Table of Contents
Company profile – cloud-based provider of cybersecurity solutions
The last CrowdStrike Holdings quarterly figures from October 2024
Key figures of CrowdStrike Holdings stock from the HGI analysis
The world is facing a period of increasing uncertainty, encompassing both geopolitical tensions and economic challenges. In this environment, cyber attacks have increased in frequency and sophistication. Attackers are increasingly targeting critical infrastructure of companies and governments. At the same time, dependency on digital technologies, cloud solutions and networked systems is increasing, making organisations more vulnerable.
In this dynamic and rapidly growing market, CrowdStrike (ISIN: US22788C1053) has positioned itself as a leading provider of cybersecurity solutions, particularly through its cloud-based Falcon platform and its innovative strength. The expansion is now taking place worldwide, with acquisitions broadening the ecosystem. A high net retention rate is standard here.
CrowdStrike's share price is also rewarding these developments with rising prices. Most recently, it was trading at USD 359, again close to its old all-time high. The share price increase over the last five years is an impressive 607 per cent.
Source: Share price development of CrowdStrike
A lot seems to be going right here. And indeed, there are many arguments in favour of the stock – not only the strong free cash flows and the high growth. But there are also points of criticism, such as the high valuation, the visible slowdown in growth, and the constant dilution of existing shareholders. The following CrowdStrike Holdings stock analysis takes a closer look at the opportunities and risks of the cyber security stock. Is there further potential in the stock?
CrowdStrike Holdings' business model is based on providing cloud-based cybersecurity solutions to help companies protect themselves against modern threats. At its core is the Falcon platform, which uses a combination of artificial intelligence, cloud technology and security data to detect and defend against threats in real time. The company's offerings are aimed at small and medium-sized companies as well as large corporations and public institutions. CrowdStrike generates its revenues mainly from subscriptions and complementary services. These represent the two reportable segments.
Source: Form 10-K Crowdstrike
The subscription business, which accounts for the majority of revenue, is based on the sale of subscriptions to the Falcon platform. This platform is modular, allowing customers to subscribe only to the features they need. It includes solutions for endpoint security, threat intelligence, security analysis and more. The platform is offered as Software-as-a-Service (SaaS), to use this trendy term. In essence, this means that customers can access the software products via the cloud without having to operate local hardware or extensive IT infrastructures. The software is continuously updated to ensure that customers are always protected against the latest threats. CrowdStrike also relies on a scalable pricing model in which costs increase with the number of protected devices or endpoints.
The Professional Services division complements the subscription business by providing specialised services to help customers prevent, investigate and respond to cyberattacks. These services primarily include incident response, proactive threat hunting and security assessments. CrowdStrike helps its customers identify security vulnerabilities, optimise their defences and develop comprehensive threat defence strategies. These services are often offered in conjunction with the Falcon platform and help to build long-term customer relationships.
Although the Subscription segment accounts for the largest share of total revenue (94 per cent) at $2.87 billion, actual recurring revenue is significantly higher due to extrapolation effects of the contracts concluded. In 2024, they will be $3.4 billion, 34 per cent higher than in fiscal 2023. What is particularly striking here is the slowing growth momentum. For example, the pace of growth slowed by 14 percentage points in the last fiscal year. Total revenue grew by 31.4 per cent – a steady slowdown.
Source: Change in CrowdStrike share revenue growth rates
The net retention rate has also weakened. This indicates how well a company succeeds in retaining existing customers and generating additional revenue with them. At 119 per cent, the rate in 2024 was well above the 100 per cent mark. This means that existing customers are increasingly buying from CrowdStrike, which could also be due to the company's growing ecosystem. However, the rate has fallen by 6 percentage points compared to the previous year.
CrowdStrike operates in a dynamic and growing cybersecurity market characterised by increasing threats from cyberattacks and an ever more complex digital infrastructure. The market includes a wide range of security solutions that help companies and organisations worldwide to protect their networks, end devices, cloud infrastructures and data from a variety of threats. This market is characterised above all by a sharp increase in the number and complexity of cyber attacks, including ransomware, phishing, data leaks and advanced targeted attacks (advanced persistent threats, or APTs).
