On Wednesday, Rosenblatt Securities adjusted its outlook on CrowdStrike Holdings (NASDAQ:CRWD), lifting the price target to $400 from the previous $375, while keeping a Buy rating on the stock.
The revision follows CrowdStrike's report of impressive quarterly financial performance, surpassing expectations on several key metrics.
The cybersecurity firm showcased a 27% year-over-year growth in net new Annual Recurring Revenue (ARR), a 33% increase in year-over-year revenue, and a significant improvement in operating margin, which rose to 25%—up 10 percentage points from the previous year. Additionally, CrowdStrike's free cash flow margin reached 33%.
CrowdStrike's success was attributed to multiple factors, including the effectiveness of its Falcon Platform, which is noted for its ease of deployment and ability to encourage the adoption of additional modules.
The platform's design also simplifies the consolidation process for clients. The company also saw strong performance in non-endpoint solutions, such as Identity, Cloud Security, and LogScale (Next-Gen SIEM), which doubled their ARR year-over-year to $850 million.
The company's go-to-market strategy was highlighted as a key contributor to its success. This strategy encompasses a wide customer reach, from large enterprises to small and medium-sized businesses (SMBs), and leverages partnerships with system integrators (SIs), managed security service providers (MSSPs), and notable collaborations with Dell (NYSE:DELL) and the AWS marketplace.
The recent introduction of FalconFlex, a flexible licensing model launched last fall, has also been instrumental in enabling larger deals and fostering expanded module adoption.
Looking forward, management is optimistic about maintaining ARR and revenue momentum into FY25, bolstered by the strength of emerging modules such as Identity Protection, LogScale, and Cloud Security.
New launches like Falcon IT and Charlotte AI modules are expected to further contribute to growth. With the cybersecurity sector rarely seeing companies with a combination of 34% ARR growth, 33% revenue growth, and 25% operating margins, along with an anticipated FY25 free cash flow margin of 31%-33%, CrowdStrike's position appears robust. Consequently, Rosenblatt Securities has raised its estimates and reaffirmed its Buy rating, with an increased price target to reflect the company's strong performance and future potential.
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