CrowdStrike Hits Bullseye to Close Fiscal 2023

We are maintaining our $156 fair value estimate for narrow-moat CrowdStrike CRWD after the firm closed out its fiscal 2023 with strong results offset by continued macro pressures. While near-term macro tightness continues to remain front of mind for many investors, we’d highlight the tremendous opportunity CrowdStrike has in front of it as endpoint security continues to gain share of overall enterprise security spending. We believe the firm, with its sticky Falcon platform that exhibits potent network effects, is well positioned to capitalize on the increased number of endpoints every business has due to the continued digitization of IT architecture. With shares up more than 5% after hours, we believe there is still upside for investors looking to get high-quality exposure to software as a service.

Fourth-quarter revenue clocked in at $637 million, up 48% year over year. Annual recurring revenue expanded 48% year over year to $2.56 billion. While management highlighted continued macro tightness affecting sales cycles as customers continue to optimize spending, CrowdStrike posted strong numbers for net new ARR, a measure of the firm’s ability to land new customers in this tough environment. Net new ARR came in at a record $222 million, up 12% sequentially. We see strong new user adoption as evidence of the everpresent need for CrowdStrike’s solutions even during a period where most buyers are rethinking their IT spending.

CrowdStrike’s adjusted earnings clocked in at $0.47 per share, above the high end of management’s prior guidance. Looking ahead to fiscal 2024, CrowdStrike expects first-quarter sales and adjusted EPS of $676.6 million and $0.505, respectively, both at the midpoint. For the full year, management’s outlook includes revenue of $2,955 million-$3,015 million and adjusted EPS of $2.21-$2.39.