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HomeTechCrowdStrike: growth slowdown creates cyber insecurity

CrowdStrike: growth slowdown creates cyber insecurity


Online threats to businesses do not disappear in economic downturns. So says George Kurtz, CEO of CrowdStrike. But after a 42 percent revenue growth in the first quarter, the US cloud cybersecurity firm forecasts full-year growth to slow to about 35 percent. That is the slowest ever recorded.

CrowdStrike is not alone. Okta also predicts a slowdown in revenue growth. Both stock prices have fallen accordingly.

This is despite Crowdstrike’s addition to the fashionable generative artificial intelligence market with an “AI security analyst” named Charlotte. It says it uses AI to identify threats through its Falcon software platform. On the other hand, investments in AI by software companies have not yet yielded tangible increases in revenue.

CrowdStrike was part of a huge crop of IPOs in 2019. While others in the group, including Uber and Lyft, have struggled to meet early market interest, CrowdStrike shares have risen from the $34 listing price to more than $157. With predicted sales, it trades about 15 times. That may sound high, but software companies like Snowflake and Datadog trade at higher multiples.

The $37 billion company’s so-called “go-to-market” strategy has been widely praised, with free trials and demos attracting enterprise customers. As the customer base has grown, users have purchased more of its services. In the last quarter, the number of customers using five or more CrowdStrike services increased 62 percent year over year.

Like many software companies that focused on growth in the era of low interest rates, CrowdStrike has also become much more focused on profit. In the last quarter, it reported a net profit for the first time. It is expected to be profitable for a full year next year.

So why is growth slowing? Note that Microsoft is making its presence known in cloud cybersecurity. The company was mentioned nine times in CrowdStrike’s latest earnings call. Kurtz claimed that customers prefer his products. But if the slowdown is caused by competition, it could become permanent.

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