Very little is left until the end of the 3rd quarter of 2021. Most of the major financial market participants have already reported on its results, we are looking forward to only a few important reports. Today we will talk about the most interesting of them from the point of view of financial analysts.
Budding CrowdStrike Holdings
The American holding company CrowdStrike Holdings, Inc. It is included in the top global companies providing their services in the field of IT. Specializes in cloud-based endpoint protection through subscription services.
Justification of the demand for cybersecurity
The economy is rapidly moving into the world of digital technologies. However, even today, many organizations still think little about the confidentiality and security of their own information. Very sorry!
Remember at least May 2021, when hackers paralyzed the work of America's largest pipeline, the Colonial Pipeline. The usual buyout cost this company several million dollars. And the constant "bombardment" of crypto exchanges, from where hackers steal many millions. Against the background of the current events, it is not surprising that the US White House insists that companies invest in cyber defense, seeing in the actions of hackers a true threat to national security.
Taking into account the data of last year, spending on cloud services in the IT sector exceeded $100 billion, and only 1.2% were directed specifically to cybersecurity. The company's specialists predict the growth of this figure and the achievement of 10% of the budget funds by each company in need of protection. In 6 years, the cybersecurity market will grow by 11% annually and will cost at least $170 billion.
The inflexible guardian of the cyber world
Many companies still use traditional virus software-classic systems that require pre-installation on a computer. However, this kind of protection has long been ineffective against virus threats, and you can often find out that the system was "attacked" only when updating the database.
Cloud services work differently. They "tie" all computers, laptops, tablets and other devices into a common network, and at the first attack they instantly block it. In addition, Crowdstrike's artificial intelligence has the ability to self-learn, so the more attacks it reflects, the faster it improves.
All types of protection that Crowdstrike offers to its customers are called "modules". The number of these elements is constantly growing. If there were 10 "modules" in the company at the time of the issue of shares, today this number has grown to 19. Each subsequent one brings additional profit to the company, because it encourages the client to increase the cost of the service. According to the statements of the company's specialists, each client uses at least 4 modules at the same time.
The Crowdstrike addressable market has grown significantly due to new offers. Today it is 36 billion dollars, while in 2019 it was equal to 25 billion. According to all forecasts, by 2023 it will reach 44 billion
What to do with the shares?
Crowdstrike operates on the basis of a cloud subscription model, successfully expanding it and increasing its regular income. For example, since 2018, this indicator has increased by 74%.
Other figures also indicate a systematic growth:
- revenue growth by 84% by 2021 (804.7 million);
- free cash flow – 292.9 million;
- non-GAAP net profit for 2021 – 62.2 million.;
- earnings per share in the 2nd quarter – $0.08 (last year - $0.03);
- an increase in revenue – by 62% (323.3 million).
Investors are closely watching the change in the quantitative indicator of direct customers of Crowdstrike. They include more than half of those who are included in the Fortune 100 list, and the total number is 11,420, which is 82% higher than the previous year.
- revenue growth - by 48.5% - to $1.3 billion;
- non-GAAP profit - in the period from $ 83.1 to $97 million.
The company has all the opportunities not to save on investments in its own development, investing a large amount of money in innovations. According to experts, the company's services will be in increasing demand, since the threat of hacker attacks for many is becoming quite real.
In July of this year, the company's share price reached 270 dollars, after that they held their positions for a long time, and then sharply went down to $230. If sellers leave the assets alone for at least a short time, we can expect a sharp rise to $310 per asset.
Okta is also engaged in providing services in the field of IT technologies. This is a kind of intermediary between sellers and buyers, working through a special cloud platform, on which all interaction takes place. The company provides customers with access to a wide range of diverse offers, which makes its services almost irreplaceable. In addition, their prices are quite liberal, and the tools are simple and easy to understand even for an advanced user.
Okta's life after the pandemic
Throughout the past year, the services of technology companies have been particularly popular on the market. Such a high demand was due to financial injections coming from the state. Today, the excitement has somewhat subsided, as the White House is actively curtailing aid programs, paying more attention to the stabilization of the situation in the labor market.
Another important reason is the preparation of the Federal Reserve Service for tightening monetary policy measures. This will significantly change the position of companies in the market. Given these facts, investors are actively looking for new sectors of the economy where they can invest their own funds and maintain stable income growth. It is the cybersecurity sector that is included in the list of promising areas.
Okta's activities perfectly fit into this scheme. The business, which was going well even before the crisis, did not undergo any significant changes even in the year of the pandemic. The company worked at a calm, measured pace, without sharp jumps and falls. Experts recorded only an increase in income.
It is equally important that the company has not only expanded the list of its customers, but also forced them to spend more on services. According to the indicators of last year, the number of customers increased by 30%, and the net dollar retention rate was equal to 119%, of which 19% was payment for new services.
Okta experts claim that:
- the total addressable market was previously equal to 55 billion;
- with the addition of new services, it increased by 25 billion;
- today the figure has reached 80 billion.
In accordance with the consensus forecasts for the 2nd quarter, a loss per share of $0.35 is expected, whereas a year ago a profit of $0.07 was demonstrated. Experts call the recent acquisition of Auth0, which cost 6.5 billion dollars, the main reason.
In accordance with the growth of the client, the revenue indicator increases, which has currently reached 296.7 million. Investors are closely watching how this figure will change depending on the subscription.
According to the results of the fiscal year 2022 for the last quarter, the loss per share may be in the range of $1.13 to $1.16. The projected revenue value is 46% higher than in the previous period. The final result is expected to be in the range of 1.22 billion.