The increasing dependency of companies on digital platforms and cloud services is expanding the attack surface for cybercrime and increasing the demand for effective security solutions. It is therefore hardly surprising that the demand for cyber security solutions is constantly increasing. An important trend in this market is the move to the cloud. Companies are increasingly moving their IT infrastructure to the cloud, which in turn brings new security challenges, as traditional on-premise security solutions are no longer sufficient. Fortunately, CrowdStrike recognised this trend early on and developed its solutions as a cloud-based platform. It enables central administration and rapid scalability, which is particularly advantageous in an increasingly decentralised and mobile working environment.
Another important aspect of the market is the integration of artificial intelligence (AI) and machine learning (ML) into cybersecurity solutions. As cyberattacks become more sophisticated and difficult to detect, companies like CrowdStrike are using advanced analytics tools to detect, classify, and automatically respond to threats in real time. In summary, the cybersecurity market is growing rapidly, both in terms of the complexity of the threats and the technologies being developed to counter these challenges. However, the competition is fierce.
CrowdStrike's main competitors come from various areas of cybersecurity, particularly in the areas of endpoint security, cloud security and threat management. One of the main competitors is Microsoft with its Defender for Endpoint solution. Microsoft leverages integration with its widespread ecosystem, particularly Windows and Azure, to provide a comprehensive security solution that is implemented as a standard solution in many companies. This strong market presence makes Microsoft a major challenge for CrowdStrike. Another important competitor is SentinelOne, a company that, like CrowdStrike, has developed a cloud-based and AI-supported platform for endpoint security. SentinelOne offers comparable functions such as threat detection, incident response and proactive threat hunting and addresses the same customer group as CrowdStrike. Due to these similarities, SentinelOne is one of the most direct competitors in the modern cybersecurity solutions market. We had already analysed this stock. Traditional providers such as Palo Alto Networks, which are continuously expanding their security solutions and increasingly integrating cloud and AI-based approaches, also play a role. Palo Alto Networks offers a comprehensive security platform that includes protection for endpoints, networks, clouds and applications, making it a strong competitor. Companies such as Symantec (now part of Broadcom) and McAfee also operate in the endpoint security sector, but they rely more on traditional approaches and less on cloud-native technologies. However, they remain relevant players due to their broad customer base.
In addition to these established companies, more and more specialised providers are entering the market, further intensifying competition. The market is therefore characterised by rapid technological progress and a high level of dynamism, which forces companies to constantly innovate in order to remain competitive. CrowdStrike therefore not only competes with big names, but also with agile newcomers that offer specialised solutions for niche markets. It is therefore important to differentiate yourself from the competition. And CrowdStrike is doing a good job of this.
CrowdStrike stands out from the competition primarily due to its cloud-native architecture, the use of artificial intelligence and a highly data-driven security strategy. Unlike many traditional providers, who often had to adapt their solutions to existing on-premise infrastructures, the Falcon platform was developed for the cloud from the outset. This enables CrowdStrike to analyse threats in real time, deliver updates without delay and offer global scalability. However, a key advantage over the competition is also the ability to collect and analyse huge amounts of security data from millions of endpoints worldwide (big data). With its AI-based engine, CrowdStrike can detect and predict potential threats at an early stage, before they can even cause any damage. The Falcon platform offers a high degree of flexibility thanks to its modular design, enabling customers to subscribe only to the features they actually need. This modularity and the focus on usability set CrowdStrike apart from more complex and often less intuitive solutions offered by competitors.
Another key differentiator is the Threat Graph, one of CrowdStrike's core technologies. This uses the data collected on the platform to establish connections between potential threats and identify new attack patterns. While competitors such as Microsoft or SentinelOne also use AI, CrowdStrike's speed and accuracy of analysis, as well as its ability to automatically neutralise threats, are compelling.
In the area of professional services, too, CrowdStrike stands out from the competition. Not only does the company offer advanced incident response services (measures to eliminate a security breach), but it also works closely with customers to optimize their security strategies. The close integration of platform and services ensures a seamless experience that many competitors cannot offer in this form. Finally, CrowdStrike scores points with its focus on innovation and proactive approach to threat defence. While many competitors offer more reactive security solutions, CrowdStrike enables preventive protection through threat hunting and continuous security assessments.
