Cybersecurity is big business, especially now, with more companies doing their operations in the cloud and relying on artificial intelligence (AI). CrowdStrike (CRWD -1.06%) is a big player in that area, and it has done a magnificent job of attracting growth investors. This year alone, the stock is already up close to 50%. As a result, its valuation has ballooned -- it's trading at nearly 100 times its forecast profits for this fiscal year.
But despite its sky-high valuation, CrowdStrike stock could be poised to soar even higher.
Its applicant acceptance rate would make it the most exclusive Ivy League school
On CrowdStrike's fiscal 2025 first-quarter earnings call earlier this month, management highlighted the wealth of applicants it has vying for its positions. The company says that in five quarters, it has obtained 687,000 job applications. But the actual number it hired was just the "low single-digit thousands." In comparison, Harvard has a 3% acceptance rate, and given the same number of applicants, it might accept over 20,000 people.
CrowdStrike obviously wouldn't be able to hire all those people even if it wanted to. As of April 30, the company had just 8,429 full-time employees. But its vast pool of applicants speaks to the company's brand power and its popularity. It also allows CrowdStrike to pick the best and brightest people for its jobs.
Its Falcon platform is used by more than half of Fortune 100 companies
CrowdStrike's Falcon platform helps prevent breaches and keeps costs down for businesses. The proof of its effectiveness is in its adoption numbers. According to CrowdStrike, "Falcon has been selected by 62 of the Fortune 100 as their cloud security provider of choice." The reliance of its largest customers on the Falcon platform is a great vote of confidence in what CrowdStrike is doing from some of the most successful companies in the world.
Last quarter, 95% of CrowdStrike's revenue came from subscriptions. That's great news for investors because recurring revenue streams can create a lot of stability.
Its growth rate remains above 30%
In recent years, CrowdStrike's growth rate has been slowing down. This isn't an uncommon pattern for fast-growing businesses, as it becomes more difficult to keep boosting sales at a high year-over-year rate as a company starts going up against strong comparable numbers. But its revenue growth of 33% for fiscal 2025 Q1, which ended on April 30, shows the business is still expanding at a solid pace.
CRWD Revenue (Quarterly YoY Growth) data by YCharts.
For the current fiscal year, which ends in January, CrowdStrike is guiding for its top line to rise by about 31% to around $4 billion.
There are also still a lot of growth opportunities out there in cybersecurity as threats become more advanced through the malicious use of AI. According to a forecast from analysts at Fortune Business Insights, the global cybersecurity market will expand at a compound annual rate of 13.8% through 2030.
Is CrowdStrike stock a buy?
CrowdStrike's stock has soared by more than 400% over the past five years. The business is doing well. It has some promising opportunities in AI because as cyberthreats become more sophisticated, CrowdStrike may benefit from an increase in demand for its services.
The stock's valuation looks steep because of its low margins, but those have been improving over the years. Should that margin growth continue along with the company's strong top-line gains, the tech stock could prove to be a great buy for long-term investors.
