The latest rebalancing for the S&P 500 took place in mid-June, and cybersecurity darling CrowdStrike (NASDAQ: CRWD) earned a spot in the esteemed index. While getting added to the S&P 500 is an impressive milestone, it’s not reason enough to buy a stock. Nevertheless, CrowdStrike is firing on all cylinders, and I think it’s best days are ahead.
Let’s dig into the company’s progress and explore why now is a lucrative opportunity for long-term investors to own CrowdStrike.
CrowdStrike is in a league of its own
CrowdStrike operates in the cybersecurity industry and specializes in threat detection and endpoint protection through its flagship platform, called Falcon. While the cybersecurity landscape is ripe with competition, CrowdStrike stands out as a winner, thanks to its proven ability to cross-sell.
For the company’s first quarter of fiscal 2025 (ended April 30), nearly two-thirds of CrowdStrike’s total customers were using five or more products. Moreover, new deals with eight or more products increased 95% year over year. By selling multiple products to its customer base, CrowdStrike can expand its recurring revenue base, all while recognizing strong profit growth.
For the quarter ended April 30, CrowdStrike’s annual recurring revenue (ARR) increased 33% year over year to $3.7 billion. Furthermore, the company posted net income of $43 million during the first quarter, compared to just $0.5 million during the same period last year.
The combination of accelerating revenue and profit growth is encouraging, and I think it’s just getting started.
Image source: Getty Images
The party is just getting started
Back in 2022, CrowdStrike released an investor presentation showcasing a total addressable market (TAM) size of $75 billion at that time. Management further explained that with the company’s current product portfolio at that time, the TAM could reach $97 billion by 2025 and $158 billion by 2026 should CrowdStrike execute on its new-product roadmap.
Clearly, a lot has changed over the last couple of years. Not only are cybersecurity protocols more important than ever to…
..
