This Cybersecurity Stock’s Revenue Is Exploding

This Cybersecurity Stock’s Revenue Is Exploding


In recent years, cybersecurity companies have experienced significant growth. In this clip of “Ask us anything”. Motley Fool Live, recorded May 5thFool.com contributors Nick Rossolillo and Connor Allen examine Crowd strike‘s (CRWD) -5.96%) a huge increase in revenue that has excited investors.

Nick Rossolillo: So there is a breakdown of market capitalization in Ycharts. You can see the yellow line, Palo Alto Networks (PANW -7.33%) nearly $ 55 billion. Larger by market capitalization. You see, the purple line is Crowdstrike for much of 2020 and 2021, they actually left Palo Alto and Fortinet (FTNT -4.32%) with market capitalization, and recently Palo Alto regained that leadership. And it could be argued that it is very fair because there is a breakdown of revenue.

Palo Alto Networks has much more revenue than anyone, even Fortinet. And Fortinet, you know, is valued at market capitalization just like Palo Alto. Still, Crowdstrike is kind of neck and neck with these three. And you see, they have less than a third of Palo Alto Networks’ revenue. But here’s the reason.

There has been a growth in their income over the last three years. Crowdstrike is just killing him. More than 300% revenue growth over the last three years and is still very, very strong. Therefore, the expectations of this company are very high.

Jose, in your slides, you mentioned sales more than 30 times, even after the recent sale. But there is a reason. Investors expect this to be a very, very high growth company in the foreseeable future.

Connor Allen: Yes, and like them even, oh. I was just going to say that they even lowered some expectations this last quarter. They said they expect between 42% and 47% revenue growth this year, I think, are the numbers.

But you know, there are still a lot of them, especially when it comes to GAAP profitability, you know. Okay, I’m fine with 40% growth for a profitable business like this isn’t a big deal for me. I understand that they have been doubling their revenue over the last few years, but at some point, the growth of a business needs to normalize a bit.





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