CrowdStrike Holdings CRWD, the premier cybersecurity player in “endpoint” solutions — think IoT, mobile devices, and “edge” of the cloud security — reported Q1 fiscal 2023 (ends January) non-GAAP earnings of 31 cents per share on June 2, beating the Zacks Consensus Estimate of 23 cents per share.

The company added $190.5 million to its net new annual recurring revenue (ARR), taking the total ARR to $1.92 billion as of Apr 30, 2022, up 61% year-over-year.

CrowdStrike also raised guidance for the year and I jumped at the opportunity to buy shares for my TAZR Trader service under $170 last month. Let’s review the quarter details and analyst reactions to see why you should still buy CRWD shares under $190 if you can.

You can see my June 7 video where I made the bull case in that week’s Top Stock Picks. That video also has details on immediate analyst moves after the company report.

Top-Line Details

CrowdStrike’s fiscal Q1 revenues of $487.8 million surged 61% year-over-year and surpassed the consensus mark of $465.1 million. Subscription revenues jumped 63.5% yoy to $459.8 million.

The company added 1,620 net new subscription customers during the reported quarter. It had a total of 17,945 subscription customers as of Apr 30, reflecting yoy growth of 57%.

CrowdStrike’s subscription customers who adopted four or more cloud modules soared to 71%, those with five or more cloud modules rose to 59%, and those with six or more cloud modules jumped to 35% as of Apr 30.

Revenues from professional services climbed 29.6% year over year to $28 million.

Geographically, 71% of total revenues stemmed from the United States, while 29% came from outside the country.

Operating Details

CrowdStrike’s non-GAAP gross margin remained flat on a year-over-year basis at 77%. Non-GAAP subscription gross margin remained flat at 79% on a year-over-year basis.

Total non-GAAP operating expenses, as a percentage of revenues, were 60% compared with the prior-year quarter’s 67%.

Non-GAAP operating income was $83 million compared with $29.8 million in the year-ago quarter. Non-GAAP operating margin for the quarter was 17%, up 700 bps year over year.

Balance Sheet & Cash Flow

As of Apr 30, 2022, cash and cash equivalents were $2.15 billion compared with $2 billion as of Jan 31, 2022. CrowdStrike has a long-term debt of $739.9 million.

During the fiscal first quarter, the company generated operating and free cash flows of $215 million and $157.5 million, respectively. Free cash flow accounted for 32% of revenues in the same period.

Bright Outlook

Buoyed by the stellar first-quarter performance, CrowdStrike anticipates revenues between $512.7 million and $516.8 million for the second quarter of fiscal 2023. As far as the bottom line is concerned, the company expects to report non-GAAP earnings per share between 27 cents and 28 cents.

Non-GAAP operating income is expected to be $70.4-$73.3 million.

For fiscal 2023, CrowdStrike raised its guidance. The company’s management currently estimates its revenues in the band of $2,190.5-$2,205.8 million, compared with the previously projected band of $2,133.1-$2,163.2 million. The company now anticipates non-GAAP earnings to be $1.18-$1.22 per share, up from the prior range of $1.03-$1.13 per share.

Non-GAAP operating income for the full fiscal 2023 is now projected to be $306.5-$317.8 million, higher than the previous band of $289.2-$311.8 million.

Based on this guidance, analysts have pushed this year’s EPS consensus to $1.24, representing a blistering 85% growth rate!

And next year only slows down to 42.4% growth to $1.76.

While profits are great, the real story of demand for CRWD solutions is in the topline growth numbers.

This year is projected to cross $2.2 billion, for a 52% advance.

And next year is pegged at crossing $3 billion for a 37% jump.

Analyst Reactions

Here was the report I delivered to my TAZR Trader members on June 6 when we bought CRWD…

TAZR Traders

I told you last Thursday we wanted to buy CrowdStrike (CRWD), the premier cybersecurity defender, under $170 and you got your chances Friday and this morning.

