impact expected revenue streams if they fail to meet market demand or encounter deployment and scalability challenges.
• Regulatory changes and increased scrutiny around AI and data privacy could impose additional compliance costs or limit the use of generative AI and data analytics capabilities, impacting CrowdStrike's innovation trajectory and competitive advantage.

• The analysts have a consensus price target of $390.74 for CrowdStrike Holdings based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with this, you'd need to believe that by 2027, revenues will be $6.3 billion, earnings will come to $678.7 million, and it would be trading on a PE ratio of 161.4x, assuming you use a discount rate of 6.9%.
  
• Given the current share price of $321.06, the analyst's price target of $390.74 is 17.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.