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CrowdStrike (CRWD) Up 10.2% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for CrowdStrike Holdings (CRWD). Shares have added about 10.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is CrowdStrike due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

CrowdStrike's Q4 Earnings & Revenues Top Estimates

CrowdStrike reported fourth-quarter fiscal 2020 non-GAAP earnings of 13 cents per share, beating the Zacks Consensus Estimate by 44.44%. Quarterly earnings also marked a significant improvement from the year-ago quarter’s earnings per share of 2 cents.

Top-Line Details

CrowdStrike’s fiscal fourth-quarter revenues of $264.9 million surged 74% year over year and beat the consensus mark of $251 million. Subscription revenues jumped a whopping 77% year over year to $244.7 million.

An 82% increase in subscription customers led to this impressive growth. CrowdStrike added 1,480 net new subscription customers during the reported quarter. The company had a total of 9,896 subscription customers as of Jan 31, 2021.

Moreover, CrowdStrike’s subscription customers who adopted four or more cloud modules increased to 63%, those with five or more cloud modules rose to more than 47% and for six or more cloud modules the metric jumped to 24% as of Jan 31, 2021.

Revenues from professional services soared 49% year over year to $20.3 million.

The company added $143 million to its net new average run rate (ARR), achieving $1.05 billion, up a whopping 75% from the year-ago quarter.

The dollar-based net retention rate exceeded 125% at the end of fiscal 2021.

Notably, CrowdStrike added Salesforce as a customer during the fourth quarter.

Operating Details

CrowdStrike’s non-GAAP gross margin expanded 380 basis points (bps) on a year-over-year basis to 77%. Subscription gross margin advanced 300 bps to 80%. Moreover, the professional services gross margin increased to 49% from the year-ago quarter’s 42%.

Total non-GAAP operating expenses, as a percentage of revenues, were 64% compared with the prior-year quarter’s 78%.

Non-GAAP operating income was $34.4 million against the loss of $6.7 million reported in the year-ago quarter. Non-GAAP operating margin for the quarter was 13%.

Balance Sheet & Cash Flow

As of Jan 31, 2021, cash and cash equivalents were $1.92 billion compared with $1.06 billion as of Oct 31, 2020.

During the fiscal fourth quarter, the company generated operating and free cash flows of $114.5 million and $97.4 million, respectively.

Full-Year Fiscal 2021 Highlights

Total revenues of $874.4 million increased 82% year over year, with subscription revenues of $804.7 million growing 84% and professional services revenues of $69.8 million increasing 55%.

Non-GAAP earnings of 27 cents also significantly improved from a loss per share of 42 cents in fiscal 2020.

CrowdStrike generated operating and free cash flows of $356.6 million and $292.9 million, respectively.

Guidance

For first-quarter fiscal 2022, CrowdStrike anticipates revenues between $287.8 million and $292.1 million. As far as the bottom line is concerned, the company expects to report earnings per share between 5 cents and 6 cents.

Management expects Humio to contribute approximately $2 million to acquired net new ARR in the first quarter of fiscal 2022.

For fiscal 2022, management issued its revenue guidance range at $1,310.4 -$1,320.7 million. The company anticipates non-GAAP earnings per share of 27-30 cents.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted -47.06% due to these changes.

VGM Scores

At this time, CrowdStrike has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, CrowdStrike has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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