Breaking Analysis with Dave Vellante

Why CrowdStrike is separating from the cybersecurity pack

Mar 9, 2024

Exploring the cybersecurity sector's recent dynamics, focusing on CrowdStrike's impressive momentum and growth prospects. Comparisons with Palo Alto's challenges, Zscaler's negativity, and the platform vs. product strategy. Delving into CrowdStrike's diversification and $10B ARR goal, their innovative AI-driven cybersecurity solutions, and the importance of investing in robust security measures.

23:13

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Quick takeaways

CrowdStrike is strategically expanding its platform beyond endpoint security to achieve a $10 billion ARR goal by diversifying into cloud identity and next-gen SIM modules.

Palo Alto Networks faces challenges with customer spending fatigue on full consolidation, highlighting the risks of over-reliance on consolidation strategies in the cybersecurity sector.

Deep dives

CrowdStrike's Platform Expansion and Growth Trajectory

CrowdStrike has showcased impressive growth with a $3.44 billion in ARR and a solid 30.4% growth while demonstrating better operating margins and free cash flow. The noteworthy aspect is its true platform expansion by diversifying beyond its core endpoint security to modules like cloud identity and next-gen SIM, aiming for non-endpoint segments to contribute half of its $10 billion ARR goal by the end of the decade. This strategic shift positions CrowdStrike as a major player in the software industry.

Introduction

3min

Palo Alto's Financial Performance and Industry Challenges

7min

Financial Performance and Market Reactions of Silicon Eagles, Z scaler, and Crowd Strike

2min

CrowdStrike's Diversification and Growth Strategy

8min

Innovative AI-driven cybersecurity solutions and the importance of investing in robust security measures

3min

It’s been an interesting month in the cybersecurity space. The sector has been somewhat less affected by budget tightening these past twenty-four months and at the same time has benefitted from AI tailwinds. But in the past several weeks we’ve seen some separation in key highflying cybersecurity names. Specifically, Palo Alto shocked the street last month with a $600M billings forecast surprise and sounded the alarm that there were cracks in its consolidation execution. This dragged down other consolidation players in sympathy, namely CrowdStrike and Zscaler. But our research shows that the dynamics facing these three companies are quite different. Of particular note, CrowdStrike’s earnings print highlights the company’s impressive momentum while recent negativity around Zscaler is a bit of a head scratcher for us, which we’ll try to explain.

In this Breaking Analysis we take a more narrow look at the information security space and dig deeper into the continued success of CrowdStrike. With recent survey data from ETR, we continue to advance our premise that platforms beat products and we identify several levers that are powering CrowdStrike’s path to $5B by FY 2026 and to $10B by the end of the decade.

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Breaking Analysis with Dave Vellante

Why CrowdStrike is separating from the cybersecurity pack

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

CrowdStrike's Platform Expansion and Growth Trajectory

Challenges in Spending Fatigue and Consolidation Strategy

Zscaler's Market Position and Financial Performance

Remember Everything You Learn from Podcasts