The fourth-quarter earnings season is drawing to a close, and as I expected, it was stunning. FactSet reported that 79% of S&P 500 companies exceeded analysts’ earnings estimates and 75% topped revenue forecasts in the latest quarter. The average fourth-quarter earnings surprise was 14.3%, while the average revenue surprise was 2.9%. As a result, fourth-quarter earnings overall grew at a 4% annual pace, and revenue rose 3.2%.
These results vastly exceeded analysts’ expectations for fourth-quarter earnings and sales at the end of calendar year 2020. On December 31, analysts were expecting fourth-quarter earnings to decline 9.4% and for a measly 0.1% sales growth.
I’m pleased to say that my Growth Investor stocks performed much better. Of the 64 Buy List companies that have announced results, eight missed analysts’ earnings estimates, two reported in-line earnings and 54 exceeded earnings forecasts. The average earnings surprise is about 19%. Needless to say, I’m pleased with how my Growth Investor Buy List stocks performed in the most-recent quarter.
CrowdStrike Holdings, Inc. (CRWD), which released its most-recent earnings report on March 16, falls directly in the camp of my Growth Investor companies that exceeded expectations.
Fourth-quarter revenue jumped 74% year-over-year to $264.9 million, up from $152.1 million in the same quarter a year ago. Subscription revenue accounted for $244.7 million, or a 77% year-over-year increase. Fourth-quarter earnings surged to $31.6 million, or $0.13 per share, compared to an earnings loss of $3.9 million, or a $0.02 per share loss, in the fourth quarter of 2020.
The analyst community was expecting fourth-quarter earnings of $0.08 per share on $250.44 million in revenue. So, CrowdStrike posted a stunning 62.5% earnings surprise and a 5.8% revenue surprise.
For its fiscal year 2021, CrowdStrike reported earnings of $62.6 million, or $0.27 per share, and revenue of $874.4 million. That was up from an earnings loss of $62.6 million, or a $0.42 per share loss, and revenue of $481.4 million in fiscal year 2020. CrowdStrike also noted that it had a total of 9,896 subscription customers at the end of its fiscal year 2021, which represented an 82% year-over-year increase.
Looking forward to its first quarter in fiscal year 2022, CrowdStrike expects total revenue between $287.8 million and $292.1 million and earnings per share between $0.05 and $0.06. That’s up from earnings of $0.02 and revenue of $178.1 million in the first quarter of fiscal year 2021.
Company management also commented, “CrowdStrike delivered a record fourth quarter and an exceptional finish to a strong fiscal year, achieving over $1 billion in ending ARR (annual recurring revenue).”
Wall Street was clearly impressed, as CRWD rallied as much at 7.4% the day after its strong results. The stock later pulled back with the broader market selling, but the reality is there’s a lot of long-term growth potential for this fundamentally superior company.
Big Growth in the Cloud Security Business
You see, CrowdStrike is in the lucrative cloud security business, which is expected to balloon to a stunning $248.26 billion by 2023 worldwide. And the company’s business has been booming amidst the global COVID-19 pandemic. Specifically, CrowdStrike offers real-time endpoint security, threat intelligence and cloud workload protection, helping prevent cyberattacks on and off an enterprise’s network.
The company’s platform, The CrowdStrike Falcon, utilizes its proprietary CrowdStrike Threat Graph to identify security threats and prevent data breaches. CrowdStrike boasts that its platform combines artificial intelligence (AI) and machine learning with behavioral analytics and a 24/7 threat hunting all-in-one solution to protect all workloads on the network—cloud-based, on-premise and virtual environments.
Currently, CrowdStrike offers 16 modules on its Falcon platform, which includes next-generation antivirus protection, firewall management, malware search engine and analysis, threat intelligence and threat hunting. The company also acquired Preempt Security in September to expand its offerings to include identity protection.
So, it should come as no surprise that the company would post such strong fourth-quarter earnings results, or why I recommended CrowdStrike to my Growth Investor subscribers back in December 2018 in the first place.
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The Editor (Louis Navellier) hereby discloses that as of the date of this email, the Editor (Louis Navellier), directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
CrowdStrike Holdings, Inc. (CRWD)