To strengthen its own competitiveness, several companies have been acquired in the past – seven in the last five years, according to Tracxn. In 2020, for example, CrowdStrike Preempt Security was acquired, a company specialising in zero-trust security solutions and identity protection. The acquisition strengthened CrowdStrike's offering in the area of identity security, an increasingly important aspect of cybersecurity as many attacks are enabled by compromised identities.
In 2021, the acquisition of Humio, a provider of log management and observability solutions, followed for approximately $400 million. This acquisition enhanced critical expertise in real-time data analysis and monitoring, which is particularly beneficial for threat detection and response. In 2024, CrowdStrike finally acquired Adaptive Shield, a leading provider of SaaS security solutions. This acquisition made Crowdstrike one of the few providers to offer comprehensive protection against identity-based attacks in cloud environments.
The acquisitions are also reflected in the balance sheet. Here, the focus is on intangible assets.
Source: Development of intangible assets
The sharp increase in intangible assets after the acquisitions is striking. This is due to the goodwill, i.e. the premiums on the book value of the acquired companies. In the last quarter, these amounted to 722 million US dollars and represented around 87 percent of intangible assets. However, these in turn only made up around 11 per cent of the balance sheet total.
Source: CrowdStrike Holdings Q3-2024 balance sheet data
In principle, a high goodwill is an uncertainty factor, but in Crowdstrike's balance sheet, this value can be neglected. The equity of $3 billion exceeds it by more than three times. In addition, there is $4.3 billion in cash in the treasury. Millions are added each month through free cash flow.
In the third quarter of fiscal year 2025, which ended on 31 October 2025, CrowdStrike reached important milestones and achieved strong financial results. For example, the company exceeded $4 billion in annual recurring revenues for the first time, representing year-over-year growth of 27 per cent. Quarterly revenues were just over $1 billion, up 29 per cent from the same quarter last year. The majority of revenues continue to come from the subscription business, which grew by 31 per cent to $963 million.
Source: Financial data from CrowdStrike Holdings
The earnings picture is less encouraging. Here, net profit fell sharply by 163 per cent. The bottom line was a quarterly loss of $17 million. In the previous year, a profit of $27 million was reported. It is particularly striking that direct costs have risen sharply, causing gross profit to increase at a slightly lower rate. However, the big difference was in the selling and R&D costs. These rose disproportionately by 36 per cent and 41 per cent respectively, and weighed heavily on the result. High R&D costs should not be viewed negatively. They represent innovation and create competitive advantage. The same applies to selling costs. There is no question that acquiring new customers is expensive. However, with its own SaaS model, CrowdStrike earns good money over years in its own ecosystem over the customer cycle. In the long term, profits should therefore grow more strongly, since the new customers usually do not have to be acquired again.
Source: Cash flow development of CrowdStrike Holdings
It will be interesting to see how the cash flows develop. Here, the operating cash flow in the third quarter of 2025 was $326 million and the free cash flow was $231 million, which shows a solid financial base. To reiterate: Although the company reported an operating loss of $56 million and a net loss of $17 million under US GAAP, it was able to generate a free cash flow of $231 million at the free cash flow level.
One reason for this is the traditionally high share-based compensation. Like many technology companies, CrowdStrike uses share-based compensation as an important component of employee compensation. This practice is common in the industry because it enables the company to attract and retain highly qualified talent. In particular, employees in management and key positions are given access to such stock options, restricted stock units or other share-based compensation. However, this is less favourable for investors, as the number of outstanding shares increases and their own stake in the company decreases. However, CrowdStrike's management believes this approach is strategically important to attracting and retaining the best talent. This may be particularly important in a competitive market like the cybersecurity industry, where demand for experts in AI, cloud technology and security solutions is high and talent is correspondingly scarce. Although equity-based compensation puts short-term pressure on margins and GAAP earnings, it is a conscious investment in CrowdStrike's long-term competitiveness.
The following chart shows that employee compensation at CrowdStrike is also positively correlated with revenue per employee:
Source: Revenue per employee and number of outstanding shares of CrowdStrike
Here, revenue per employee has increased by 86 percent since 2020. The number of outstanding shares increased by 20 percent.
