CrowdStrike Expected to Benefit from US Corporate Cybersecurity Investments

Korea Investment & Securities Report
High PSR at 46x
But Higher Sales Growth Compared to Competitors

[Asia Economy Reporter Minji Lee] There is a forecast that cyber security investments by companies in the United States will significantly boost their revenue growth rates.

On the 11th, CrowdStrike's stock price fell about 6.7%, from $281 to $262 this month. Although the stock price had risen nearly 23% since the beginning of the year, the recent high valuation has been a burden, causing a slight decline in the stock price.

Second-quarter revenue reached $340 million, a 70% increase compared to the same period last year. Earnings per share (EPS) were $0.11, with both revenue and EPS exceeding market expectations by 4.5% and 26.1%, respectively. The number of subscription customers grew 81% year-over-year to 13,000, maintaining a high growth trend. The renewal rate also showed a solid performance at 120%.

Researcher Taewan Oh from Korea Investment & Securities explained, “The company has exceeded the upper end of its previously provided revenue and EPS guidance in the last nine earnings announcements,” adding, “Currently, the market consensus for the fourth quarter is at the upper end of the guidance provided by the company.”

The Biden administration strengthened cybersecurity in the public sector by signing an executive order to enhance cybersecurity standards in May. In August, at a White House cybersecurity strategy meeting attended by CEOs of major companies such as Google, Microsoft, JP Morgan, and Bank of America, a call was made to reinforce cybersecurity. Accordingly, Google announced plans to invest $10 billion over five years, Microsoft $20 billion over five years in cybersecurity, and Apple also announced measures to strengthen supply chain security, among other steps to enhance cybersecurity.

Researcher Oh analyzed, “Currently, there is a shortage of nearly 500,000 cybersecurity professionals in the U.S. alone, so in the short term, collaboration with security companies utilizing SAAS like CrowdStrike will be strengthened.”

With the rise of remote work after COVID-19 and successive large-scale hacking incidents, the importance of cybersecurity is increasing, and high growth is expected to continue. Although the price-to-sales ratio (PSR) for next year is high at 46 times, it is important to note the potential for structural growth. Researcher Oh analyzed, “Looking at competitors’ PSRs in 2022, Zscaler is at 47 times, Okta at 36 times, and Cloudflare at 52 times, which are similar levels to the company,” adding, “Next year, CrowdStrike’s revenue growth rate is expected to be 60%, while other competitors’ growth rates are only 40%, making it highly attractive for investment.”

This content was produced with the assistance of AI translation services.