Is CrowdStrike A Buy Before Its Quarterly Earnings Report?

The company's guidance on 05 March 2024 for the period ended 30 April, was for revenue between $902.20 million and $905.80 million. (SAL is based on Total Revenue basis). CrowdStrike earnings per share is expected to be 90 cents, where CrowdStrike provide the EPS guidance on 05 March 2024 for period ending 30 April to be between $0.89 and $0.90.

We have seen CrowdStrike peers and closest competitors reported their earnings in April and May, and there have been a mixed in their earnings in reference to stock price. But if I were to summarize, the focus is on the outlook provided by the company.

If we were to look at SentinelOne which is closest competitor, its stock price plunge after weaker guidance was provided. At time of this writing, CrowdStrike current customers stands above 3,400 and with a market share (estimate) of 23,88%, it current rank number one for end user cybersecurity defence software.

So how shall we look at CrowdStrike earnings, I personally feel that CrowdStrike would report a strong revenue and also EPS, but the guidance they are going to provide might not be so strong, because there seems to be a trend of cautious reporting of outlook guidance among cybersecurity firms till date.

This could be due to the expectations that enterprises might not be raising their spendings on cybersecurity end user protection.

The top three of CrowdStrike’s competitors in the Endpoint Protection category are McAfee ePO with 19.07%, SentinelOne with 9.59%, Duo Security with 8.24% market share.

If we look at how the generative AI have moved, now both computer security firms and hackers are expected to make use of generative AI tools.

Cybersecurity firms expect generative AI tools to help reduce the time to detect and respond to many forms of computer hacking. Also, they see generative AI automating more functions in security operations centers to help companies deal with a shortage of software engineers.

So if we look at how CrowdStrike used the generative AI in their strategy in the key product Falcon, this could help them to really help to reduce the cost and also provide more functions automated in SOC for their customer.

If we as investor were to look at cybersecurity stocks which address ransomware, phishing or other kinds of cyberattacks. The range of products need to be looked at.

Meanwhile, CrowdStrike uses machine learning and a specialized database to detect malware on laptops, mobile phones and other devices that access corporate networks. In addition, many software companies are using artificial intelligence to get a competitive edge.

The coronavirus emergency and shift to remote work has accelerated the growth of cloud-based network security. So the industry now has a new term for the infrastructure that supports distributed workers and branch offices.

This trend should be able to benefit CrowdStrike as more and more demand would be needed to protect the company overall infrastructure.

If we looked at how CRWD have been trading recently, it actually trade below the 50-day period, but the demand (buying) strength still present, this would mean that investors are still positive and confident about CrowdStrike stock.

But as mentioned in the previous section, it looks like cybersecurity stocks are providing a cautious rather than weaker outlook guidance, this might cause a dip in the stock price. But if CrowdStrike maintain its customer base, billings for rest of 2024 and 2025, might differ from its competitors, then we could see maybe a surge in stock price after its earnings.

I would be monitoring how the trading goes today (01 June), this should give us an idea of how the investors perceive CRWD price before its quarterly earnings.

Even though we could see that investors looks like to be positive and buying, the strength is decreasing and from KDJ, it is actually showing a downside, with no potential signal of a reversal.

This could be due to the earnings release of other cybersecurity stocks, and market is also going through a consolidation, this might be an opportunity to look at if CRWD earnings and guidance surpass expectations.

If we were to look at how cybersecurity stocks have performed post their earnings, some of them have recovered after plunging after their quarterly earnings, and CRWD should be able to post a strong earnings, what I would focus is the outlook of their product billings, would it be higher?

If that is the case, then we could see CRWD surge after its earnings. I would monitor the price action to see how traders and investors are thinking of CRWD stock.

Appreciate if you could share your thoughts in the comment section whether you think CRWD would provide a surge with strong earnings and strong outlook guidance.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.