Let's move on to the outlook for the current fiscal year 2025, which ends on 31 January 2025. CrowdStrike is providing an optimistic outlook for the fourth quarter and for the full fiscal year 2025, reflecting the company's continued growth and strong market position. For the fourth quarter, the company expects revenue between $1.0287 and $1.0354 billion. For the full fiscal year, CrowdStrike forecasts total revenue of approximately $3.9 billion, a significant year-over-year revenue growth – in the best-case scenario, growth of 28.6 per cent. This is likely to further weaken the growth momentum.
In terms of non-GAAP earnings, however, CrowdStrike expects net income of between $211 million and $216 million for the fourth quarter and between $938 million and $943 million for the fiscal year. EPS of $3.74 to $3.76 is forecast for the full year, based on an average of 251 to 252 million diluted shares outstanding.
The forecast thus ultimately reflects CrowdStrike's continued success in scaling its business, growing subscription revenues and expanding its customer base. The company's strong financial discipline and the increasing adoption of the Falcon platform are key to achieving its ambitious growth targets.
Source: Margin development of CrowdStrike shares
But despite the impressive growth and positive outlook, there are some criticisms of CrowdStrike's figures. A key criticism is that while the company is growing strongly, margins are hardly rising anymore. The gross margin in the subscription business remained unchanged compared to the previous year, which could indicate that economies of scale are no longer being fully exploited. Only slight improvements are visible at the EBIT level as well. Furthermore, it remains questionable whether CrowdStrike will be able to sustain its high growth rates in the long term in the face of increasing competition and possibly flattening demand.
In the medium term, analysts continue to expect significant double-digit revenue growth that will settle above the 20 percent mark. Thus, revenue could rise rapidly from the most recent $3.1 billion in 2024 to $8.8 billion in 2029.
Source: Revenue and margin forecast for CrowdStrike shares up to 2029
Analysts also expect CrowdStrike to see a significant increase in earnings. The Falcon platform's high scalability makes this possible in principle, provided that the high sales costs for customers already acquired are eliminated or R&D costs no longer rise as steeply. However, investors still have to expect a significant decline in profits by 2025. High sales and development costs, which drive growth, as well as extensive share-based employee compensation, are a particular burden here. In the long term, however, this picture could change, as analysts' profit forecasts of $423 million in 2027 show.
The High-Growth Investing analysis of CrowdStrike stock shows a mixed but overall solid picture of the valuation and growth criteria that are of interest to investors in the area of growth stocks. With an HGI score of 11 out of 18 points, CrowdStrike is in the upper midfield. This makes the stock a top scorer for the growth strategy. Strong growth figures, but also an ambitious valuation, are characteristic.
Source: HGI score of CrowdStrike
First of all, there is the gross margin of 75 per cent, which reflects the high efficiency and profitability of the business model. The high value achieved full marks in the HGI analysis. The Rule of 40 value of 61 percent is also a strong result and shows that CrowdStrike is maintaining the balance between revenue growth and profitability despite high growth investments. In addition, the low leverage ratio of 0.26 is also given the highest score. The company is virtually debt-free and generates high free cash flows.
Ultimately, however, revenue growth is a key indicator that speaks in favour of CrowdStrike shares as a growth investment. The company achieved growth of 36 percent in fiscal year 2024, which, while again slower than in previous years, is still strong. With revenue growth of 31 per cent in the last twelve months, CrowdStrike therefore scores two out of a possible three points in the HGI analysis.
One weak point in the analysis is the EV/Sales ratio of 23, which is considered extremely high and indicates an ambitious valuation. This is underlined by the PEG ratio of almost 7.2, which is also considered critically high. Both values suggest that the stock has already priced in a significant portion of future growth, which could limit the short-term upside potential. Therefore, no points were awarded for these two valuation metrics.
Source: History of the HGI score of Crowdstrike stock
However, apart from the valuation, a positive conclusion remains, especially because the developments are sustainable, as the HGI history shows.