This morning sees this upgrade…

CrowdStrike upgraded to Overweight from Equal Weight at Morgan Stanley: Analyst Hamza Fodderwala upgraded CrowdStrike to Overweight from Equal Weight with a price target of $215, up from $195. The company offers “defensive positioning” in an uncertain macro environment and the recent pullback in the shares provides an attractive entry point. Security demand remains durable as companies invest to bolster their defenses in a rising threat environment, says the analyst. As a next-generation software-as-a-security platform, CrowdStrike is the leading beneficiary of growing secular trends within security.

And here’s a round-up of analyst reactions from last week after the company report, which keep the stock at a Zacks #2 Rank Buy…

CrowdStrike price target raised to $215 from $200 at Jefferies: Analyst Joseph Gallo raised the firm’s price target on CrowdStrike (CRWD) to $215 from $200 and keeps a Buy rating on the shares after the company’s “impressive” ARR growth of 61% year-over-year beat consensus and its FY23 guidance for 51-52% year-over-year revenue growth was also above the consensus forecast. He continually hears of dislocation of other legacy endpoint vendors, with two of the biggest beneficiaries being CrowdStrike and SentinelOne (S), noted Gallo, who believes CrowdStrike should continue to take share from Carbon Black as well as Kaspersky, Symantec and McAfee.

CrowdStrike price target lowered to $235 from $280 at DA Davidson: Analyst Rudy Kessinger lowered the firm’s price target on CrowdStrike (CRWD) to $235 from $280 to reflect lower peer multiples but keeps a Buy rating on the shares. The company posted another typical “beat and raise quarter”, and its module attach rates are continuing to climb nicely, while its gross retention was at an all-time high. Kessinger adds that the macro backdrop and increased competition from SentinelOne (S) do not appear to be having any material impact on the trajectory of the business.

CrowdStrike’s First-Quarter Earnings Beat Driven by Strengths in Emerging Modules, Customer Adds, Oppenheimer Says
Jun 3, 2022, 14:43MT Newswires

CrowdStrike Holdings’ (CRWD) fiscal first-quarter results topped Wall Street views as the company saw continued momentum for its emerging modules, as well as robust subscription revenue and customer growth, Oppenheimer said.

For the quarter through April, the cybersecurity company late Thursday reported non-GAAP earnings of $0.31 per share on revenue of $487.8 million. Analysts surveyed by Capital IQ projected normalized EPS of $0.23 and revenue of $464.4 million. Its emerging modules’ annual recurring revenue grew by 100%, while its managed detection and response solution, Falcon Complete, saw a record net new ARR.

Oppenheimer analysts led by Ittai Kidron said in a note emailed Friday that Falcon Complete has “significant runway for growth,” especially in a challenging macroeconomic environment. “We are bullish on Falcon Complete’s value proposition and believe it offers CrowdStrike a frictionless cross-sell motion and opportunity to capture incremental revenue as the company adds new modules,” they added.

For fiscal 2023, the company lifted its non-GAAP EPS estimate to a range of $1.18 to $1.22 from $1.03 to $1.13 and its revenue projection to $2.19 billion to $2.21 billion from its prior range of $2.13 billion to $2.16 billion.

Oppenheimer said the outlook is “somewhat conservative” as it reflects the potential for macro headwinds. The analysts said CrowdStrike’s fiscal second-quarter net new ARR is likely to be impacted by seasonality and its operational expenditure is expected to increase in the second half of the year as its pursues aggressive investment to capture growth.

The firm cut its price target on the company’s stock to $250 from $300 while maintaining its outperform rating.

Separately, RBC Capital Markets said CrowdStrike remains one of its “favorite” ideas and one of the “most impressive models we’ve seen at scale, continuing to deliver on both growth and profitability.”

RBC increased its price target to $232 from $225 while keeping its Outperform rating intact.

Bottom line on CRWD: Buy it now before it’s $220 and the risk-reward is still good, but not as great as it is now.

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