CrowdStrike: High Visibility And Longer Term Growth Acceleration

Summary

• There is sequential growth acceleration in RPOs; a leading indicator of revenues, driven by customers' adoption of the Falcon Flex subscription.
• High visibility of a large pipeline is leading to upgrades in longer term revenue and earnings estimates by Wall St.
• Valuations are rich but acceptable given CrowdStrike's 'leader-of-leaders' market leadership and longer term visibility.
• Technicals indicate some room for upside vs S&P500 as the ratio prices move up toward the top of the trading range.
• GAAP profitability is still in unprofitable territory, due to a persistent 20% of revenues SBC intensity that has not reduced despite revenues multiplying almost 3x over the past 3 years. This is a key risk as such a scenario benefits employees at the expense of minority shareholders.

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Performance Assessment

In my initiating coverage of CrowdStrike (NASDAQ:CRWD), I had adopted a 'Neutral/Hold' stance on the stock. This has resulted in a moderate error of omission as the stock has handily outperformed the S&P500 (

Analyst’s Disclosure: I/we have a beneficial long position in the shares of VOO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.