Valuation of CrowdStrike stock is a key topic, especially for growth investors who are confronted with high multiples. Two of the most frequently discussed valuation metrics here are EV/Sales and PEG ratio, while P/E is largely useless in this case. But more on that later.
CrowdStrike's EV/Sales ratio is currently 24, well above the average for both the market as a whole and many competitors in the cybersecurity industry. It indicates how much an investor pays for each dollar of revenue. The higher the value, the more expensive the stock is valued. Historically, however, significantly more has been paid. At its peak, the EV/Sales ratio was over 63!
Source: Historical development of the EV/Sales ratio of Crowdstrike shares
So the company's valuation has grown somewhat over the years. Nevertheless, this valuation entails risks, as it leaves little room for disappointment in growth rates or profitability. And as we can see, growth is slowing steadily, which high multiples are less likely to justify.
Let's move on to the PEG ratio, which compares the price-earnings ratio to expected earnings growth. At 7.2, it is also high based on the last twelve months. Here, values below one are considered attractive. However, for growth companies, values below two or even four – depending on how strongly the company is growing – can still be considered acceptable. But even these values are no longer being met.
Source: Development of the PEG ratio of CrowdStrike shares
The P/E ratio itself is less informative. One reason for this is that the company is still making losses according to US-GAAP. This is typical for fast-growing technology companies that invest heavily in research and development and in expanding their market share (marketing). In addition, CrowdStrike reports high share-based compensation as an expense, which significantly distorts its GAAP earnings. As a result, the P/E ratio does not provide any interpretable assessment of the company's operating performance or future potential. Furthermore, as already mentioned, it does not take growth into account. And this component is the decisive part of the valuation at Crowdstrike.
However, if you look at the free cash flow of $1.1 billion and compare it to the current enterprise value, this picture is confirmed. Here, the ratio is 77 – a high value that can only be justified by strong growth. And that is being delivered, as the following chart impressively shows. But the kink at the upper end needs to be monitored.
Source: Chart on the development of the free cash flow of the CrowdStrike share
The CrowdStrike share is therefore trading at a high premium due to its strong growth and leading market position. However, investors should always be aware that this valuation depends heavily on future growth rates and that a significant re-evaluation could occur if growth slows or uncertainties arise.
In the end, my analysis of CrowdStrike shows a promising growth company in a future-oriented market, whose valuation, however, could at first glance put the risks in the foreground. But first, let's look at the opportunities: The cloud cybersecurity company benefits from its leading position in the cybersecurity space, a steadily growing need for protection solutions and the innovative Falcon platform, which enables high customer loyalty and modular expandability. These strengths are reflected in impressive revenue and growth rates, which certainly justify investors' confidence. However, growth is slowing noticeably. Therefore, caution is advised on the valuation side. The high EV/sales ratio and the ambitious PEG suggest that a large part of future growth may already be priced in. At the same time, traditional valuation metrics such as the P/E ratio are less meaningful due to the high share-based employee compensation. On a positive note, the company generates over USD 1 billion in free cash flow per year. However, this will need to increase significantly for a market capitalisation of around USD 90 billion at present – an ambitious but not impossible target. In particular, acquisitions and global expansion could become more important in the future in order to maintain a high pace of growth.
For investors with a long-term horizon who are willing to accept a high valuation, CrowdStrike could therefore be an attractive opportunity, especially since there are only a few companies that combine trend topics such as AI, cloud and cybersecurity as strongly as CrowdStrike. However, investors should keep an eye on the risks, particularly the high dependence on growth momentum and the possible impact of global economic uncertainties. However, the high level of competition could also lead to setbacks.
Source: Analysts' opinions on CrowdStrike shares
The majority of analysts also see the share as a buy – 76 percent of them give it this rating. A further 20 percent of analysts rate the share as a hold, while only 4 per cent rate the share as a sell. However, the average price of $384.21 is very close to the current price, which means that the upside potential may already have been exhausted. In the opinion of the experts, major price jumps are therefore no longer to be expected. Let's see what the market does with the stock in the future.
Particularly for highly valued stocks like Crowdstrike, an alarm is a good idea to ensure you don't miss out on entry opportunities. An EV/Sales alarm in the aktien.guide at, for example, 18 could be a good idea to then take another look at the stock.